Impact Investing | July 8, 2024

Investors find child-lens impact through interviews with customers for cookstoves, clean energy and microfinance

Lindsay Smalling and Erin Egan Watson

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Guest Author

Lindsay Smalling

Guest Author

Erin Egan Watson

As impact investors, we are focused on solving the pressing challenges faced by millions of people across the world today and prioritizing investments that will shape the future – future prosperity, peace, equity, and resilience.

Which raises an important question that has been hiding in plain sight: Why aren’t we talking about children in our impact? 

Children are the future. They are tomorrow’s workforce, consumers, advocates, and leaders. Getting childhood right can have transformative effects on future societies, while children who aren’t properly invested in may need expensive support as adults. For example, increasing pre-school enrollment for children in lower-and-middle income countries can result in $14 – $34 billion in lifetime earnings gains, while promoting workforce health and gender equity. 

Children remain almost invisible from investment strategies and decision-making today, even though they are one-third of the global population. Children are entitled to special care and assistance and that includes identifying and monitoring how they are impacted by capital markets.

That’s why UNICEF USA and partners are working to bring a “child-lens” to the market. As we know from other investment lenses, we need an intentional approach to make vulnerable populations visible in the data as a critical first step.

Beneficiary voice

All lenses start with recognizing that the impact on specific populations is distinct from the aggregate, and that valuable insight can be gained by more intentionally disaggregating and understanding their unique experience. Namely, we need visibility into how children are being impacted across all sectors, especially in strategies that do not target children directly or intentionally but where impact nonetheless occurs.

To explore this, the UNICEF USA (UUSA) Impact Fund for Children, the impact investing arm of UNICEF USA, has partnered with 60 Decibels, an organization focused on impact outcomes data gathered directly from beneficiaries. The partnership is designed to ensure that we use our ‘lean data’ approach of mobile, voice-based customer data collecting and benchmarking to ask the right questions of families and youth to understand the positive and negative impacts that products and services have on children across sectors.

Existing data allows us to identify where a child-lens is most relevant and additive. Child-related trends can be easily identified in energy, agriculture and financial sectors, where benefits for children are frequently shared. Open-ended questions related to quality-of-life improvements, for example, can yield valuable insight even without standard questions focused on child-related outcomes.

With this guidance in existing data, we believe that even simple changes to standard impact survey practices – like asking how many children live in a household, or tagging qualitative responses where children are mentioned – could unlock powerful insights related to impacts on children. This in turn informs better practices that support positive outcomes and mitigate child risks.  

Children in survey data

This partnership has elevated clear evidence of impact on children across sectors that are generally not considered to be child focused. If we look at the impacts on children related to energy access, child-aligned themes clearly arise when asking respondents about changes to quality of life more broadly.

Energy customers report feeling safer because of access to a brighter and more reliable light and children use the light for studying – and often do better in school as a result.

Customers of cleaner cookstoves mention reduced risks to children both in terms of air pollution and associated health effects.  

Ninety percent of the world’s 1.8 billion youth live in developing countries where people overwhelmingly rely on polluting fuels and stoves to cook their food. The Clean Cooking Alliance Venture Catalyst Fund mobilizes investment, innovation, and political will to accelerate access to clean cooking. 60 Decibels’ work with the CCA Venture Catalyst Fund showcases the intersection of clean energy with children’s safety and well-being.

In a focused study of CCA’s clean cooking portfolio companies, 57% of respondents said they, or their families, health significantly improved after getting a clean cooking stove, noting improved respiratory function as the top health outcome. This is significant given UNICEF research has shown that almost 600,000 children under age five die each year from respiratory infections related to indoor and outdoor air pollution and second-hand smoke resulting from unsustainable energy practices.

In microfinance and agricultural sectors, a large majority of impact investments aim to improve economic opportunity, income, and financial resilience for the world’s poorest people. But when that additional income is realized, does it benefit the children in the family?

We found that it does by increasing food security and investments in education. In the 2023 MFI Index of over 45,000 microfinance clients globally, 62% of clients who have been with their financial service provider for more than two years report increased meals, 64% report increased education, and 62% report household improvements. In a recent 60 Decibels study of an organic fertilizer company, most customers experienced an increase in their earnings due to the fertilizer. Among them, 74% said they used that additional income for education, showing that improving farmer livelihoods can directly enable investment in children. 

VisionFund is a microfinance fund that puts children at the center of their strategy. Following a 60 Decibels project interviewing 2,500+ VisionFund clients, supporting 10,000+ children, Johanna Ryan, the Global Director of Impact at VisionFund said, “The degree to which children’s education really benefits from microloans was quite startling.” The data is helping VisionFund think more deeply about how they can capitalize on this positive impact and build future programs and initiatives around supporting caregivers to pay fees for schooling and vocational training.

Analyzing existing data shows the impact of products, services, and interventions on children within customer households. The insights are likely to be shaped not just by the product or service itself but in how it is used within the home, and who in the household is prioritized. And, this work isn’t limited to positive impacts. Insights around negative risks in various sectors have direct and serious impacts on children that may go unnoticed without child-focused data. Even investment strategies that don’t directly target children have child-related impacts. 

The UUSA Impact Fund and 60 Decibels will continue to drive forward research and collect child insights more comprehensively to build the field of child-lens investing. Join us. After all, you can’t manage what you don’t measure. 

Erin Egan is managing director of UNICEF USA’s Impact Fund for Children.

Lindsay Smalling is head of sales at 60 Decibels.