UK Start-Up Launches Early Version of World’s First Company-Level Child Labour Index

It is estimated that 160 million children around the world are involved in child labour, equating to one in ten of all children.

June 12, 2023 sees a soft launch of a new Child Labour Index by Manchester start-up HACE: Data Changing Child Labour. In the coming weeks the Child Labour Index will be made available to a select group of early adopters for incremental product feedback and refinement in a pilot programme, prior to a full market launch anticipated late summer 2023.

The new index, which coincides with the World Day Against Child Labour, is the only quantitative metric in the world for child labour performance at a company and group level.

For many people, child labour is something they associate with the Ready-Made Garment industry, but the true nature of child labour is far bigger. Child labour supports many of the world’s biggest industries, from agriculture and manufacturing, to the extraction of the minerals that power our smartphones and electric cars. The ILO estimates that between 2016 and 2020, 8.4 million children were added to the global child workforce.

This humanitarian crisis is a huge risk for global companies. Companies that are accused of human rights abuses and those that finance such companies, can be subject to huge reputational damage and fines. For example, new regulations such as the EU’s CSRD and CSDD could see financial market participants fined up to 5% of global revenues if they’re found to be supporting organisations involved in child labour and other human rights abuses. Recent child labour cases have shown an increase in investor and shareholder culpability, especially in media reporting. Corporations have found themselves embroiled in global scandal, and face unprecedented scrutiny around child labour issues. 

HACE’s Child Labour Index helps to mitigate this risk by giving organisations reliable, up-to-date access to information about how companies are performing around child labour. The platform, which is available via an API or portal, quantifies three aspects of corporate performance and provides an overall score on a company’s performance and strategy around child labour in its supply chains.

“We know that companies and investors today have limited tools available to identify, monitor and remedy the use of child labour in their supply chains. The Child Labour Index uses our deep subject matter expertise and our own AI algorithms to provide vital insight, so they can make intelligent risk assessments about companies of interest,” explains Eleanor Harry, CEO and Founder of HACE. “By providing a holistic view, this also makes it easier for organisations to prioritise areas where they can strengthen performance.”  

There are currently no quantitative metrics for measuring or reporting on child labour at a company or group level, yet investors are still required to report on child labour by law. The Child Labour Index allows investors to know which companies are compliant and provides the only quantitative child labour metric to comply with new SFDR and ISSB statutory reporting requirements.  

HACE has worked alongside AI consultants from Equal Experts to build algorithms that can process vast amounts of data about global supply chains to provide critical insights into the nature and scale of performance and risk around child labour. The company is also supported by KPMG and NatWest.

Harry explains: “By offering both a user-friendly portal and an API integration into users’ existing ESG monitoring platforms, along with collaboration with scored companies themselves through our Company Engagement Package, we provide reliable, useful and actionable insights.”

Search any corporate website in 2023 and the chances are you’ll find a statement about a commitment to ESG, and perhaps information about how the company is committed to eliminating child labour.

The problem is that many organisations simply don’t know if child labour is an issue in their supply chain, much less how to address it. Globally, one in ten children is involved in child labour, which the UN estimates equates to 160 million children, a figure that is growing rapidly.

Manchester-based tech company HACE is shining a spotlight on the issue with the launch of their new Child Labour Index, which ranks the world’s biggest companies based on their performance around child labour. HACE hopes that the Index, built in partnership with Equal Experts, will encourage investors to take a closer look at the issue of child labour in corporate supply chains. The company believes that the index will harness the power of the investment community to influence the way organisations manage supply chains and the risk of child labour. 

“The Index is needed because many large organisations don’t have the visibility that they need to identify child labour in their supply chains,” explains Eleanor Harry, CEO and Founder of HACE. “For example, a global corporation might not have children working in its canning factory, but child labour could be prevalent in the mines that supply tin to the factory. Most organisations don’t have the visibility into supply chains to see this sort of issue, presenting a risk to their reputation and, ultimately, financial performance.”

The key to understanding what investment and action is needed is – of course – data. HACE’s existing product AthlumTM platform uses millions of data points to provide a detailed, granular insight into the risk of child labour in a range of industries and geographies. 

For the past three years, some of the world’s largest companies have used AthlumTM to provide insight into the risk of child labour throughout supply chains. While companies are investing billions in ESG programmes that attempt to address child labour, a lack of insight means this investment is often wasted. “The root causes of child labour might vary depending on the circumstances, so it’s important to understand why families need to rely on income from child labour in that particular industry and place,” says Eleanor. “We have seen instances where organisations are investing in electricity infrastructure when 80% of local families have access to power already, but only 40% have access to safely managed water.”  

The new Child Labour Index will combine some of that data with public information about individual organisations to create a ranked index showing how well the world’s most influential companies are addressing child labour.

Building the Index is technically challenging, in part because of the vast quantities of data involved. The underlying platform will be developed by Equal Experts using cutting-edge AI and NLP, says Simon Case, Head of Data at Equal Experts. “We don’t often get to apply AI to data that has the potential to be so meaningful, so this has been a really exciting project to be involved in,” says Case. The prototype has been built using a number of Amazon Web Services (AWS), including EC2, ECC, Neptune, DynamoDB and RDS.

At launch, the Index will rank the world’s largest companies, and the intention is to expand the range and number of companies included over time. HACE is actively seeking partners to engage with the new platform and understand how the insights created can help companies to make more positive, proactive decisions around child labour.

Eleanor hopes that the index will provide a useful starting point for conversations about child labour. “We hope that companies will see the Index as a way to understand and improve their performance around child labour, and we hope to work with companies to understand their policies and provide advice around how to improve supply chain visibility with a view to reducing the risk of child labour,” she says.     

The challenge of child labour might seem remote but it’s an increasing issue. The UN estimates that 8 million more children have been brought into child labour since 2016 alone. Eleanor hopes that the Child Labour Index could be a first step towards making real change. “Child labour doesn’t just affect this generation, it has  consequences that last forever,” she says. “You can’t just rewind and have a different childhood, and it’s critical that we start to understand how important that is.”

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