Sustainable Investment Awards 2024

Thought leadership paper on sustainable investing, Americas: ISS ESG

Research by ISS ESG highlighted that child labour is a problem in the US, with the automobile, food products, and retail industries being particularly exposed to child labour risks.

Most underage workers are migrant children from Central America who have arrived in the US without their parents, it said, pointing at press reports.

The note, called Not a Thing of the Past: Child Labour in the US, used ISS ESG's Norm-Based Research tool to assess companies' adherence to international norms on human rights, labour standards, environmental protection, and anti-corruption. Companies incorporated in the US tend to have lower scores in this area than those incorporated in the EU, it found.

Norm-Based Research data on cases of child labour across geographies illustrate that the US is the only OECD country, besides Turkey, with active child labour cases. The US currently accounts for 4% of all assessed child labour cases globally, while Turkey accounts for 2.4%.

Areas where US companies tend to score poorly are on measures to ensure freedom of association and to facilitate collective bargaining, non-regular employment policies, and measures to enable key suppliers to safeguard labour rights and improve working conditions.

The rising reports of child labour violations come at a time of growing international regulatory pressure on companies to conduct human rights due diligence along their value chains to identify, prevent, mitigate, and account for how they address their impacts on human rights. The US has some initiatives to combat child labour but lacks broader, mandatory human rights due diligence legislation at the federal level.

Meanwhile, the EU's proposed Directive on Corporate Sustainability Due Diligence mandates companies to respect human rights and the environment along their value chains. US companies may fall under the EU directive's human rights due diligence regime if they meet certain thresholds of doing business in the EU.