Fernando Morales-de la Cruz was plying his trade: shaming the wealthy for investments in companies he claims benefit from child labor. Wearing a hoodie and baggy jeans, the 63-year-old Guatemalan activist looked out of place in January at the annual Davos conference, a gathering that’s synonymous with prestige and power.
He was targeting Klaus Schwab, the German economist and engineer who oversees Davos as founder of the World Economic Forum, which is funded by 1,000 of the world’s biggest corporations. Morales-de la Cruz plastered the posh Swiss mountain resort with a caricature of the usually elegant Schwab. In the cartoon, Schwab’s head is ungainly and large, with giant corks in his ears to block out a woman’s anguished cries. “I’m trying to move dinosaurs in the right direction,” Morales-de la Cruz says. (The forum and Schwab didn’t respond to requests for comment.)
Amid a shift to the right, particularly in the U.S., corporations have abandoned many of their environmental, social and governance (ESG) pledges. But as companies jettison goals to fight climate change and foster diversity in their workforces, they’re still very much under pressure to honor the campaign to root out child labor.
Activists are zeroing in on the most promising targets, including consumer-oriented companies highly susceptible to bad publicity and government investment pools, which manage money for rank-and-file workers. Some examples: Norway’s sovereign wealth fund, which oversees $1.8 trillion and professes a commitment to ESG, including screening out businesses that use child labor, and U.S. state pension funds. Last year, America’s largest, the $517 billion California Public Employees’ Retirement System, Sacramento, required some private equity firms to attest that their portfolio companies don’t use underage workers.
The problem of child labor brings together people across industries, political parties and religions. As recently as January, Pope Francis, who died on April 21, called for churches and other institutions to divest from companies that exploit children. In March, Senators Josh Hawley, a Missouri Republican who’s otherwise derided “woke” investing, and Cory Booker, a New Jersey Democrat and defender of ESG, refiled a bill to prohibit corporations that engage in illegal child labor practices from securing federal contracts.
The National Center for Public Policy Research, a conservative think tank, last year introduced a shareholder resolution at Ford Motor Co.’s annual meeting. It called on the company to detail whether its suppliers rely on child labor in Congo mines that extract cobalt used in electric vehicles. Ford’s board said it already prohibits its suppliers from using child labor. As is common for such shareholder proposals, the motion failed, garnering less than 6% of the vote. Ruth Aguilera, a business professor at Northeastern University in Boston who studies corporate governance, says she expects more shareholder activists to file proposals related to child labor this year. “Those aren’t going to stop,” she says.
One in 10 children globally—or 160 million—is working in a job detrimental to their health and development, according to the United Nations’ International Labour Organization, which focuses on workers’ rights. In the U.S., companies are facing costlier sanctions. The Department of Labor issued $15 million in penalties related to underage workers in the 2024 federal fiscal year, up from $8 million in 2023 and $4 million in 2022.
