Beyond pledges: Why tackling child labor is a business imperative

Key takeaways:

• • • Poverty is a prime driver of child exploitation — Poverty drives more than half of child labor cases, with girls comprising 64% of affected children.

    • Companies can act to fight child labor — Companies must critically examine their purchasing practices, include lower-tier suppliers in risk assessments, establish multiple detection methods beyond audits, and fund independent remediation mechanisms to effectively combat child labor.

    • The Centre’s Action Hubs offers help — The Hub pools resources among brands, suppliers, civil society, and governments to create sustainable, locally driven solutions that achieve measurable results in child protection and remediation.

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Child labor remains a persistent global crisis and affects an estimated 138 million children worldwide, according to the latest estimates by the International Labor Organization. Despite international commitments, such as the United Nations Sustainable Development Goal to end child labor by 2025, progress has fallen short and left millions deprived of their fundamental rights to safety, education, and protection.

While often framed as a human rights violation, child labor is also a pressing business issue. Companies are increasingly expected to ensure ethical supply chains, and their reputations, compliance with regulations, and supply chain resilience all hinge on addressing this challenge.

Yet, in a new report, the Centre for Child Rights and Business calls for moving beyond pledges and instead pursue collaboration toward real action. Overly ambitious goals and zero tolerance policies have sometimes backfired, and when this occurs, it pushes child labor further underground rather than eliminating it.

One of the main causes of child labor is poverty. In fact, more than half of the children affected cite it as the primary reason for working, according to the Centre. And almost two-thirds (64%) of the Centre’s child labor cases are girls. Other hidden challenges include cuts to social services, shifting migration policies, and a lack of local remediation capacity, especially in countries like the United States, where child labor persists due to inadequate support systems and limited transparency.

Companies can take action to reduce child labor

Companies can take several actions to fight against child labor in their supply chains, and the first of which requires them to honestly acknowledge its existence and take targeted, practical steps toward prevention and remediation. Indeed, businesses know that they have a vital role to play in tackling child labor for ethical reasons, especially since consumer expectations, especially among Gen Z consumers, and new regulations increasingly require transparency and real action.

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Child labor remains a persistent global crisis and affects an estimated 138 million children worldwide.

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To effectively prevent and remediate child labor, companies must critically examine their own practices. The Centre recommends that company leaders ask themselves critical questions, such as:

• • • Are purchasing practices enabling fair wages?
    • Are lower-tier supplies included in the company’s risk assessments and are there sufficient long-term budgets for due diligence?
    • Do suppliers understand and the company’s expectations around children’s rights?
    • Are multiple detection methods being used beyond audits?

“One of the first steps to close the gap between rhetoric and practice is acknowledging the intrinsic link between informal lower-tier actors and formal supply chains,” explains Ines Kaempfer, CEO of the Centre. “Once that is fully acknowledged and recognized, the case to engage and invest in lower-tiers becomes glaringly clear. The most severe human rights violations and deprived children are those in lower-tier and informal settings, trapped in generational poverty with little hope of breaking the cycle if approaches don’t change. We also know that engaging can seem extremely challenging, but that cannot keep us from taking action. There are innovative programs, partnerships and tools available — it is up to businesses to take the resolve and engage.”

In addition, companies must move beyond policy to establish comprehensive actionable mechanisms that can monitor risks in sourcing countries and adapt how companies monitor complex supply chains. Robust remediation mechanisms should be funded and managed by independent experts to ensure priority is given to children’s rights over commercial interests.

Enlisting outside support

Providing transparent reporting and collaborating with local stakeholders are other key actions that corporations can take to ensure sustainable, child-centered solutions throughout the supply chain. For example, companies can take a lead role in Child Rights Action Hubs — a Centre initiative that promotes collaboration among multiple stakeholders to address systemic child labor risks — by becoming funding partners, which enables the scaling of prevention and remediation efforts for child labor in high-risk supply chains.

Companies also can nominate their suppliers, including those in lower tiers, to participate in Action Hub activities. By engaging and supporting suppliers to implement change-making programs and participate in training, companies can strengthen local capacity. Finally, companies in these Hubs also can proactively join stakeholder meetings, share best practices, and advocate for transparency and collaboration within their own industry.

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Key lessons highlight the need for companies to engage in local capacity building, sustained funding, and strong stakeholder collaboration to address the unique challenges of informal and lower-tier supply chains.

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The Centre has played a central role in activating recent Hubs in Bangladesh, Malaysia, and the Democratic Republic of Congo (DRC) with new ones planned in Pakistan, India, and Sri Lanka in the coming months. These Hubs unite brands, suppliers, civil society, and local governments to pool resources, provide training, and create sustainable remediation systems. For example, the Action Hub in Bangladesh has integrated 87 child labor cases in the ready-made garment industry into remediation and enabled 42 young workers to access decent work.

In the DRC Hub, which focused on the country’s mining industry, has supported more than 82 children in remediation and built a strong local network of eight civil society organizations for long-term impact. And in Malaysia, despite sudden funding cuts, the Hub has remained operational with private sector support. Currently, 18 children are in the remediation program, with 42 case managers having been trained, and 46 community focal points having been established from country’s palm oil planting communities.

Key lessons learned from the Centre’s Action Hubs highlight the need for companies to engage in local capacity building, sustained funding, and strong stakeholder collaboration to address the unique challenges of informal and lower-tier supply chains. While there is no single solution to ending child labor, the Action Hubs proves that decisive, collaborative action can drive meaningful changes.

Businesses must move beyond pledges and take responsibility for their supply chains by investing in prevention, remediation, and honest transparency about the challenges they face. Now is the time to turn commitments into real progress by building resilient, ethical supply chains that protect children’s rights and create a safer, more just future for them.

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You can find more about child labor and exploitation here