Social Capitalism: Taking a Wider View of National Progress

How should we measure economic progress? Can countries adopt policies that will deliver more prosperous and sustainable societies?

Social Capitalism is the first research paper from the Aberdeen Standard Investments Research Institute. The authors have developed a new indicator of national success. It blends measures of progress on economic goals with indicators of sustainable development. It is underpinned by a new proprietary environmental, social and governance (ESG) index for 135 countries.

Our research identified 46 ‘Social Capitalist’ countries that have delivered persistently strong economic growth alongside strong ESG performance.

Our research identified 46 ‘Social Capitalist’ countries. These are the countries that have delivered persistently strong economic growth alongside strong ESG performance. The majority are developing economies. We see these as the hunting ground for both economic and sustainable development leadership over the next 20 years.

China and India are not 'Social Capitalists' despite their strong economic performance. If China is to make the grade, it will need to improve transparency and representation in its political and governance institutions. For India, the authorities will need to address environmental issues and reduce social inequality.

The majority of European countries have performed strongly on our ESG measures. But economic progress has been disappointing. The danger is that populist pressures will eventually undermine support for broader sustainability goals.

Contrary to popular wisdom, Japan scores highly on our measures of economic dynamism. The shrinking population masks relatively healthy productivity performance.

Most countries are not doing enough to reduce greenhouse gas emissions. Nor are they tackling air quality. And, while income inequality between developed and developing countries has been shrinking, the disparity within countries is high and rising. Addressing these issues is vital. Without progress, it may prove impossible to sustain support for necessary economic reforms.

Our paper shows that strong economic performance need not come at the expense of the environmental, social and governance goals that bind societies together. It views the world through a wider lens.

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