During the course of the 20th century, Scandinavia – taken together as a geographic, cultural, historic, and linguistic region compromising the closely related northwestern European nations of Denmark, Sweden, and Norway – has become the world leader in the implementation of forward-thinking environmental, social, and corporate governance (ESG) policies. Building upon the famous ‘Nordic Model’ as their approach to socio-political and economic governance, these three nations have come to represent significant achievements in equality, liberty, and transparency. They consistently top international rankings which measure standards of living, political freedoms, and transparency in governance, amongst other qualitative indicators that measure the overall quality of life in the world’s nations. Understanding the reasons behind Scandinavia’s sustainable development and social welfare system requires extensive historical, political, and sociological research which time and space do not permit in this article. However, according to a working report from the Hertie School of Governance, the main advantages which have led to regional prosperity are rooted in “the extensive prevalence of the state in welfare arrangement, the principle of universal social rights…[and] the historical inheritance of the Nordic countries [with] fairly small class, income, and gender differences.”
Given their excellent development rankings, it is unsurprising that the Scandinavian nations are accorded the top three positions in this year’s Global Sustainable Competitiveness Index, an annual report compiled by SolAbility, a Korean-Swiss sustainability research group. While economists measure the performance of countries based upon their annual Gross Domestic Product (GDP), SolAbility has found this methodology to be lacking where sustainability factors are concerned, and has therefore developed its own approach to measuring sustainable competitiveness on the world stage.
SolAbility’s qualitative analysis focuses on three main categories by which nations are ranked, namely environmental sustainability, economic achievements, and social stability. Within these categories, the sustainable competitiveness of states is determined according to the following benchmarks:
The Global Sustainable Competitiveness Index is a comprehensive report analyzing multiple factors (seen in the chart above) which are considered in ranking the overall sustainable development standings of world nations. Following the theme of this blog, I will focus exclusively on why the Scandinavian countries come out at the top of SolAbility’s ranking chart where sustainable competitiveness is concerned. However, I would like to briefly touch upon the three other sustainable development themes, namely Natural Capital and Resource Intensity, Sustainable Innovation Competitiveness, and Social Cohesion, to provide some insight as to SolAbility’s methodology.
In the category of Natural Capital and Resource Intensity, Scandinavian countries rank well in the top 20 but biodiversity and climate change are worrisome issues that prevent these nations from featuring in the top 10. According to a report from the European Centre for Climate Adaptation, Swedish, Danish, and Norwegian biodiversity is threatened by climate change as the region’s many lakes, fjords, and seas are prone to rising temperatures which will lead to “the leaching out of nutrient salts and humus”. With melting ice and large amounts of run-off comes “increased eutrophication and probably increased presence of algae and cyanobacteria,” resulting in poor water quality and making it unlikely that the regional nations will achieve their environmental objectives. Climate change also increases the risk of avalanches, coastal and river floods, and coastal erosion, which can lead to major vulnerabilities where transportation and infrastructure are concerned. Still, the region is notable for its diverse animal life, flora, and fauna, and notwithstanding climate change, Scandinavia is still rich in natural capital and resources.
Where Sustainable Innovation Competitiveness is concerned, East Asian states are top of the pack, mixed in with (and followed closely by) northern European countries including Norway (#5), Denmark (#8), and Sweden (#11). In this subsection, “the score is calculated based on indicators incorporating education availability and education quality, R & D efforts and importance, business facilitation environment, infrastructure indicators, and the Gross National Income (GNI).” Given that East Asian countries are among the most tech-savvy in the world, it is no surprise that Singapore, China, and Japan occupy the top spots for this bracket, as many of the world’s most recognized IT companies and manufacturers are located in this region of the world. Nevertheless, Scandinavia is also a leader in sustainable innovation as affirmed by both this report as well as a brief published by the World Economic Forum in 2008, which found that “the Nordic countries are the most successful in the world at leveraging ICT (Information Communications Technology). They have fully integrated ICT in their competitiveness strategies to boost innovation and ICT is present everywhere and in all areas of society, such as education and healthcare.”
The final theme which SolAbility used to determine their overall sustainable competitiveness rankings is that of ‘social cohesion,’ whereby Sweden, Denmark, and Norway once again emerge on top of the Global Sustainable Competitiveness Index owing to their legendary attentiveness to social welfare issues such as human rights, protection of individual liberties, and governmental accountability. Further indicators whereby countries are awarded their rankings in this bracket include “health status, availability and affordability of healthcare systems, equal opportunity factors, demographic balance, crime levels, public services” and other qualitative measures of social welfare. SolAbility notes that “a certain level of social balance or social consensus is required to maintain a stable environment in which economic activities can take place” while simultaneously taking into account that countries with higher GDPs seem to have higher levels of social consensus. While an old adage claims that money will not bring individual happiness, this report finds that the wealthier (primarily Scandinavian and northern European) countries enjoy the most social cohesion, while the peripheral nations of the Global South round out the bottom of this list with the highest rates of poverty, crime, and corruption correlating to the lowest rates of social consensus.
All in all, sustainable competitiveness is, in most cases, hostage to predetermined social, economic, geographic, and political conditions in any given country. Comparing the rankings of the wealthy Global North to the stagnating economies of the Global South would be a disingenuous exercise if empirical factors such as colonialism, resource exploitation, ethnic strife, and armed conflict are not considered. It seems to me that the ‘luck of the draw’ has afforded historically industrious countries in northern Europe with an array of advantages that have furthered social consensus and promoted economic prosperity as well as sustainable development. As this report points out, “sustainable competitiveness is therefore subject to human influence and can be improved for the better, or will change for the worse in the absence of thoughtful and intelligent guidance.” Judging by its sustainable competitiveness, Scandinavia and its Nordic Model can certainly be adopted as that guidance which the Global South is badly in need of.