Think tank and sustainable management consultancy SolAbility recently released its fourth Global Sustainable Competitiveness Index (GSCI), a ranking of 180 countries for “sustainable competitiveness,” defined as the ability to generate and sustain inclusive wealth and dignifying standard of life for all citizens in a globalised world of competing economies.
Iceland topped the list for the second year running, followed by other Scandinavian nations. The only non-European countries in the top 20 are Japan (11), New Zealand (12), and Canada (16). The US ranked 41 and the UK ranked 48; China and Russia ranked above them at 25 and 33, respectively.
- Natural Capital - the given natural environment and climate, minus human induced degradation and pollution;
- Resource Capital - the ability to extract the highest possible value from existing resources (natural, human, and financial), considers energy efficiency, and water, materials and greenhouse gas intensity;
- Social Capital – measures of social cohesion including equality, health and wellbeing, public services, crime, and freedom;
- Intellectual Capital - the ability to compete in a globalized market through sustained innovation, based on factors such as education and R&D performance; and
- Governance Capital - the framework in which a national economy operates, including investments, corruption, bubble exposure, and economic balance.
The US did not score in the top 10 of any of the fundamental 5 criteria. Its best rankings were for Governance and Intellectual Capital, at 19 and 22 of 180, respectively. The decline of resources – fresh water in particular – and amount of environmental degradation and pollution caused the biodiverse country to rank 50 in Natural Capital. High crime and violence “prevent the country [from] fully capitalizing on internal human resources,” resulting in a rank of 113 for Social Capital. Finally, the US ranked a dismal 159 for Resource Capital, as one of the world’s most resource intensive nations.
SolAbility compared its Global Sustainable Competitiveness Index against the average ratings by the “three sisters:” Moody’s, S&P, and Fitch to demonstrate the discrepancy caused by ignoring workforce, wellbeing, and physical environment factors in credit evaluations for 57 countries. The fictional GSCI credit ratings were as much as 11 levels different from the three sisters’ average rating. SolAbility then compared the ratings to calculate sustainability-adjusted ratings.
The sustainability-adjusted ratings would be lower for 14 countries and higher for 29 countries. Australia and the UK would each be downgraded by 2 levels, and the US would be downgraded by 3. Kuwait, South Korea, and the UAE would be the most downgraded – by 4 levels each. Argentina, Venezuela, Belize, and Greece would benefit the most, their scores upgraded by 5 or 6 levels. Brazil and Iceland are close behind; these nations’ scores would each be upgraded by 4 levels. In general, South America, Eastern Europe, Central Africa, and Asia would benefit from adjusted ratings.