When considering the environmental and social challenges faced by nations of the world, it’s fair for citizens of countries to ask their leaders: Are we built for long-term prosperity in an era of low-carbon economics? How competitive are we in globalized markets? Are we stable, socially just and innovative? Is sustainability in our national DNA?
The Corporate Knights research team decided it was time to arm citizens, politicians and other stakeholders with a scorecard that measures the G20 group of countries (as well as the European Union) across 10 environmental, social and governance indicators.
Those acquainted with our rankings of companies – such as the Global 100 Most Sustainable Corporations in the World and S&P 500 Clean Capitalism Ranking – will be familiar with some of the metrics we use, including energy, carbon and safety productivity.
But countries aren’t corporations, so getting a more complete picture meant looking at education, gender gaps, citizen inequality, unemployment figures, patent filings, perceptions of corruption, and renewable energy as a percentage of electricity production. Taken together, we believe these indicators offer a strong sense of where countries lie on the sustainability curve and, when compared year over year, point clearly to the direction they’re heading.
“Assessing a country’s sustainability requires measuring the extent to which the country is efficiently using its financial, social and natural resources to innovate, form and preserve human capital, and ensure income equality – just to name the main ones,” said Michael Yow, lead analyst at CK Capital, the research division ofCorporate Knights. “The set of indicators chosen in this ranking aims to encapsulate that.”
Why the G20? Its 19 member countries and the European Union represent two-thirds of the world’s population, 80 per cent of global trade and 90 per cent of global gross domestic product. We applaud the efforts of countries outside of this group to embrace clean energy, boost efficiency, better respect human rights and break down barriers to inequality, but the G20’s economic clout and environmental footprint make it the group to watch and encourage.
Germany, long recognized for its aggressive embrace of green energy, topped our ranking with a score of 80.42 out of a possible 100. Nearly 14 per cent of the country’s power generation capacity comes from renewable energy sources, not including hydroelectric power production. Germany also ranked highest for gender equality, which measures the degree to which women participate in the economy, pursue an education, occupy power positions in politics and get access to health care.
Following close on the heels of Germany was Japan, which had the highest energy and carbon productivity of all G20 countries. Japan also scored best on the Gini index, which is an economic measure of income inequality. While the gap between rich and poor has accelerated in countries such as Canada and the United States over the past 15 years, it has remained relatively unchanged in Japan.
But where Germany is strong on gender equality and renewable energy, Japan shows weakness. Excluding hydro, only 2.5 per cent of its power generation capacity comes from renewable energy, though a big push for more green energy development following the nuclear catastrophe at Fukushima could significantly improve Japan’s ranking in the coming years. On gender, Japan trails its G20 peers, ranking ahead of only South Korea, Turkey, India and Saudi Arabia when it comes to equal opportunity for women.
Rounding out the Top 3 is Australia, which is perceived as the least corrupt country in the G20 and a great place to get an education, offering the best balance of access, cost and quality. But like Japan, Australia – known for the strength of its coal industry and mining sector – has much work to do when it comes to embracing renewable energy. The introduction earlier this year of a national carbon tax, however, is expected to spur more green energy development.
Honorable mention goes to South Korea, which ranked seventh. While a laggard on energy productivity and gender equality, it performed average or above-average in most other categories and stood out by grabbing top spot for its record on innovation (based on patents filed as a percentage of the labor force) and safety, and for having the lowest unemployment rate in the G20.
As close neighbors and trading partners, it’s not surprising that the United States and Canada ranked back to back, claiming fifth and sixth place respectively. Both countries earned above-average scores for education, safety productivity, gender equality, innovation and perceptions of corruption. On corruption, Canada was viewed much more favorably than the U.S., ranking second only to Australia.
On weaknesses, America is struggling socially and Canada is struggling environmentally. The U.S. is among the worst in terms of income equality, ranking 16th out of 20. Its employment rate, at 14th place, is also below average. Canada, by comparison, lands in the middle of the pack on unemployment and a respectable fifth on income equality.
On carbon and energy productivity, the tables are turned: the U.S. outperforms its northern neighbor. The U.S. is ranked sixth for the amount of GDP generated per metric ton of greenhouse gas emissions, compared to 10th place for Canada. America also gets more GDP per unit of energy consumed, ranking eighth where Canada ranks 12th.
This latter finding is consistent with the recent energy-efficiency scorecard put out by the American Council for an Energy-Efficient Economy (ACEEE), which ranked Canada 11th and the U.S. ninth out of the world’s 12 largest economies for the efficiency of industry, buildings and transportation.
But as the council pointed out, this is no reason for the U.S. to brag. “The overall story is disappointing,” it concluded. “The United States, long considered an innovative and competitive world leader, has progressed slowly.” Countries such as Germany and Japan, it added, continue to surge ahead. “The inefficiency in the U.S. economy means a tremendous waste of energy resources and money,” ultimately making the country less competitive against many of its global peers.
Our report concludes that South Africa, India and Saudi Arabia are the biggest sustainability laggards in the G20, achieving scores of 23.60, 19.79 and 14.79, respectively, out of 100. Across every category all three countries rank 10th or lower (where data is available), with the exception of gender equality in South Africa, which ranked an impressive second only to Germany.
India ranked at the bottom for education, South Africa had the highest unemployment rate and oil-rich Saudi Arabia – no shock – was lowest for the percentage of renewable energy in its electricity system.
Also unsurprising is that Saudi Arabia ranked 20th for gender equality – though for the first time in its history the Islamic country, ruled strictly by Sharia law, let a female athlete compete in the 2012 Summer Olympics after intense pressure from the International Olympic Committee. (Women are still not permitted to drive a vehicle, however.)
India also has some work to do around gender equality, where it ranked 18th – the same position it holds for its high unemployment rate. The world’s second-most populous country needs to also do a better job of driving innovation from its workforce, if its 19th place for patent filings is any indication. It was also among the lowest for workplace safety. Russia handily beat out all other countries for being considered the most corrupt country in the G20.
The Corporate Knights’ Sustainable Countries Scorecard offers, first and foremost, a sense of where countries rank relative to each other on environmental, social and governance criteria. At the same time, it’s important to recognize that even a high score for any particular indicator still leaves room for significant improvement.
The G20 has publicly stated its commitment to promoting inclusive, sustainable and “green” economic growth that decouples economic expansion from environmental degradation. Collectively, these economic titans are far from reaching that goal, according to anti-poverty group Oxfam.
“The stakes are high: over half the world’s poorest people live in G20 countries, and rising inequality threatens to prevent them benefiting from economic growth,” it concluded in a recent briefing paper. “Meanwhile, G20 countries alone consume almost all the natural resources that the planet is capable of replenishing each year. Unsustainable patterns of usage are driving dangerous climate change and depleting the natural resources upon which poor people depend for their livelihoods.” Oxfam’s advice: “They must now practise what they preach and tackle these linked, but distinct, challenges of equality and sustainability.”
At Corporate Knights, our aim is to help you keep score and showcase the leaders. This scorecard is the first of many to come.