the social progress index and the challenge to brazil

Social Progress Imperative #socialprogress

Professor Michael E. Porter

Sao Paulo, Brazil

September 4, 2013

THE SOCIAL PROGRESS INDEX AND THE CHALLENGE TO BRAZIL


HOW DO WE MEASURE A NATION’S DEVELOPMENT?

2


• In both economic and business development our understanding of success has been incomplete

• There is a powerful connection between economic and social development, both positive and negative

• Separating business and competitiveness from social progress and societal issues is a serious mistake

THE DUAL CHALLENGES OF DEVELOPMENT

Economic Development

Social Development

3


MEASURING NATIONAL DEVELOPMENT

• There has been a growing recognition of the need to go beyond GDP in measuring a nation’s performance

• A series of indexes have been introduced to do so: - Human Development Index- Millennium Development Indicators- Happy Planet Index- OECD Better Life Indicators- Legatum Prosperity Index

4


SOCIAL PROGRESS INDEX: DESIGN PRINCIPLES

• Separate from economic indicators

• Holistic framework

• Outcomes rather than inputs

• Relevant to all countries

5


WHAT IS SOCIAL PROGRESS?

Social progress is the capacity of a society to meet the basic human needs of its citizens,

establish the building blocks that allow citizens and communities to enhance and sustain the

quality of their lives, and create the conditions for all individuals to reach their full potential.

6


SOCIAL PROGRESS INDEX MODEL

7

Social Progress Index

Nutrition and Basic Medical Care

Air, Water, and Sanitation

Shelter

Personal Safety

Access to Basic Knowledge

Access to Information and Communications

Health and Wellness

Ecosystem Sustainability

Personal Rights

Access to Higher Education

Personal Freedom and Choice

Inclusion and Equity of Opportunity

Does a country provide for its people’s most

essential needs?

Are the building blocks in place for individuals and communities to enhance and sustain wellbeing?

Is there opportunity for all individuals to reach

their full potential?

OpportunityFoundations of WellbeingBasic Human Needs


SPI RANKINGS: 2013

8

1. Sweden2. United Kingdom3. Switzerland4. Canada5. Germany6. United States7. Australia8. Japan9. France10. Spain11. Korea, Rep.12. Costa Rica13. Poland14. Chile15. Argentina16. Israel17. Bulgaria18. Brazil19. United Arab Emirates20. Turkey21. Dominican Republic22. Colombia23. Thailand24. Peru25. Mexico

26. Philippines27. Paraguay28. Tunisia29. Georgia30. Viet Nam31. Jordan32. China33. Russian Federation34. Kazakhstan35. Botswana36. Sri Lanka37. Morocco38. Indonesia39. South Africa40. Egypt, Arab Rep.41. Ghana42. Bangladesh43. India44. Senegal45. Kenya46. Rwanda47. Mozambique48. Uganda49. Nigeria50. Ethiopia

Social Progress Imperative #socialprogress9

SPI RANKINGS: 2013

1. Sweden2. United Kingdom3. Switzerland4. Canada5. Germany6. United States7. Australia8. Japan9. France10. Spain11. Korea, Rep.12. Costa Rica13. Poland14. Chile15. Argentina16. Israel17. Bulgaria18. Brazil19. United Arab Emirates20. Turkey21. Dominican Republic22. Colombia23. Thailand24. Peru25. Mexico

26. Philippines27. Paraguay28. Tunisia29. Georgia30. Viet Nam31. Jordan32. China33. Russian Federation34. Kazakhstan35. Botswana36. Sri Lanka37. Morocco38. Indonesia39. South Africa40. Egypt, Arab Rep.41. Ghana42. Bangladesh43. India44. Senegal45. Kenya46. Rwanda47. Mozambique48. Uganda49. Nigeria50. Ethiopia


SOCIAL PROGRESS INDEX VS. GDP PER CAPITA

10



11



13


THE SOCIAL PROGRESS INDEX: KEY FINDINGS

• Economic development is necessary but not sufficient as a measure of national performance

• Some approaches to economic development are less effective than others in advancing social progress, and even counterproductive

• Just as economic development helps social progress, social progress can enable sustainable economic development

• The amount of government spending (as a percent GDP) is an incomplete explanation for social progress performance

14


OVERALL SPI VS. GOVERNMENT EXPENDITURE (% OF GDP)

Government expenditure source: 2013 Index of Economic Freedom


Brazil

16

Brazil

BRAZIL’S SPI PERFORMANCE AGAINST BRICS


RECENT SOCIAL PROGRESS TRENDS IN BRAZIL

• Faster prosperity growth in the recent decade

• Shift to democracy increased the focus on social inclusion and achieving better opportunities for the poor and disadvantaged citizens

• Targeted support programs for the very poor (Bolsa Escola/Bolsa Familia)

• Improved access to basic medical services (Health care reform/Sistema Único de Saude)

17


SOCIAL PROGRESS BRAZIL SCORECARDOVERALL RANK 18

Brazil GDP per capita rank is 24th among sample of 50 countries

Basic Human Needs 30 Foundations of Wellbeing 20 Opportunity 16

Nutrition and Basic Medical Care 27 Access to Basic Knowledge 26 Personal Rights 15

Undernourishment 29 Adult literacy rate 32 Political rights 17Depth of food deficit 31 Primary school enrollment 25 Freedom of speech 12Maternal mortality rate 25 Secondary school enrollment 19 Freedom of assembly/association 1Stillbirth rate 23 Women's mean years in school 30 Private property rights 18Child mortality rate 24 Women's property rights 1Prevalence of tuberculosis 24

Air, Water and Sanitation 28 Access to Information and Communications 20 Personal Freedom and Choice 16

Indoor air pollution attributable deaths 31 Mobile telephone subscriptions 14 Basic religious freedoms 26Outdoor air pollution attributable deaths 18 Internet users 20 Contraceptive prevalence rate 3Access to piped water 16 Fixed broadband subscriptions 22 Access to childcare 17Rural/urban access to improved water source 34 Press Freedom Index 17 Freedom over life choices 13Access to improved sanitation facilities 29Access to wastewater treatment 24

Shelter 23 Health and Wellness 31 Inclusion and Equity of Opportunity 2

Availability of affordable housing 28 Life Expectancy 27 Equity of opportunity for ethnic minorities 1Access to electricity 22 Obesity 27 Women treated with respect 43

Cancer death rate 27 Community safety net 9Deaths from cardiovascular disease & diabetes 22 Tolerance of immigrants 13Deaths from HIV - Tolerance for homosexuals 6Availability of quality healthcare 45

Ecosystem Sustainability 21 Access to Higher Education 33

Ecological footprint of consumption 29 Tertiary school enrollment 33CO2 emissions per capita 20 Female tertiary enrollment 31Energy efficiency (use per $1,000 GDP) 29Water withdrawals per capita 20

*

*Safety net, tolerance and respect for minorities, women, and disadvantaged

Personal Safety 46

Homicide rate 47

Level of violent crime 39

Perceived criminality 36

Political terror 38


OVERALL SPI VS. GOVERNMENT EXPENDITURE (% OF GDP)

Government expenditure source: 2013 Index of Economic Freedom


THE SOCIAL PROGRESS IMPERATIVE: DRIVING TO ACTION

The Social Progress Imperative is not just an Index, but a global effort designed to catalyze action at the country level. It aims to form and support National Committees of leaders and stakeholders in each country, and work jointly

with them to mobilize policy changes and private sector initiatives.

20


THE ROLE OF THE NATIONAL COMMITTEE

• Interpret and disseminate country level priorities for social progress improvement

• Pursue policy changes in priority areas for social progress, through cross-sector collaboration

• Foster improvements in local data collection and relevant research

21


THE ROLE OF BUSINESS IN SOCIETY

• Only business can create wealth and prosperity

• Business is facing growing scrutiny as the cause or a contributor to many of today’s societal challenges

• Corporate social responsibility efforts are greater than ever, but the legitimacy of business has fallen

• Government and NGO’s alone lack sufficient resources and capabilities to fully meet social challenges

We need a new approach

22


• Compliance with community standards

• Good corporate citizenship

• “Sustainability”

• Mitigate risk and harm

Corporate Social Responsibility

(CSR)

Creating Shared Value(CSV)

Philanthropy

THE ROLE OF BUSINESS IN SOCIAL AND ECONOMIC PROGRESS

• Donations to worthy social causes

• Volunteering

• Address societal needs and challenges with a business model

23


SOCIAL NEEDS AND ECONOMIC VALUE CREATION

24

• Social deficits create economic costs for companies

• Social needs represent the largest market opportunities

CompanyProductivity

Skills

Worker Safety

EnvironmentalImprovement

Education

Water Use

Energy Use

Health

AffordableHousing

CommunityEconomic

Development


CREATING SHARED VALUE IN PRODUCTS AND MARKETSJAIN IRRIGATION SYSTEMS

25

• Drip irrigation equipment for small farmers in Africa and India

• Serves more than 4 million farmers worldwide as of 2012

• Reduces water use by over 40%

• Enables higher crop yields that improve food security while raising farmers’ income

• Jain is now a $820 million company that is rapidly growing


SHARED VALUE IN THE VALUE CHAINFIBRIA, BRAZIL

• Fibria, a large manufacturer of pulp for paper, utilizes planted eucalyptus trees rather than native and old growth forests

• The company supports and encourages small-scale producers near its mills to plant eucalyptus in conjunction with other crops, assisting them with technical training and inputs

• Fibria achieves far greater resource efficiency versus old growth forest production, with eucalyptus yielding 30 times higher yield per acre of wood pulp

• Small scale producers contribute 27% of the raw material volume utilized in Fibria mills, improving efficiency

• 4000 households have significantly increased their income


THE PURPOSE OF BUSINESS

• Our purpose in business is to create shared value for society, not economic value for its own sake

• Businesses acting as businesses, not as charitable givers, are arguably the most powerful force for addressing many of the pressing issues facing our society

• Shared value will give rise to far broader opportunities for economic value creation

• Shared value thinking will drive the next wave of innovation, productivity, and economic growth

• A transformation of business practice around shared value will give purpose to the corporation and represents our best chance to legitimize business again

27


THE SOCIAL PROGRESS COMMITTEE IN BRAZIL

• A network in Brazil is forming under the leadership of: - Fundación AVINA - Instituto Arapyaú - Instituto Ethos- Deloitte- Coca Cola

• Other potential partners include:- Vale, SA- Local chapter of WBCSD- CEAL

28


THE CHALLENGE TO BRAZIL

• Is Brazil, as a leading emerging economy and steward of vital natural resources, willing to become a leader in advancing social progress and a role model for the emerging world?

• Is the business community in Brazil willing to embrace shared value as a way to engage directly in Brazil’s social challenges?

• Is government ready to move from solely government solutions to collaborating with the private sector to drive social progress through shared value solutions?

29


www.socialprogressimperative.org

Twitter: @socprogress

#socialprogress

the social progress index and the challenge to brazil

Technology

social progress imperative

business development

nations development

national development

socialprogress spi rankings

united kingdom

united states

united arab emirates