Thought Leader Interview:

Michael Porter

What is the Social Progress Imperative?

It started back in 2009, at a meeting of one of the Global Agenda Councils at the World Economic Forum. Michael Bishop of The Economist threw out an idea to the group: The WEF had already had a significant impact on the world from an economic perspective, in terms of helping countries increase their GDP per capita; shouldn’t there be a way to measure social progress as well — progress that drives not GDP, but social well-being?

People loved the idea, and a founding group was quickly formed, including our current chairman, Brizio Biondi-morra. Shortly thereafter, I was asked to come on board to lead the development of the conceptual framework for measuring social progress and the research effort.

Social progress has become an increasingly pressing issue for leaders in business, government and civil society. Since the financial crisis of 2008, citizens increasingly expect business leaders to play their role in delivering not just economic growth, but improvements to the lives of customers and employees, while protecting the environment.

How do you define social progress?

The Social Progress Imperative officially defines it as ‘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’.

There is extensive academic literature on all the different aspects of social progress, and in creating the Social Progress Index (SPI), we drew heavily on that work, so we felt like we were standing on the shoulders of giants. After a beta test in 2013, the SPI officially launched in 2014. Each year, it measures the elements of social progress for countries around the world, grouped into three categories:

(Nutrition and Basic Medical Care; Water

• BASIC HUMAN NEEDS and Sanitation; Shelter; and Personal Safety); (Access to Basic Knowledge; Ac

• FOUNDATIONS OF WELL-BEING cess to Information and Communications; Health and Wellness; and Environmental Quality); and

(Personal Rights; Personal Freedom and

• OPPORTUNITY

Choice; Tolerance and Inclusion; and Access to Advanced Education).

For each of the four components within each category there are three to five specific 'outcome indicators'. Importantly, the SPI measures social progress strictly using outcomes — not by how much effort a country or community makes. For example, how much a country spends on healthcare is far less important than the health and wellness that is actually achieved by that country, which is what we measure.

The SPI isn’t just intended for businesses that are seeking to create shared value. It is also meant to be used by the social sector — which, until now, has been highly fragmented: The people working on water issues rarely talk to the people working on early childhood education, who rarely talk to the people working in healthcare. There is a large, energetic social sector in the U.S. and Canada, but it is very siloed, and it has lacked an overarching strategic framework for thinking about social progress in a holistic way.

The traditional measure of progress at the country level has always been GDP per capita. Why did you and your colleagues decide to leave it out of the SPI?

That was a very important strategic choice for us. No one can argue that economic growth has lifted hundreds of millions of people out of poverty over the last 50 years, but it is increasingly evident that a model of human development based on economic progress alone is incomplete. A society that fails to address basic human needs, equip people to improve their quality of life, protect the environment and provide opportunity for its citizens is not succeeding. Inclusive growth requires both economic and social progress.

With increasing concerns about inequality and environmental limits to growth, the relationship between economic development and social progress has become central to the leader’s agenda. Because the SPI is the first comprehensive framework for measuring social progress independently of GDP, it enables us to understand the relationship between the two. We are learning that there is a positive feedback loop between economic progress and social progress. Some might call this ‘trickle-down theory ’— which states that economic growth and rising national income lead to social progress, raising the quality of life of all citizens. However, our data reveals that such a trickle-down is not sufficient to ensure social progress. Social progress can differ in countries with similar levels of economic growth and prosperity. The link is not automatic.

There is also a feedback loop in the other direction: Unless a country is moving social progress forward — particularly in areas like tolerance, discrimination, educational quality and improving health — economic growth will slow down, and the effects will be magnified for citizens who are less advantaged. SPI is not a replacement for GDP, it is a complement to it. Our goal is a world in which social progress sits alongside GDP as a core benchmark of national performance.

What does the most recent Social Progress Index reveal?

The 2017 data revealed some key findings. First, as indicated, there is a clear and positive relationship between the SPI and

We believe that this approach will create some of the richest opportunities for innovation today — across industries.

GDP per capita. Second, that relationship is not linear: At lower income levels, small differences in GDP can lead to large improvements in social progress; but as countries reach high levels of income, the rate of improvement in SPI and income slows, or even stops.

The top performer on the 2017 Index was Denmark. All five Nordic countries were in the ‘Very High Social Progress’ tier, but the top performers also included non-nordic countries with larger and more diverse populations, including Canada, The Netherlands, Australia, the UK and Germany. Canada was the best performing G7 country. Importantly, four G7 countries with significant wealth — the U.S., Japan, France and Italy — achieved only the second tier of ‘High Social Progress’, and two middle-income countries (Argentina and Costa Rica) achieved that level. Among the BRIC countries, Brazil performed the best, but India showed marked improvement, moving up to the Lower Middle Social Progress tier, ahead of Pakistan and nearing China.

Your data shows that globally, social progress is improving over time. What is driving this?

The overall ‘world score’ on the SPI has increased from 63.19 in 2014 to 64.85 in 2017, and of the 128 ranked countries, 113 have registered a positive change over that same period. Where we see the greatest progress — in countries like Nepal, Côte d’ivoire, Bangladesh, Sierra Leone and Ghana — it is often due to improving access to information and communications, thanks to the rapid spread of mobile phones and internet access. Also, access to advanced education is increasing as the number of high quality universities expands globally, and we are seeing steady progress on nutrition and medical care, access to basic education and sanitation.

Sadly, some countries are slipping backwards. Hungary, Nicaragua and the Central African Republic all experienced declining social progress. On average, tolerance and inclusion have been eroding in many countries and we have seen a slow deterioration around the world in terms of individual personal rights over the last three years.

How has the SPI been received by leaders in the public and private sectors?

Our strategy was not just to build an index, but to drive change. Our entire board and team have been active in social enterprise and the responsible-business world, so actionability was always key. The goal is for leaders in every country we rank to use this data for positive impact.

Our network of strategic partners now extends to 44 countries, where the SPI is galvanizing government, business leaders,

researchers, civil society organizations and citizens to take action. Leaders are coming together to ask, ‘How healthy are the communities we work in, and what can we do to drive progress?’ Already, we’ve seen a range of models of implementation.

Paraguay was one of the first countries to embrace the Index. Facing a host of challenges, it has integrated the SPI into its national plan, so that it now has GDP and SPI targets. Paraguay’s leaders believe this information is so important that they are now producing ‘sub-national SPIS’ for different regions of the country. The European Commission has also embraced the SPI and uses it to inform policy for some of the poorer regions of Europe. And India uses the SPI as a way of benchmarking states against each other, as part of Prime Minister Narendra Modi’s transformation agenda.

Recently, we have started creating sub-national indexes for provinces, cities and municipalities. We have done these for 15 countries in Latin America and created a regional SPI for the European Union.

Describe how private sector companies are using the Social Progress Index.

One example comes from the Amazon region of Brazil, where leaders from Coca-cola and Brazillian cosmetics company Natura were alarmed by the low levels of social progress they saw in Carauari — an important municipality for their supply chains. So, the two companies partnered with Ipsos to create a communityneeds survey based on our framework. The resulting community-level SPI laid the foundation for a new development program in the region that featured collaboration between citizens, government, business and civil society.

We are now taking the community-level index concept to other sectors. We have work underway with Peruvian mining company Breca, and in Costa Rica, we’re looking at the impact of tourism on social impact in different areas of the country. Created in partnership with the Costa Rica Tourism Board, this is the first comprehensive measure of tourism’s social effects. The SPI had revealed that ‘environmental tourism’ — which includes