The Social Progress Index Seeks To Redefine Economic Success Measures – the diversion between GDP growth and social progress

By Bruce Rogers, Forbes

According to Deloitte Touche Tohmatsu Limited’s (Deloitte Global) Chairman, Steve Almond, the world is overly obsessed by GDP statistics as a defining measure of national progress or local progress.  And while the research behind the  Social Progress Index  has shown that there is a very strong correlation between growth in GDP per capita and enhancement in social progress at an early stage along the development line, the further you look at the richer a country gets, the greater there are diversions between GDP growth and social progress. 

 “There’s a recognition of the need for something in addition to, not instead of, GDP to give us a more holistic measure of inclusive growth. Thus the Social Progress Index (the Index) was born,” says Almond.

Deloitte Touche Tohmatsu Limited's (Deloitte Global) Chairman, Steve Almond

Deloitte Touche Tohmatsu Limited’s (Deloitte Global) Chairman, Steve Almond

 The Social Progress Index examines three different component parts of a country’s progress of social and environmental terms, including society’s ability to meet the basic needs of its citizens like water, sanitation, shelter and basic medical care. The next tier measures a society’s ability to both sustain itself and provide systems and infrastructure for things like secondary schools, access to the internet and mobile tools. The third tier measures the level of opportunity and upward mobility a society offers to provide the conditions conducive to personal rights, freedom of speech, tolerance, inclusion and access to advanced tertiary education.

 “In all, there are 52 different indicators across these three dimensions of social and environmental indicators and importantly all are focused on outcomes.  So it doesn’t matter how much money you spend on healthcare. What matters is how well, how healthy are your citizens. So there’s a sting in the tail for some advanced economies like the U.S. and the U.K. with high GDPs.  It doesn’t matter how much we spend on healthcare if our citizens suffers from obesity, for example,” says Almond.

2015 Social Progress Index

2015 Social Progress Index

Almond and Deloitte contend that if you are guided only by GDP– whether you’re a government, an NGO or indeed a business looking to invest then that may indeed lead to policies that drive economic growth, but in a way that it does not also drive social and environmental progress.  In short, wealth in terms of GDP does not always equate to high social progress.

“The ambition and the vision for the Index and the Social Progress Imperative, which is the not for profit organization behind the Index, is that we want social progress to be seen as an equally important measure as GDP in measuring overall a country’s progress so that GDP growth and then social progress combined drives inclusive growth,” says Almond.

 “It becomes really telling if you map a country’s performance on the Social Progress Index against its GDP per capita. At the early stages of development the two are very closely correlated. As you go up, as you get richer then there is much less correlation.  And a stark example, and perhaps not entirely surprising if you think about it, is you’ll see on the Index that countries that have relatively high GDP per capita but an economy that’s highly resource dependent like Qatar, Russia and Nigeria, for example, score for much less well in social progress. This implies that economic success is yielding progress for the few rather than the many,” explains Almond.

 Some of the thinking behind the Index aligns with a book Deloitte produced two years ago called The Solution Revolution, which articulated that the big societal and environmental challenges the world is facing are just too big for any one sector to tackle by themselves.  “But when you combine the authority and policy making powers of government and the convening power and subject matter expertise of NGOs and civil society along with the technical depth and resource capability of business positive change can really happen,” says Almond.

 Almond provides an example of the power of the Index to help engender change. “The government of Paraguay formally  adopted social progress as a measure of its performance . To execute on that framework they formed a social progress network, a national committee that combines the authority of government as policy maker paradigm and expertise of civil society and resources of business to target the issues identified by the Index data. The Index showed what Paraguay needed to focus on most. Having the Index and the robust data supporting the Index each year will help provide a way that the Paraguay government can hold itself accountable to itself and to its citizenship to progress against those very specific items,” says Almond.

 Why is the largest professional services firm on the planet spending time and resources on the Index? Certainly the data can help Deloitte with its government and NGO advisory business, but more importantly it emanates from the company’s continuing efforts to build a “culture of purpose.”

 “We seek to convey a message to Deloitte’s current and prospective employees that their enterprise is a force for good in building a society beyond just the profit motive.  We, as the Deloitte board recognize, that our stakeholders, which includes our current and future employees and customers, want us to stand for something more than just financial  returns,” says Almond.

 Deloitte is in this for the long term and recognizes that it will take a lot of hard work and evangelism in order for the Social Progress Index  to take what they believe is its rightful place alongside GDP metrics. After all, GDP has been around for 80 years while the Index is in its infancy, having just released its second, annual ranking data.

 Long-term service and diligence is something Almond knows something about himself. His own journey to the global leadership role at Deloitte Global is a study in stick-to-itiveness.  He grew up in the city of Preston, Lancashire, located in the northwest of England. “My mother and two of my brothers still live there but I moved to London when I attended university.” says Almond.

After graduation, he trained with Deloitte as a Chartered Accountant. He did leave Deloitte to join J.P. Morgan in London, but was drawn back to Deloitte after just a few years. “I was drawn back to Deloitte because I wanted to work at an organization and in a cultural environment that causes you to thrive. If you can thrive in an organization then you’re likely to get the most out of it,” says Almond. “I’ve always found in Deloitte at any stage, not just the later years of my career, that if I have a problem of any sort, I can turn to my left, to my right, up or down in the organization and the culture is such that whoever I talk to will help me solve the problem.”

 Almond is in the last several weeks of his four year term as Global Chairman of the Board at Deloitte Global and considers the Index work to be one of the most significant initiatives at the firm during his tenure.  “We’re serious about having this impact that matters on all of our stakeholders. I can’t claim anything as my personal legacy, but it is testament to the vision and leadership of the whole organization.”

 “We’ve achieved success by being true to our shared values and our sense of purpose around providing outstanding value to clients and to markets, integrity, commitment to each other and strength through cultural diversity,” says Almond.

http://www.forbes.com/sites/brucerogers/2015/04/28/the-social-progress-index-seeks-to-redefine-economic-success-measures/3/

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