THE SOCIAL PROGRESS
INDEX AND THE
CHALLENGE TO BRAZIL
Professor Michael E. Porter
Sao Paulo, Brazil
September 4, 2013
Social Progress Imperative
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HOW DO WE
MEASURE A
NATION’S
DEVELOPMENT?
Social Progress Imperative
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THE DUAL CHALLENGES OF DEVELOPMENT
Social
Development
Economic
Development
• 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
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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
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SOCIAL PROGRESS INDEX: DESIGN PRINCIPLES
• Separate from economic indicators
• Holistic framework
• Outcomes rather than inputs
• Relevant to all countries
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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.
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SOCIAL PROGRESS INDEX MODEL
Social Progress Index
Basic Human Needs
Foundations of Wellbeing
Opportunity
Nutrition and Basic Medical Care
Access to Basic Knowledge
Personal Rights
Air, Water, and Sanitation
Access to Information and
Communications
Personal Freedom and Choice
Shelter
Health and Wellness
Inclusion and Equity of Opportunity
Personal Safety
Ecosystem Sustainability
Access to Higher Education
Does a country provide
for its people’s most
essential needs?
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Are the building blocks in
place for individuals and
communities to enhance
and sustain wellbeing?
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Is there opportunity for
all individuals to reach
their full potential?
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SPI RANKINGS: 2013
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
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Sweden
United Kingdom
Switzerland
Canada
Germany
United States
Australia
Japan
France
Spain
Korea, Rep.
Costa Rica
Poland
Chile
Argentina
Israel
Bulgaria
Brazil
United Arab Emirates
Turkey
Dominican Republic
Colombia
Thailand
Peru
Mexico
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
8
Philippines
Paraguay
Tunisia
Georgia
Viet Nam
Jordan
China
Russian Federation
Kazakhstan
Botswana
Sri Lanka
Morocco
Indonesia
South Africa
Egypt, Arab Rep.
Ghana
Bangladesh
India
Senegal
Kenya
Rwanda
Mozambique
Uganda
Nigeria
Ethiopia
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SPI RANKINGS: 2013
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
Social Progress Imperative
Sweden
United Kingdom
Switzerland
Canada
Germany
United States
Australia
Japan
France
Spain
Korea, Rep.
Costa Rica
Poland
Chile
Argentina
Israel
Bulgaria
Brazil
United Arab Emirates
Turkey
Dominican Republic
Colombia
Thailand
Peru
Mexico
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
9
Philippines
Paraguay
Tunisia
Georgia
Viet Nam
Jordan
China
Russian Federation
Kazakhstan
Botswana
Sri Lanka
Morocco
Indonesia
South Africa
Egypt, Arab Rep.
Ghana
Bangladesh
India
Senegal
Kenya
Rwanda
Mozambique
Uganda
Nigeria
Ethiopia
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SOCIAL PROGRESS INDEX VS. GDP PER CAPITA
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SOCIAL PROGRESS INDEX VS. GDP PER CAPITA
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SOCIAL PROGRESS INDEX VS. GDP PER CAPITA
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SOCIAL PROGRESS INDEX VS. GDP PER CAPITA
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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
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OVERALL SPI VS. GOVERNMENT EXPENDITURE (% OF GDP)
Government expenditure source: 2013 Index of Economic Freedom
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BRAZIL’S SPI PERFORMANCE AGAINST BRICS
Brazil
Brazil
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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)
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SOCIAL PROGRESS BRAZIL SCORECARD
OVERALL RANK 18
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
Depth of food deficit
Maternal mortality rate
Stillbirth rate
Child mortality rate
Prevalence of tuberculosis
29
31
25
23
24
24
Adult literacy rate
Primary school enrollment
Secondary school enrollment
Women's mean years in school
32
25
19
30
Political rights
Freedom of speech
Freedom of assembly/association
Private property rights
Women's property rights
17
12
1
18
1
Air, Water and Sanitation
28
Access to Information and Communications
20
Personal Freedom and Choice
16
Indoor air pollution attributable deaths
Outdoor air pollution attributable deaths
Access to piped water
Rural/urban access to improved water source
Access to improved sanitation facilities
Access to wastewater treatment
31
18
16
34
29
24
Mobile telephone subscriptions
Internet users
Fixed broadband subscriptions
Press Freedom Index
14
20
22
17
Basic religious freedoms
Contraceptive prevalence rate
Access to childcare
Freedom over life choices
26
3
17
13
Shelter
23
Health and Wellness
31
Inclusion and Equity of Opportunity
Availability of affordable housing
Access to electricity
28
22
Personal Safety
46
Homicide rate
Level of violent crime
Perceived criminality
Political terror
47
39
36
38
Life Expectancy
Obesity
Cancer death rate
Deaths from cardiovascular disease & diabetes
Deaths from HIV
Availability of quality healthcare
27
27
27
22
45
Equity of opportunity for ethnic minorities
Women treated with respect
Community safety net
Tolerance of immigrants
Tolerance for homosexuals
1
43
9
13
6
Ecosystem Sustainability
21
Access to Higher Education
33
Ecological footprint of consumption
CO2 emissions per capita
Energy efficiency (use per $1,000 GDP)
Water withdrawals per capita
29
20
29
20
Tertiary school enrollment
Female tertiary enrollment
33
31
*
Brazil GDP per capita rank is 24th among
sample of 50 countries
*Safety net, tolerance and respect for minorities, women, and disadvantaged
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OVERALL SPI VS. GOVERNMENT EXPENDITURE (% OF GDP)
Government expenditure source: 2013 Index of Economic Freedom
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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.
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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
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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
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THE ROLE OF BUSINESS IN SOCIAL AND ECONOMIC PROGRESS
Corporate Social
Responsibility
(CSR)
Philanthropy
•
Donations to worthy
social causes
•
Volunteering
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Compliance with
community standards
•
Good corporate
citizenship
•
“Sustainability”
•
Mitigate risk and
harm
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Creating Shared
Value
(CSV)
•
Address societal
needs and challenges
with a business
model
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SOCIAL NEEDS AND ECONOMIC VALUE CREATION
Environmental
Improvement
Energy Use
Education
Water Use
Skills
Company
Productivity
Community
Economic
Development
Health
Affordable
Housing
Worker Safety
• Social deficits create economic costs for companies
• Social needs represent the largest market opportunities
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CREATING SHARED VALUE IN PRODUCTS AND MARKETS
JAIN IRRIGATION SYSTEMS
• 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
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SHARED VALUE IN THE VALUE CHAIN
FIBRIA, 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
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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
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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
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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?
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