On 26 November 2018, UN Environment and partners launched the third Inclusive Wealth Report and an Inclusive Wealth Index on the margins of the UN Environment Finance Initiative Global Roundtable in Paris. Curated by over 200 economists from across the world, the index of 140 countries shows the latest estimates of wealth of nations by aggregating natural, human and produced capital into a league table. This represents an important first step in reconsidering the prominence of Gross Domestic Product as the core economic indicator by defining a new compass for sustainability.
Thinking beyond GDP
Traditionally, we have relied on Gross Domestic Product (GDP) to measure a country’s economic performance, and more broadly, as a way of anticipating overall wellbeing. However, GDP has limitations as it fails to account for the stocks of capital that underpin income and thereby says little about the economy’s ability to produce value in the future.
This matters not only for the health of the economy, but also for the health of the earth and the wellbeing of humans. If we are drawing down the base of our wealth, what good is it to have an expanding economy?
The Inclusive Wealth Index looks at a country’s wellbeing through a sustainability lens, assessing the social value, rather than dollar price, of all of its assets, including natural, human and produced capital. This means that the Inclusive Wealth Index is uniquely able to capture a nation’s capacity to create and maintain the wellbeing of its people over time.
The Inclusive Wealth Report has expanded from its original iteration from 2012, to cover 140 countries and to include more indicators of social and natural sustainability. These insights enable countries to make strategic investment decisions and demonstrate the Inclusive Wealth Index’s value as a key indicator for sustainable development, complementing GDP as a measure of economic performance.