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A Beyond-GDP view of Nordic performance
Demos Helsinki.
Norion.
IVL Swedish Environmental Research Institute.
Demos Helsinki.
Show others and affiliations
2025 (English)Report (Other academic)
Abstract [en]

The growing dissatisfaction with gross domestic product (GDP) as a measure of nationalwelfare has sparked an interest in alternative metrics. The limitations of GDP inaccounting for social, environmental, and distributional factors have been welldocumented,highlighting the need for comprehensive approaches to welfaremeasurement. In response to this, Nordic countries, known for their progressive socialpolicies, are poised to take a global lead in adopting alternative frameworks. This reportaims to assess the performance of Denmark, Finland, Iceland, Norway, and Swedenthrough three key alternative metrics: the Sustainable Development Index (SDI), theTransition Performance Index (TPI), and Doughnut Economy Indicators.

Methodology:

The research employed a structured literature review to identify a broad set of welfaremetrics. After an initial evaluation of 38 indicators, three were selected based on theirrelevance and applicability to the Nordic countries: the SDI, TPI, and Doughnut EconomyIndicators. These metrics were evaluated across thematic areas of sustainability, socialinclusion, and wellbeing.

1. Sustainable Development Index (SDI): This metric integrates human developmentwith ecological impact. It uses five key indicators—education, life expectancy,income, consumption-based CO2 emissions, and consumption based materialfootprint. The SDI is a composite measure that divides human development byecological overshoot, making it particularly suited for assessing sustainability.

2. Transition Performance Index (TPI): Developed by the European Commission, theTPI evaluates countries across four dimensions—economic, social, environmental,and governance. Its aim is to measure progress towards sustainable and inclusive economies.

3. Doughnut Economy Indicators: This framework is based on ensuring that societiesoperate within planetary boundaries while also meeting basic social needs. The report utilised existing datasets to assess the performance of Nordic countries against both the ecological ceiling (also using consumption based data) and socialfoundations defined by the Doughnut model.

Overall, the Nordic countries generally perform well in terms of social outcomes but–whenwe look at environmental impacts from consumption rather than just territorially– facechallenges in reducing their ecological footprints. While they all perform in the upperechelons of the TPI rankings, the SDI and Doughnut Economy Indicators demonstratethat every Nordic country is significantly overshooting the planetary boundaries requiredfor ecological safety.

7 This report thus underscores the need for a more holistic approach to welfaremeasurement in the Nordic countries. While their social outcomes are laudable, ecologicalsustainability remains a critical challenge. The findings suggest the importance ofintegrating alternative welfare metrics, such as the SDI, TPI, and Doughnut EconomyIndicators, into national policymaking to ensure a balanced approach to social andenvironmental sustainability. These indicators are salient to the Nordic countries as theycontrast strong performance relative to European peers and measured by the yardstick ofongoing transition (TPI), with a sobering view of ecological boundary transgression whichpoints to a complete lack of long-term sustainability of the welfare performance theregion has become known for (SDI, Doughnut Indicators). This contrast should come as anurgent reality check to Nordic policymakers who may be otherwise convinced that theNordics’ ecological transition is proceeding effectively.

The report concludes with several findings and recommendations:

1. Aligning Metrics: There is a need for greater alignment and standardisation acrossalternative welfare metrics to ensure consistency and comparability.

2. Governance Integration: Without governance structures that integrate thesealternative metrics, measurement alone will not lead to meaningful change.

3. Ecological Focus: Policymakers look to alternative ecological interventions toaddress the significant, consumption based environmental overshoot identifiedacross all Nordic countries. Demand side policy frameworks such as sufficiencysolutions are highlighted as promising.

4. Leadership Potential: The Nordic countries are well-positioned to lead the globalshift towards a wellbeing economy, provided they can reconcile their economicpolicies with the ecological limits.This report makes a case for an urgent recalibration of the metrics used to define success,advocating for a move beyond GDP to foster a more sustainable and inclusive future forthe Nordic region.

Place, publisher, year, edition, pages
Stockholm: IVL Svenska Miljöinstitutet, 2025.
Series
C report ; C881
Keywords [en]
Welfare, Sweden, Finland, Iceland, Norway, Denmark
National Category
Economic Geography
Identifiers
URN: urn:nbn:se:ivl:diva-4510ISBN: 978-91-7883-648-2 (electronic)OAI: oai:DiVA.org:ivl-4510DiVA, id: diva2:1930230
Note

Commissioned By: Nordisk Ministerråds Sekretariat.

Available from: 2025-01-22 Created: 2025-01-22 Last updated: 2025-01-22

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9101112131415 15 of 15
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