The end of the first quarter of 2021 represents the aftermath of a year strongly impacted by COVID 19 pandemic, whose extreme consequences have impacted the world in many ways. The sustainability of countries is not an exception. DPAM’s Fixed Income Sustainability Advisory Board (FISAB), is assessing in this edition of the country sustainability rankings, the impact of the health crisis on the different dimensions of country’s sustainability and the path to a sustainable future.

Since its inception, democratic values and governance have always been at the core of the model as a foundation to ensure the other pillars of a country’s sustainability. The titles of Freedom House or Democracy Index reports have highlighted the deterioration of civil rights and freedoms over the last fifteen years. The health crisis and related containment have been instrumentalised by authoritarian regimes to reinforce dictatorship and the curtailment of individual rights. Today, only 8.4% of the population is living in a full democracy, while 35.6% live in severe authoritarian regimes. Given the decline in the number of free countries according to Freedom House, it is no longer possible to believe that this is an issue only for the so-called emerging economies.

Regarding the environmental dimension, OECD countries are the largest per capita emitters of carbon. The lack of co-operation and co-ordination between climate policies within a country and across the OECD as a whole makes them less effective and slows down the transition to a low-carbon economy. The impact of the lockdowns and health crisis on carbon emissions is not yet clearly confirmed. However, after a decline over several years, the emissions had increased again in 2018, demonstrating that the link between economic growth and environmental deterioration had not yet been broken. The climate crisis is still very present and the destruction of tropical forests is accelerating. Agricultural expansion remains the main factor in deforestation and land fragmentation. The transformation of our food systems is essential.

On the social dimension, Education is still a matter of concern both in emerging and developed countries.

The initial impact of the health crisis is significant in terms of economic contraction, private debt and sustainability in general, especially on healthcare and education pillars. There is cause for concern for all countries, particularly the low- and middle-income ones. UNICEF speaks of a global education disaster and a risk of a lost generation. However, there is still hope for the mitigation of the effects of this debt crisis and the impact on basic social spending.

Meanwhile, for OECD countries, the latest PISA study (2018) was focused on the current teenage generation’s professional ambitions, particularly with regard to the (r)evolution taking place in the labour market. The findings were quite alarming, as they highlighted the mismatch among education, aspirations and market needs. The 2020 Global Competitiveness Index also stresses the critical need for education, re-skilling, re-directing and up-skilling, for inclusive prosperity. Education systems need to evolve to meet the digital and critical thinking skills needed to train workers. These disruptive developments and changes in the labour market need to be integrated into the education policies of any sustainable country.

For health, population and wealth distribution pillar, 2020 ended with the annual mortality rate risen by almost 4% and marks a significant loss for social welfare. The implications of the health crisis have created economic insecurity, increased stress and anxiety and imposed a significant change in lifestyle. It has also increased social inequalities at a time when the European Union’s growth strategy aims to be inclusive and offer equitable opportunities. Different studies and findings reinforce our conviction to keep these criteria at the heart of our sustainability model for countries.

Last but not least, regarding the economic dimension, the contraction of global GDP by almost 5% in 2020 is leading to one of the biggest crises in recent generations. Job vacancies remain at least 20% below their standard level. There is a need to revitalise human capital.

The continued assessment of sustainability at a country level remains as essential as ever.






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