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Sustainable trade

Sustainable Trade Index 2020


Published 27 October 2020

The Sustainable Trade Index (or Hinrich Index) measures the capacity of 20 economies – including 19 in Asia, and the United States – to participate in international trade in a manner that supports the long-term domestic and global goals of economic growth, environmental protection, and better social equity. The Hinrich Index aims to stimulate meaningful discussions of the full range of considerations when advancing sustainable trade.

The Covid-19 pandemic has provided a stark and painful reminder of why the concept of sustainable trade is so critical. The Hinrich Foundation Sustainable Trade Index 2020, commissioned to the Economist Intelligence Unit (EIU), examines the role of sustainable trade for building back better in a post-pandemic world. It identifies four areas policymakers, business leaders and NGOs should address for more sustainable growth.

Watch a recording of our launch event titled "Building back better with sustainable trade", featuring seven prominent experts.

The primary principle which underpins sustainable trade is balance. Trade cannot be pursued solely for economic gains, without considering environmental and social outcomes. The Covid-19 pandemic has highlighted just how balance is important, especially as we endeavor to build more resilient economies and communities.
Merle A. Hinrich - Founder and Chairman, Hinrich Foundation

Who is the index for?

It is now abundantly clear that countries that fall short on trade sustainability face competitiveness, social and environmental issues. APAC economies are encouraged to use the index to benchmark their performance and view positive examples of trade policy. 

Additionally, while the original intention behind the STI was not necessarily to serve as a tool for crisis prevention, the Hinrich Index 2020 has taken on that dimension. It identifies four areas policymakers, business leaders and NGOs should address if and when the next crisis comes.

  • Economies can use the STI to benchmark their performance against others
  • Policymakers can use the STI for guidance about future trade policies
  • Companies can use the Index's dataset as a tool to evaluate sustainability risks in their operations and predict progress against their SDG commitments 

Click here to read more about the Index.

The Sustainable Trade Index dataset

The detailed results for the 20 economies reviewed in the STI are presented in an excel format. Results can be compared across economies, indicators and years.

Get access to the dataset and all STI2020 materials here.

 

Listen to our podcast featuring Andrew Staples, Director of Research and Stephen Olson, Research Fellow, where they discussed the origins of the Sustainable Trade Index.

Overview of the index findings

  • Japan and South Korea are joined once again in the group of the other mainstays atop the index: Singapore, Hong Kong, Taiwan and the US.
  • Japan and South Korea share many similarities, including low growth rates, difficulty in attracting in FDI and volatile trade-weighted exchanged rates. But both benefited from indicators new to the 2020 STI, namely the existence of carbon pricing schemes and efforts to combat human trafficking.

  • Elsewhere, the most notable move in the index was in Vietnam. After making progress in previous editions of STI, there was backsliding relative to other countries in the index in the social and environmental pillars. That dragged its rank to 16th overall, just behind in India and just ahead of Indonesia. For a country that is becoming the next hub of supply chains in the Asian region, that is not an encouraging development.

Four policy priorities to build back better after the pandemic 

If the covid-19 pandemic and resulting economic crisis around the world teaches us anything it is that preparedness matters. The original intention behind the STI was not necessarily to serve as a tool for crisis prevention, but it has taken on that dimension. To that end, we identify four areas policymakers, business leaders and NGOs should address if and when the next crisis comes:

Reducing inequality

Unless significant steps are taken now, the gap between the rich and the poor will only widen further when the next crisis comes, making sustainable trade all the more difficult.

Improving education

Without progress in education, many countries in the STI may find themselves left behind.

(Re)lowering barriers to trade and investment

None of the developing countries (in the STI) have the internal demand or the capital base to grow, let alone grow ina manner that will alleviate poverty and create a middle class. Trading, and trading sustainably, are really their only paths. That means keeping their economies open and welcoming the kind of foreign investment that supports those goals.

Building on the environmental benefits of the pandemic

Governments have an opportunity to apply the environmental lessons learned from the crisis to their policy decisions and ask themselves questions about how to retain the gains already made.

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The Sustainable Trade Index is currently in its third edition. You may access the first and second edition below:

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