Which of the world’s economies are at the forefront of sustainability? This article explores the list of most sustainable global economies and analyses their progress against a range of key criteria.
To compile the list, we use the authoritative ratings of the annual Hinrich-IMD Sustainable Trade Index (STI).
Now in its fifth edition, the STI measures a country’s readiness and ability to participate in the global trading system in a way that helps long-term economic growth, environmental protection, and social development.
The 2023 rankings are calculated by averaging each economy’s performance across three underlying pillars of sustainability: Economic, Societal, and Environmental.
- The Economic pillar measures an economy’s ability to achieve and maintain economic growth through international trade.
- The Societal pillar measures an economy’s capacity to trade internationally in a way that supports human capital development, such as education and labour standards, as well as influencing public support for trade expansion.
- The Environmental pillar measures the extent to which an economy’s trade supports sustainable resource use and management. Trade considerations include the use of non-renewable natural resources and the management of industrial and commercial impacts on third parties that are not reflected in market prices due to economic growth and global trade.
These pillars are then supported by a total of 71 individual indicators.
The top 10 most sustainable economies of 2023
10. Taiwan
Taiwan ranked 10th overall, 6th in the economic and societal pillars, and 27th in the environmental pillar, with its ranking remaining stable across all pillars in 2023.
The countries poor environmental performance was due to high levels of deforestation, poor environmental standards in trade, high carbon emissions, and weak renewable energy (26th).
The highly industrialised economy of Taiwan, largely driven by electricity generated using 81.5% coal and natural gas, has made the country one of the heaviest greenhouse gases (GHGs) emitters.
Learn more about Taiwan’s net zero goals.
9. United States
The United States ranks ninth overall, fourth in the economic pillar, 15th in the environmental pillar, and ninth in the societal pillar. Its overall and economic pillar rankings remained stable in 2023, but it dropped two positions in the societal pillar and progressed four positions in the environmental pillar.
Economically, the United States improved in several indicators, including consumer price inflation, labour force growth, and foreign direct investment. It also advanced in foreign trade and payment risk, monetary policy intervention, export concentration, and technological infrastructure.
However, the country declined in trade costs, exports of goods and services, and trade barriers. Other areas that experienced a downturn include growth of real GDP, gross capital formation, and exchange rate stability. Together, these mean the US sits at the lower end of the most sustainable economies of 2023.
Learn more about the United States’ net zero goals.
8. Japan
Japan ranks eighth overall in 2023, 10th in the economic pillar, fifth in the societal pillar, and 12th in the environmental pillar. Its overall ranking declined four positions this year, due to a significant fall of eight positions in the environmental pillar and a slight drop in the economic pillar. Japan remained stable in the societal pillar.
Japan maintained its ranking in the societal pillar, due to its strong performance in indicators such as avoidance of forced labour, social mobility, life expectancy, political stability, and overcoming uneven economic development. However, its educational attainment and labour standards rankings remained relatively low, and its government response to human trafficking ranking declined slightly.
Learn more about Japan’s net zero goals.
7. Canada
Canada ranks seventh overall, ninth in the economic pillar, 19th in the environmental pillar, and impressively took the first place in the societal pillar. Its overall ranking remained stable in 2023, but it rose one position in the societal and economic pillars, and four positions in the environmental pillar.
Canada moved up to first place in the societal pillar, thanks to its continuously strong performance in labour standards, social mobility, and evenness in economic development. It also performed well in educational attainment, government response to human trafficking, and life expectancy at birth. Canada’s lowest ranking in this pillar is in trade of goods at risk of modern slavery, due to its import of goods at risk.
Learn more about Canada’s net zero goals.
6. South Korea
South Korea ranks sixth overall, second in the economic pillar, seventh in the societal pillar, and 17th in the environmental pillar. Its overall ranking improved by two positions in 2023, owing to advances in the economic and societal pillars, offset by a slight drop in the environmental pillar.
Economically, South Korea rose to second place, due to stable performance in some indicators and improvements in others. It continues to lead in technological innovation, and its performance remains stable in technological infrastructure and the provision of adequate financing to the private sector.
South Korea has also improved in attracting foreign investment, labour force growth, real GDP growth, and gross fixed capital formation. Challenges for South Korea include; barriers to trade, the effective management of its current account balance and foreign currency reserves, and the level of exchange rate volatility.
5. Australia
Midway through our list of the most sustainable economies of 2023, Australia ranks fifth overall. 12th in the economic pillar, third in the societal pillar, and 10th in the environmental pillar. Its overall ranking improved one position in 2023, thanks to the fact Australia advanced four places in the environmental pillar, offset by a slight decline in the economic pillar. Australia remained stable in the societal pillar.
Australia maintained its third ranking in the societal pillar, thanks to strong performances in evenness of economic development, social mobility, and life expectancy at birth. It also improved in avoiding goods produced by forced labour or child labour.
Learn more about Australia’s net zero goals.
4. Hong Kong
Hong Kong SAR (Special Administrative Region) ranked fourth overall, third in the economic pillar, 10th in the societal pillar, and seventh in the environmental pillar in 2023. Its overall ranking fell one position, due to a two-place drop in the economic pillar, offset by a slight gain in the environmental pillar. Hong Kong SAR remained stable in the societal pillar.
In the economic pillar, Hong Kong SAR lost its top spot, falling to third place. This decline was driven by lower performance in real GDP growth, export concentration, gross fixed capital formation, tariff and non-tariff barriers, and monetary policy intervention.
Learn more about Hong Kong’s net zero goals.
3. Singapore
Singapore ranked third in the index, topping the economic pillar, placing fifth in the environmental pillar, and eighth in the societal pillar. Singapore improved its overall ranking by two positions, as well as its rankings in the economic, societal, and environmental pillars.
Economically, Singapore thrived thanks to reductions in tariff and non-tariff barriers to trade, improvements in the availability of domestic credit to the private sector and exports of goods and services, and disciplined monetary policy management, helping make it one of the most sustainable economies on this list.
Environmentally, Singapore rose to fifth position, thanks to improvements in transfer emissions, air pollution, and environmental standards in trade. Singapore also performed well in terms of wastewater treatment, energy intensity, and deforestation. Singapore’s areas for improvement include renewable energy, ecological footprint, and environmental standards in trade.
Learn more about Singapore’s net zero goals.
2. United Kingdom
The United Kingdom remains second overall in the competitiveness ranking, performing well in all three pillars: economic, environmental, and societal. It ranked fifth in the economic pillar, second in the environmental pillar, and fourth in the societal pillar.
In the economic pillar, the UK retained its fifth position overall. It rose to the top rank in exchange rate stability and improved its ranking in labour force growth. However, its rank fell in GDP growth, consumer price inflation, gross fixed capital formation, and foreign direct investment.
In terms of the societal pillar, the UK remained fourth, sustained by improvements in the government response to human trafficking, avoidance of goods produced by forced labour or child labour, and life expectancy at birth. Equality, educational attainment, and social mobility remain core strengths of the UK.
Finally, under the environmental pillar, the UK retained second place due to strong displays in environmental standards in trade, energy intensity, transfer emissions, carbon, percentage of wastewater treated, and air pollution. However, there is room for improvement in ecological footprint, renewable energy, and share of natural resources in trade.
Learn more about the UK’s net zero goal.
1. New Zealand
New Zealand remains the top performer in the Hinrich-IMD Sustainable Trade Index 2023, making it the world’s most sustainable economy. This is thanks to its strong performance in all pillars. The country ranks eighth in the economic pillar, first in the environmental pillar, and second in the societal pillar.
New Zealand’s environmental performance is particularly noteworthy, with top rankings in air pollution, environmental standards in trade, and share of natural resources in trade. It also made progress in transfer emissions, renewable energy, and energy intensity.
In the societal pillar, New Zealand slipped to second place due to some declines in political stability and absence of violence, goods produced by forced labour or child labour, and trade in goods at risk of modern slavery. However, New Zealand still performs well in evenness of economic development, labour standards, social mobility, and life expectancy at birth.
Learn more about New Zealand’s net zero goal.
Conclusions from the research
According to the Index, globalisation has transformed from a once fast and furious process to a more thoughtful and measured one. This significant change has led to the creation of a new name for the process; “slowbalization”. This is happening because we as a global community have realised that we need to balance economic growth with social well-being and, critically, environmental protection.
Countries that are doing well in this new era of ‘slowbalization’ are those with strong infrastructures, a commitment to innovation, access to capital, and open trade policies. Countries that are struggling have weak environmental standards and high inflation, or closed markets.
To achieve a truly sustainable future, we need greater collaboration on fair trade deals and strong and impactful environmental standards that are shared by all. The ranking also highlights the need to provide greater support to countries that are struggling to become more sustainable, the benefits and importance of prioritising sustainability needs to be reinforced, along with an increase in available resources which aid countries in innovation and development.
