The Philippines ranked 6TH regionally and 12th globally in the Sustainability Trade Index (STI) 2022, joining more developed economies as it scored high in the report that measures economies’ behavior and effects of international trade on sustainability and economic prosperity.
In the first Hinrich-IMD Sustainable Trade Index (STI), produced by the Institute for Management Development (IMD) and the Hinrich Foundation released Tuesday, Nov. 9, New Zealand ranked first, the UK second, and Hong Kong third.
STI ranks 30 economies by their capacity for global trade in a manner that supports long-term sustainable development by analyzing the factors that affect the sustainability of trade at a time of high political tensions and inflation. These include economic growth, social capital development and environmental protection.
The STI Report explores how nations can maintain “climate accountability” and Environment Social and Governance (ESG) objectives while preserving the economy at a time of high geopolitical tensions ahead of COP 27.
Based on the report, the Philippines was ahead of other ASEAN countries in the APAC and Global ranking except Singapore which ranked third for APAC.
Globally, the Philippines scored high in the Environmental pillar at 5th, Societal pillar at 17th, and Economic pillar at 19th. It has mixed scores in 70 indicators across the three pillars.
Notably, the Philippines ranked high in tariffs and non-tariff barriers metrics finishing first place on new tariff barriers 2021.
The country also ranked second place for high technology exports as percentage of manufactured exports. It also ranked fourth in growth in labor force in 2020 and exchange rate stability in 2018.
In the monetary policy intervention, the Philippines also finished 6th overall and ranked 7th in total reserves as percentage of GDP and 8th in terms of monetary policy intervention in 2021. The country also ranked 10th in terms of mobile subscriptions per 100 people.
The Philippine ranking was affected by low scores in terms of trade costs having finished low in corruption perception index in 2021 and rule of law index in 2020 at 22nd while it ranked 18th in logistics in 2018.
It placed lower in export concentration at 22nd and exports of goods and services at 19th.
The country finished lower in overall technological infrastructure at 21st having ranking for sub metrics on fixed internet speed, internet users, fixed broadband subscription, and mobile subscriptions. On technology innovation indicator, the Philippines ranked13th overall.
As COP 27 approaches, The Sustainable Trade Index is a reminder for nations that sustainability of trade – economically, socially and environmentally speaking – is essential for economies to prosper at a time of higher 'climate accountability' expected of nations.
"Globalization and sustainability are at odds with each other. Companies and countries have used global trade and sourcing to maximize financial returns, but we are now acutely aware that this compromises sustainability to the extent, for instance, that energy is consumed and natural resources are depleted. Therefore, governments and corporate leaders alike must balance these two effects, asking 'how do we support our economies while preserving ESG objectives?'" Professor Arturo Bris, Director of the IMD World Competitiveness Center, IMD Switzerland, said in a statement.
The STI looks at 70 indicators across three pillars. The Economic pillar quantifies how well economies are fostering economic growth through international trade, e.g., the quality of trade infrastructure, the ease of conducting international trade, export diversification in bilateral trade partnerships and export goods concentration. The Societal pillar captures social factors contributing to economies' long-term capacity to conduct trade, e.g., education levels and labor standards, which feed human capital development. The Environmental pillar measures the extent to which a country uses natural resources and manages the externalities arising from its economic growth and participation in the global trading system, e.g., the air and water pollution levels.
The results reveal how economies balance the trade-offs between growth and equitable prosperity. The Index can serve as a tool for regulators and businesses to shape policies to better integrate sustainable trade along with the prosperity of economies.
The Index finds that the top-ranking economies encourage technological innovation and
have low trade barriers. Their citizens have a high life expectancy, attend school for longer, and enjoy more growth opportunities. They conserve energy and respect climate goals globally.