top of page

Dr. Matthew Agarwala Project Leader, The Wealth Economy


2020 has been a year of turbulence – environmental, social, and economic. Around the world, we see public and political mandates to ‘build back better’.

In practice, this means building back differently: different objectives and different strategies to achieve them.


The objectives have been defined already. They are the 17 United Nations Sustainable Development Goals. Meeting these Goals requires a wealth management strategy that recognises all of society’s assets – natural, human, social, institutional – and harnesses their interdependencies.


Building capacity and resilience after the pandemic requires investments in vital assets needed for a sustainable 21st century. These include: human health and skills; physical infrastructure (e.g. transport, housing, utilities and information and communications technologies); intangible knowledge assets that allow us to use resources more efficiently; sustainable natural resource and ecosystems management (including air quality, biodiversity, and climate systems); social trust and the strength of communities, and the quality of democratic institutions.


Combined, these assets constitute an economy’s Inclusive Wealth. Ultimately, how we manage these assets today determines what is economically possible in the future.


Ideas are taking root

Inclusive Wealth is more than just a measure of our capacity to deliver the SDGs: it provides the context in which businesses can maximise returns on their own assets.


A just-in-time supply chain is more profitable under a stable climate without the disruption of catastrophic storms.


A talented workforce is more productive amidst strong communities, good schools and efficient transport infrastructure.


It is the combination of mutually reinforcing assets that matters. These ideas are taking root in the notion of stakeholder capitalism, which recognises the need for positive relationships between customers, workers, shareholders, nature, society and corporations.


The sheer number of SDGs (17), targets (169), and individual indicators (232) can understandably seem overwhelming. A key challenge is that progress towards one goal may undermine another. But this presents opportunities for business leadership, entrepreneurial creativity, and can lead to high-return investments in new technologies, brokerage services, and systems management.


Renewable energy is up, coal and oil are down

Conflicts between expanding access to energy and combatting climate change can be addressed by developing and deploying clean energy technologies. Renewable energy has been the most resilient to Covid-19 lockdown measures and is expected to rise by 5% in 2020, compared to 5% and 9% declines in coal and oil.


Similarly, whilst increasing consumption for the poor could conflict with attempts to reduce material footprints, it could also create opportunities to develop the circular economy. Wastes from one production process (e.g. cooking oils) can become inputs to another (e.g. heating). Brokerage services that find opportunities to turn waste into inputs can boost resource efficiency, reduce material footprints, and help combat poverty.


Crucially, these examples entail the deployment of multiple capitals: human – to develop the necessary knowledge and technologies; social – to develop the networks and deliver the brokerage services to connect businesses within the circular economy; and institutional – to support businesses in taking the necessary risks, provide a safety net for those who might otherwise be ‘lost in transition’, and develop smart regulations that encourage sustainable innovation.


A framework that applies across all sectors

The Inclusive Wealth framework is applicable across sectors and scalable to all levels of business decision making.


Anglian Water is a private water company in the East of England with over 5,000 employees and 1,257 treatment facilities serving 6 million people.


It adopted a Six Capitals framework (people, financial, intellectual, social, manufactured, and natural) in 2015. Since then, it has integrated Inclusive Wealth into their revised Articles of Association, launched a Åí250 million green bond, and developed natural capital solutions such as treatment wetlands (which benefit climate and biodiversity) to reduce the need for traditional ‘bricks and mortar’ facilities.


Of course, there are challenges. Identifying specific metrics for each capital can be difficult. Treatment wetlands score well on natural capital, but may not build new skills in your team (intellectual capital) if they rely on outside experts.


Examples are encouraging but challenges remain

Veon, an emerging markets telecoms company with over 46,000 employees and $8.9bn in revenue (2019) takes the Wealth-SDG link a step further. Focusing on financial, digital and technological, social and relationship, and human and intellectual capital, they identify short and long-term goals directly linked to individual SDGs.


With local partners, they provide access to digital literacy training (including a pilot for incorporating digital skills into Armenia’s national curriculum and another to train 950 female teachers digital skills), expand internet coverage to rural villages in Georgia, and provide digital banking services to the previously un-banked.


Their annual sustainability report indicates a clear link between the capitals that make up Inclusive Wealth and the SDGs they wish to influence.


These examples are encouraging, but issues remain. Corporate impacts on Inclusive Wealth and the SDGs are notoriously difficult to audit, rendering direct comparisons across companies nearly impossible. The potential for ‘greenwash’ is high. And causality is difficult to determine: do companies change behaviour to improve ESG (environmental, social and governance) outcomes, or select ESG reporting to support business as usual?


A positive relationship

However, there is also room for optimism. A systematic analysis of peer-reviewed articles showed a positive relationship between firm financial performance and the adoption of SDG strategies in 96% of cases. The challenges of auditing and reporting themselves generate business opportunities for management consultants, ratings agencies, and ESG specialists. Even the process of thinking about how business activity impacts and depends upon all capitals can itself be illuminating.


The simple, demonstrable, economic reality is that businesses and countries which enhance Inclusive Wealth can enjoy a more prosperous future, paving the way towards a sustainable 21st century.


The Wealth Economy Project at the Bennett Institute for Public Policy, University of Cambridge, is funded by LetterOne – an international investment business – and explores new measures for the 21st century economy, considering how we can better account for social, natural and human capital.

bottom of page