Earlier this month the Scottish Government unveiled its new 10-year National Strategy for Economic Transformation. The much anticipated plan included the welcome aspiration to become a Wellbeing Economy. But it failed to set out how we will genuinely transform our economy to one that ensures good lives for all of Scotand’s people and protects the health of our planet. In this blog, WEAll Scotland’s, Dr Lukas Hardt, explores the substance of the Strategy and makes the case for a inclusive national debate on how we move beyond business as usual.

The day before the Strategy was published, the global scientific community issued its starkest warning yet about the disastrous consequences ahead if we fail to urgently act to avoid climate breakdown. The Intergovernmental Panel on Climate Change (IPCC) cautioned that further delay in action will miss a “brief and rapidly closing window to secure a liveable future.”

At the same time, the cost of living crisis threatens to deepen already eye-watering levels of poverty and inequality in Scotland. One in four children in Scotland is growing up in poverty. Without new approaches that reflect the realities of today, rather than the recipes of the last century, the Scottish Government looks set to miss its child poverty targets. The need to reprogramme our economy has never been more apparent.

Scotland has positioned itself at the forefront of the movement to build a new type of economy which is designed to deliver good lives for all on a healthy planet. Scotland was a founding member of the Wellbeing Economy Governments partnership – a collection of nations who are united in their ambition to redesign their economies. Nicola Sturgeon’s Ted Talk on the subject received 2.4 million views. But this rhetorical commitment to a different sort of economy has yet to be met with sufficient action.

Ahead of the publication of the National Strategy for Economic Transformation, 40 leading economists and climate change academics urged the Scottish Government to set out how it will put environmental and social concerns at the heart of financial and economic decision making. The final Strategy includes some positive commitments such as a Wellbeing Economy Monitor to measure the things that really matter to people and to review ‘how to increase the number of social enterprises, employee-owned businesses and cooperatives in Scotland’. But overall it marks a continuation of the same flawed logic that has delivered decades of inequality and environmental degradation.

The economy we have today is driven by a widely debunked logic – that continually growing the economy will automatically ‘trickle down’ to more wealth for the whole population. Yet in practice this necessitated that governments have to set aside some of this money in taxes to pay for the social and environmental casualties of our economic system. This economic paradigm has driven a cycle of paying to fix what we continue to break.

For example, the Scottish and UK Governments spend billions of pounds in Scotland topping up poverty wages, housing people who are homeless and building flood defences. Our recent report on Failure Demand has quantified the financial cost of this way of operating.

By privileging GDP growth and indiscriminate productivity, the National Strategy for Economic Transformation continues to follow this flawed logic. The most important challenge for Scottish and other economies in the 21st century is not a lack of productivity, innovation, inward investment (as important as they are). It is that they are often construed as goals in their own right. What we need to do is ask: What sort of innovation? Productivity of what and who gets the benefits? And how to ensure investment flows to those activities most aligned with a Wellbeing Economy? The key responsibility of governments in our time is to embed a new purpose into all economic and financial decision making. It is to ensure that  power is shared across workers and communities so that our economy uses our resources and creativity to provide the things that really matter. Governments have to make sure that care work is valued, that we all have the basics, like safe warm homes, that we expand the economic activities we need more of, such as decarbonisation, not just those that offer the biggest profits. There is very little in this strategy to suggest that the Scottish Government is living up to this responsibility.

Businesses have a vital role to play in a Wellbeing Economy, but the Strategy fails to offer a clear mechanism to ensure the enterprises Scotland will nurture will help build thriving local communities. Fostering social enterprise, employee-owned businesses and cooperatives has to be a key part and the Strategy promises a review of how their number can be increased. But more concrete support is needed urgently.

The Government needs to set the right rules and incentives to make sure that the right thing to do for people and planet becomes the right thing to do for businesses. The many enterprises in Scotland that are pioneering fair, green and transformative ways of working would welcome moves to rectify the unfair competition they face from those businesses who are shirking their responsibilities to the environment and society.

The Strategy talks about “Team Scotland” and rightly notes that economic transformation has to be supported by all citizens, and implemented through collaboration of the public, private and third sector. But the process of developing this Strategy has not lived up to this ambition. There is little evidence that this Strategy has had input from citizens and communities across Scotland.

The reports of the Citizens’ Assembly of Scotland and the Scottish Climate Assembly clearly show that people want the Government to step up to the plate and set a new direction for our economy.  Four in five Climate Assembly delegates supported the recommendation to reframe the national focus for Scotland’s future away from economic growth towards the prioritisation of a more person and community centred vision of thriving people, thriving communities and thriving climate. While the Strategy references an aim to respect environmental limits there is very little evidence of how this will be achieved nor how this squares with the thrust of the Strategy which focuses on growth.

This Strategy has failed to present solutions that are adequate for the challenges of the 21st century. Scotland now needs an urgent and inclusive national debate on how to transform our economy into one that truly delivers good lives and protects the health of the planet we depend on.



Commenting on Scotland’s National Strategy for Economic Transformation, Jimmy Paul, Director of Wellbeing Economy Alliance Scotland, said:

We welcome the Scottish Government’s aspiration to become a Wellbeing Economy and the aim to respect environmental limits. The Strategy includes some positive commitments such as a wellbeing economy monitor to measure the things that really matter to people.

“But this does not amount to a plan to transform our economy to one that truly puts our collective wellbeing first. The last decades have shown us that economic models that focus too narrowly on growth and productivity for their own sake fail to translate into more secure jobs, higher wages, decent housing for all, or a healthier natural environment. Assuming growth and productivity will trickle down to all has been debunked – Scotland needs to be bolder in its approach to economic change.

“Businesses have a vital role to play in a Wellbeing Economy, but the Strategy fails to offer a clear mechanism to ensure the enterprises Scotland will nurture will help build thriving local communities.

“The Strategy refers to economic transformation as a “collective national endeavour”, but there is no evidence that this Strategy has had input from citizens and communities across Scotland. This must be the start of conversation across Scotland about how we choose a new economic path that serves the health and wellbeing of our communities and protects the planet we depend on.  

“Scotland has positioned itself at the forefront of the movement to build a new type of economy, and the world is watching. Last week, 40 leading economists and climate change academics urged the Scottish Government to set out how it will put environmental and social concerns at the heart of financial and economic decision making. This Strategy stops short of achieving that. 

ENDS

For enquiries call 07855 069 952 or email frances@scotland.weall.org

Notes to editors

  • Dr Lukas Hardt, ecological economist and Policy Lead at Wellbeing Economy Alliance Scotland is available for interview.
  • Scotland’s National Strategy for Economy Transformation is here 
  • Nicola Sturgeon has previously championed the Wellbeing Economy agenda with her Ted Talk on the subject receiving 2.4 million views. Scotland is a founder member of the Wellbeing Economy Governments Partnership together with New Zealand, Wales, Finland and Iceland.
  • Last week, 40 leading economists and academics called on the Scottish Government to use the strategy to set out how it will put environmental and social concerns at the heart of financial and economic decision making. Their asks, supported by Poverty Alliance, Friends of the Earth Scotland, Scottish Environment Link and others here.
  • The strategy comes as yesterday’s IPPC report showed we only have a brief window to secure a liveable and sustainable future for all. 



Written by: Isabel Nuesse

In the system that we’re currently living in, money reigns in every aspect of our lives. Wherever money flows in our economy will dictate the priorities of our culture. If this is the case, what can we do in the short-term to influence where money is flowing and, therefore, influence the priorities of our time? 

In October 2021, Jags Walia, a portfolio manager and responsible investor since 2008,  gave a WEAll Talk “From Nudge to Push – Money, Power and CO2” where he shared his own experience of influencing big companies to reduce their CO2 emissions as a smart investment decision. 

He gave our audience his take on how to do this, and assurance that he’s not alone working on these bold objectives.

As an investor, Jags told us he has two priorities: 

  1. Make money for his clients;
  2. Consider the environmental implications of those decisions, to reduce harm and the amount of CO2 emitted into the atmosphere.

There are a number of strategies to go about meeting these goals, and, rather than shying away from today’s big polluters as potential clients, Jags operates on the notion that, by  choosing to work with a dirty company, he can have a bigger impact by directly  influencing their decision making. You can read his Investment Guide here.

“I find the companies that are not the saints today – and try to change their behavior and rehabilitate them.”

He shared a story of a client he worked with back in 2019. The company had proposed to build two brand new coal power plants. Of course, he was adamantly against this decision. But rather than coming out and saying his opinion, he needed to show them that making such a choice was bad business. Why? Well, the average lifespan of a coal power plant is 48 years, and he was predicting that, in 48 years, coal will not be the primary energy resource that we use and, therefore, the return on their investment wouldn’t be realized. In the end, after 8 long months of back and forth, the company decided that they wouldn’t go ahead with the power plants and not only that, but they vowed never to build another coal fired power plant again. 

This was a huge win for Jags and his team, as the outcome of their work turned out to be a long-term company-wide divestment from coal, rather than something restrained to one single project within the company. 

How does Jags do it? He shared his 3 main strategies  for how to engage with companies effectively.

  1. Understand the complexity of the situation that the company is in. Really put yourself in the shoes of these businesses. Who are their stakeholders? Who are the beholden to? What steers their decision making?
  2. Find the right question(s) to ask. When engaging with any company, find out what is possible for them within their context. Don’t suggest something outrageous for them to achieve without first understanding what is reasonable. 
  3. Evaluate what each company says they’re doing vs. what they are actually doing. Many companies will boast about their sustainability achievements, but these can often be overembellished. Do your due diligence to better understand what kinds of commitments the company is actually making. 

One of the participantsasked Jags about the Key Performance Indicators he looks at when evaluating whether a company is ‘clean’ or ‘dirty’. 

He said that he looks at three things, 

  1. Willingness
  2. Ability 
  3. Commitment 

In other words, are the companies willing to make a change? Is it possible and are they able to make it? And, can they get paid to commit to making significant changes? Still working within the current framework, Jags understands that in order for companies to decarbonize, they still have to meet their financial obligations and therefore be paid to do it. 

There is always a balance between uprooting what exists, and improving the status quo. This talk with Jags showed a clear example of how to improve the current situation within the existing boundaries or our system. 

If you missed the talk or want to engage further with this topic, you can watch the full talk recording on our YouTube channel:https://www.youtube.com/watch?v=bgCljvMqzKY