An adult and a child each hold a small plant with soil in their hands and pass them to one another. The scene takes place outdoors in soft sunlight.

Many advanced economies remain ill-prepared for present challenges

A shifting geopolitical landscape, sluggish growth, digital transformation, the climate crisis and accelerating demographic change are testing the capacity of OECD and EU countries to innovate and adapt like never before. Denmark, Finland, Sweden and Norway are among the best positioned. But the analysis of 144 indicators from the Bertelsmann Stiftung's Sustainable Governance Indicators (SGI) reveals a troubling pattern: most advanced economies are still not adequately equipped to deliver sustainable policy.

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Foto Christof Schiller
Dr. Christof Schiller
Senior Project Manager
Foto Thorsten Hellmann
Dr. Thorsten Hellmann
Project Manager

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Governments across Western democracies face growing pressure to reform. Yet most OECD and EU countries still lack the institutional frameworks and long-term policy strategies needed to tackle their most pressing challenges – strengthening democratic resilience, boosting economic competitiveness and adaptability, crafting socially viable responses to the climate and resource crises, and managing demographic change. In 11 of the 30 OECD countries analyzed, a fragmented mix of economic, social and environmental policies – combined with weak democratic oversight – poses a serious threat to sustainable governance. Among the G7 economies, Japan, Italy, the United States and Canada are especially at risk of losing sight of the interests of future generations. "In these countries, short-term fixes and reactive policymaking dominate," says our sustainable governance expert, Christof Schiller. "By contrast, the Nordic states are far better prepared. They offer strong democratic checks and public participation opportunities, comprehensive economic, social and environmental policies, and forward-looking administrative structures."

By contrast, the Nordic states are far better prepared. They offer strong democratic checks and public participation opportunities, comprehensive economic, social and environmental policies, and forward-looking administrative structures.

Christof Schiller, expert for sustainable governance at Bertelsmann Stiftung

Western democracies face major challenges in strengthening democratic governance

Sustainable policymaking and a healthy democracy go hand in hand. Yet even many of the world’s oldest democracies still have a long way to go before they can be considered fully functional. Key areas requiring urgent attention include:

  • Strengthening the integrity of elections
  • Guaranteeing unrestricted access to official information
  • Building coalitions to counter anti-democratic forces
  • Engaging civil society meaningfully in decision-making processes

The top performers in democratic oversight, according to the SGI rankings, are Sweden, Norway, Denmark and Finland. SGI data highlight, for example, how Norway has successfully limited the influence of political extremism by addressing its root causes.

Most advanced economies are still unprepared for sustainable policymaking

The daily workings of government in many advanced economies are overdue for a structural upgrade. Key institutional reforms are needed to support more sustainable and effective governance, including:

  • Breaking down ministerial silos and improving coordination across levels of government
  • Increasing transparency
  • Strengthening the capacity for strategic foresight and evidence-based policymaking

Finland and Denmark top the SGI ranking for anticipatory governance. In Finland, for example, the Prime Minister's Office (PMO) reviews legislative proposals on behalf of the head of government. The Finnish Council of Regulatory Impact Analysis, which reports to the PMO, evaluates proposed legislation and its expected effects. Its aim is to improve the quality of draft legislation by enhancing impact assessments and optimizing the timing and planning of new proposals.

When it comes to aligning national economic, social, and environmental policies with the demands of long-term sustainability, all OECD and EU countries still face major challenges:

  • Designing coherent strategies for economic transformation
  • Accelerating the shift to a circular economy
  • Advancing mission-oriented innovation policies
  • Developing future-ready social policy frameworks

Sweden, Denmark, Norway and Finland lead the way in sustainability-focused policymaking. “In Denmark, policy design is guided by evaluations and sustainability assessments,” says our economic policy expert, Thorsten Hellmann. "Impact assessments for new laws are publicly available, which increases transparency. If a policy falls short of expectations, adjustments are typically made."

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