All IDCA News

By Loading

11 Feb 2023

Share on social media:

Why and How Norway Leads the Inaugural IDCA EESG Digital Readiness Index of Nations

Norway emerged at the top of the inaugural IDCA EESG Digital Readiness of Nations Index of 147 nations with an overall score of 84 on a 0-100 scale. This result is not surprising, given the nation's reputation for a strong economy, clean government, and well-developed Digital Infrastructure.

But there is no gold medal to be awarded here. The rankings are meant to be a general guide and a basis to start discussions, rather than a competition. Each of the top nations are very similar in existing development, just as lower-ranked nations have similar great opportunities for new development.

How Does The Index Work?
The Index integrates more than 100 separate parameters across EESG – Economy, Environment, Social, and Governance – to create an overall number that shows how well each nation is doing relative to the expectations of it.

The process doesn't simply weigh factors in a linear fashion, with a percentage of weight attached to each one, as most traditional rankings and indexes do.

Rather it uses a series of mathematical functions that consider each factor's influence upon the others, adjusting for income and cost of living, and resulting in a curve rather than a “ladder” of results. The data is actually processed as a function of a logarithmic curve rather than a 0-100 score. But results are expressed on a 0-100 scale for a more intuitive understanding.

A Real-World Model
This entire process is meant to model the real world in all of its difficulty and complexity. It also makes the assumption that a fairminded application of technology – to build Digital Infrastructure, to have strong mobile networks and Internet access, to have the wherewithal to take advantage of cloud computing, AI, Web3 migrations and Metaverse construction – is the foundation and backbone of positive socioeconomic change. Smart use of tech improves the world, in other words.

As in the real world, the more developed a society becomes, the more difficult it becomes to achieve additional progress. The corollary to that reality is that progress can be achieved quickly in under-developed nations if underlying social and governance can improve.

The Index thus outlines areas of opportunity, especially in developing nations.

The entire data sets of each of the 147 nations is also mapped internally against an ideal nation, called “Perfectland.” This optimal case is expressed with a score of 100, even though the underlying data is open-ended. Doing things this way enables the Index to show how far even the best-developed nations have to go before achieving ideal Digital Readiness.

This is especially true in the Environmental category, which is the hinge upon which all other categories hang. So Norway even top-ranked Norway scores only 84; 10th-ranked Canada comes in at 67. So this Index grades on a very tough curve, but again, one that is meant to reflect the difficulties of the real world.

Balance is Important, Too
In addition to overall score, each of the four categories has a 0-100 score. Beyond just the score, the Index seeks balance; each of the four categories will ideally contribute to 25% of the overall score.

Here is where abandoning the simplistic weighting systems found in most rankings shows its worth. The IDCA method shows how in the real world a lack in addressing GHG emissions weighs heavily on a nation, and how an underperforming economy as well as lackluster social and governance conditions impede a nation's prospects to improve toward Digital Readiness.

The Perfectland model in the data shows Economy contributing 21.4% to the overall score, Environment 31.9%, Social structure 21.5%, and Governance 25.2%.

Why is this not perfectly balanced at 25% across the board? The reason is that even Perfectland exists in an imperfect, non-linear world. Its Economy, Social, and Governance data is based on what's been achieved by human beings, but in the Environment category, its sustainable power grid and emissions profile lies beyond the capacity of any real nation today. Even at that, Perfectland ha still not reached 100% renewable electricity and still is not a Carbon-Zero society. But it still does represent an ideal that assumes we humans can do better, in all cases.

Norway's balance is impressive, though: Economy contributes 19.5%, Environment 30.4%, Social 22.9%, and Governance 27.2%. Rounding the percentages to whole numbers thus shows:

Perfectland – 21% - 32% - 22% - 25%

Norway – 20% - 30% - 23% - 27%

Nuance Beneath the Numbers
Subtleties emerge from a very close look at these numbers. Norway has itself built a strong renewables grid, approaching Perfectland. But its well-known status as an oil exporter, even though not damaging to its emissions profile, shows an imperfection in its economy, of which it is well-aware.

Its governance structure, having to influence its future above Perfectland's levels, shows it is bearing the strain of maintaining a strong future economy with less-to-no reliance on oil.

Now consider the United States, which looks like this side-by-side with Norway:

Norway – 20% - 30% - 23% - 27%

US – 31% - 9% - 24% - 36%

The US has an appalling environmental score, with its status as the world's second-largest emissions producer, per-capita emissions twice that of the EU, and a renewables grid that produces about 20% of its electricity. Its economy is still the largest and most consequential in the world, and despite its raucous political environment has a strong government.

The US has an overall score of 51, ranking it 45th among the 147 nations in the Index. The numbers show that the US has the economic and governmental wherewithal to effect huge change, but has increasing income disparity and poverty (by developed-nation standards) that can lead to a lack of priority to environmental improvement.

The US's neighbor Canada, which ranks 10th in the Index, shows better balance side-by-side:
US – 31% - 9% - 24% - 36%
Canada – 25% - 21% - 23% - 31%

This is a better-balanced picture than that of the US. Canada has taken advantage of its massive hydropower resources to build one of the strongest renewables grids in the world.

Canada is still a significant emissions emitter because of its highly industrialized economy, but even so, shows an efficiency almost twice that of the US in limiting emissions throughout its manufacturing sector. Its government does some heavy lifting in keeping it on an environment-friendly course, to date.

A Little More Nuance
Another interesting note is to see how Canada's and Norway's social percentages are a tick lower than that of the US. We have to remember these are percentages of an overall score, not absolute numbers. So Canada's and Norway's percentage in this category reflects a their much higher absolute scores.

Comparing Environment with Social shows a +7 point difference (30-23) in Norway, and a -2 difference (21-23) in Canada; the US differential in these two categories -15 points (9-24), reflecting a much greater societal challenge facing the US.

Next time out, I'll discuss how the 147 nations fall into income tiers, how the balances in developing nations look, and what the data means about their current situation and future prospects.

Follow us on social media: