This case study, extracted from Redefining progress: Global lessons for an Australian approach to wellbeing, tracks the 15-year evolution of the Welsh government’s attempt to embed sustainable development principles into its core functions. It details a series of policy failures stemming from vague mandates and “tick-box” compliance between 1998 and 2011. These failures ultimately led to the legislative creation of the Well-being of Future Generations (Wales) Act (2015). This Act established a clear, mandatory framework and accountability mechanisms, including the Future Generations Commissioner, to ensure public bodies actively pursue seven defined wellbeing goals. This journey matters for sustainable finance by illustrating that strong, legally binding governance and clear institutional design are necessary preconditions for successfully translating sustainability aspirations into mandated public action, which in turn directs investment and spending towards long-term, non-economic outcomes.

Activities relevant to investors / finance audience

• Integration of wellbeing valuation into cost-benefit analysis to strengthen the business case for public investment, as demonstrated in Porirua, New Zealand, where regeneration options were reassessed using wellbeing metrics.
• Use of wellbeing-informed prioritisation frameworks to guide fiscal policy by identifying policies with the highest expected wellbeing outcome per dollar spent, enhancing allocative efficiency in constrained budget settings.
• Application of cost-effectiveness analysis using WELLBYs (wellbeing-years) as an alternative to traditional CBA, enabling comparison of interventions where outcomes are difficult to monetise (e.g. improved social connection or reduced air pollution).
• Standardisation of wellbeing valuation tools, such as the New Zealand Treasury’s CBAx model, to support consistent assessment of social and wellbeing impacts across departments and improve the quality of economic advice.
• Institutionalisation of wellbeing accountability mechanisms, including legislation requiring agencies to set wellbeing objectives and take all reasonable steps to meet them, as seen in the Well-being of Future Generations (Wales) Act (2015).
• Development of multidimensional investment assessment approaches, incorporating fiscal, economic, and wellbeing dimensions into policy evaluation, improving alignment with long-term and socially sustainable outcomes.

These activities illustrate how expanding traditional economic appraisal to include wellbeing impacts can enhance the robustness of public investment decisions, and ensure finance policy settings are better aligned with long-term societal value.

Scope

The scope is national policy and public administration within Wales, UK. The focus is on governance, legislative framework design, and institutional embedding of sustainable development principles. The key theme is intergenerational equity and the shift from discretionary policy to statutory accountability across the public sector.

Who the case study is for

• Policymakers and regulators designing ESG/Sustainability mandates
• Investors and asset managers evaluating sovereign and public sector governance risks
• Sustainability and ESG analysts assessing national accountability mechanisms

Tools, data and methods used

The primary methods involved policy learning and legislative reform. Early attempts (Starting to Live Differently, One Planet Wales) served as empirical failures, which were highlighted by critical reports (e.g., Wales Audit Office 2010). These failures supported the decision to adopt a statutory accountability model in the 2015 Act, replacing soft policy with legal enforcement by an independent commissioner.

Findings

The main finding is that political intentions alone are insufficient to embed sustainability; a legislative duty is essential. The Act’s success relies on the “comply or justify” principle enforced by the Commissioner, creating a powerful mechanism to ensure public spending decisions align with the seven long-term goals. The implication for sustainable finance is that the durability and enforceability of national sustainability commitments should be a key factor when assessing country-level systemic risk and long-term investment viability.