Speech notes

Swedish sustainable business

Language: English

Topics: Sustainable business, Innovation

Slide 2

Swedish sustainable business

Your excellences, ladies and gentlemen, It is my privilege to speak on behalf of the Swedish industry and Government, of the promising and important topic sustainable business, or CSR as some say.  Sweden and Swedish companies enjoy a reputation of being sustainability frontrunners. The Swedish brand stands for quality and reliability. These values are founded in Swedish industry’s long tradition and experience of innovation and ambition to be part of the solution to society’s challenges – in Sweden and abroad. By showcasing best practices of Swedish companies which have been able to integrate sustainability in their core business, and how the Government works to support the industry, I hope to inspire your understanding of how sustainability can be leveraged as a competitive advantage and pave way for new business models. 

(Image: The image shows the Western Harbor district in the Swedish city Malmö. The area has been completely transformed from a heavy industrial harbor to a beautiful living neighborhood. As Swedish society has developed the need for heavy industry within city limits has reduced and the need for environmentally friendly living quarters for people has increased. With limits on car traffic and focus on pedestrians, smart electric grids and other solutions, the Western Harbor has become one of Sweden’s most environmentally friendly and lively neighborhoods.)

SDG 11: Sustainable cities and communities

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Sustainable business creates value

Some say sustainability is a cost. On the contrary, we say it drives profits.  Harvard Business School conducted a study in 2015 which showed that high-sustainability companies outperform low-sustainability companies, both in stock market value as well as accounting performance.  Between 1992 and 2014, the high-sustainability companies performed almost twice as well on the stock market as the low-sustainability companies did.  When Oxford University reviewed 190 of the highest quality academic studies conducted on the relationship between sustainability and performance they found that 88% indicated that the operational performance was improved by robust Environmental, Social and Governance practices. Growing revenue streams along positive forces in society is possible and provides a much more reliable and attractive business model for investors and consumers. They key to success is to focus on the sustainability factors which matters for your company and your business model.

 SDG 8: Decent work and inclusive economic growth

Source: Turning a Profit While Doing Good. Brookings Institution, 2014 Corporate sustainability: first evidence on materiality. Harvard Business School, 2015

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Malmberg - 0% carbon emissions from energy usage at Sweden’s largest airport

Sweden’s largest airport Arlanda aims to become completely carbon neutral.

To achieve this the world's largest energy storage in a groundwater magazine has been built in a nearby natural groundwater reservoir, a so-called aquifer where the water is enclosed by sealing land and does not "leak" to the surrounding area.

The Swedish company Malmberg have drilled a number of groundwater wells, from which naturally stored heat and cooling is collected from the groundwater by circulation pumps.

The annual energy saving is estimated at approximately 4 GWh of electricity and 15 GWh of heat which makes the plant a profitable and very environmentally friendly investment, reducing the airport’s carbon emissions from energy use by 80-100 percent.

SDG 7: Affordable and Clean Energy

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Scania – Introducing India’s first ethanol bus

The global truck and bus company Scania has made it their strategic goal to become an industry leader by driving the transformation of the transport sector, through a combination of cutting-edge engine technology, smart logistics and sustainable biofuels adoption.

Scania’s strategy is to shape the Indian market by driving the shift to sustainable transport and become a leader in the world’s fastest growing economy. To realize this goal, Scania initiated a collaboration with the city of Nagpur in central India and invested in building up biogas production capacity to eventually supply a local green bus fleet.

By 2014 Scania launched India’s first ethanol-run bus in Nagpur to prove the business case of biofuels to the Indian market.

By using local waste to local fuel for local transport, the production of vehicle fuel does not compete with food production and contributes to sustainable urban development.

SDG 9: Industry, Innovation and Infrastructure

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Tetra Pak – The world’s first fully renewable carton

Another company who seek sustainability to secure industry leadership is the global packaging company Tetra Pak.

In 2014 they launched the world’s first food package made from 100% renewable products and 100% recyclable materials.  The bio-based package is manufactured solely from paperboard and plastics derived from plants. When the cartons are recycled, the wood fibre and the polypropylene are all recovered and can be used again.

A resourceful win-win for both the environment and for Tetra Pak’s business.  SDG 12: Responsible consumption and production

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Löfbergs – Increasing fairtrade consumption by 51% with sustainable quotes Speaking of sustainable consumption; Swedes consume third most coffee per person in the world, only second to the Dutch and the Finns. Coffee is big business in the Nordics.

Löfbergs is one of the largest family-owned coffee roasters in the Nordic countries, with a production equalling more than 10 million cups of coffee per day.  By offering two quotes to all their customers – one regular quote and one sustainable quote, explaining the benefits of organic and Fairtrade products, Löfbergs makes it easier for their customers to realize the power of their purchase, and make a conscious choice. With this simple yet innovative gesture, one of Löfbergs largest customers increased its share of Fairtrade coffee from 2 to 53 %, resulting in a $168,000 increase in revenue per year for the coffee farmers.

The farmers have been able to reduce the use of manure by 35 tonne and enabled land equivalent to 337 football fields to shift to organic production.

This is proof of how small changes in daily habits can make big change.

SDG 12: Responsible consumption and production

Sources: Quartz with data from Euromonitor (2014)https://qz.com/166983/where-the-worlds-biggest-coffee-drinkers-live/ The Swedish Procurement Agency (Upphandlingsmyndigeten) http://www.upphandlingsmyndigheten.se/hallbarhet/stall-hallbarhetskrav/livsmedel/kaffe-te-och-kakao/

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iZettle – Growing small businesses 5x the EU average with digital payments

A majority of the world’s working population is employed in small companies, and to a larger extent in developing markets. Improving their ease of doing business can make a huge difference on micro- and macroeconomic levels. This is what the company iZettle does.

iZettle offers an online payment solution via an app and a mini-chip credit card reader device [point to picture]. The founder got the idea in 2011, as a solution to his wife’s need to get paid by credit card for her products when selling at local fairs, without the hassle of buying and installing a full credit card machine equipment. The business expanded rapidly and went international after only one year.

When iZettle entered the Mexican market in 2016, they realized that many vendors lacked bank accounts. They innovated their solution in partnership with a local bank, Banco Santander, and MasterCard, and now the iZettle solution offers a substitute virtual bank account via the iZettle solution.

iZettle not only creates profit for themselves, but their service helps their users grow their businesses every year by more than five times the European average. By facilitating financial transactions iZettle creates value for small businesses and supports inclusive economic development.

SDG 10: Reduced inequalities

Source: Micro, Small, and Medium Enterprises Around the World: How Many Are There, and What Affects the Count? World Bank/ IFC, 2010

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Raised ambition in policy for sustainable business

In 2015, during the negotiations of the Sustainable Development Goals and the Paris Climate Agreement, the Swedish Government invited representatives of the industry, government agencies, civil society and academia to engage in a stakeholder dialogue on the sustainability shift. The Government wanted to raise the ambition and get the Swedish industry and society committed to the SDGs.  In line with this, the Swedish Government launched a more ambitious policy for sustainable business, including a National Action Plan on Business and Human Rights.

It states the Government’s clear expectation that Swedish companies shall follow international guidelines on sustainable business1, including respecting human rights in all their activities, when doing business in Sweden and abroad. It also provides practical advice on best practices and tools for companies to become more sustainable.

SDG 17: A global partnership

Source: Government Offices (Regeringskansliet) http://www.regeringen.se/regeringens-politik/globala-malen-och-agenda-2030/ http://www.regeringen.se/regeringens-politik/naringspolitik/hallbart-foretagande/

1 OECD Guidelines for Multinational Enterprieses; UN Global Compact; ILO core conventions; UN Guiding Principles for Business and Human Rights, and the 2030 Agenda on SDGs.

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Working model for sustainable business

Business Sweden’s working model for sustainable business is built on the UN Global Compact model.  The content of the model is the four aspects which defines sustainable and responsible business – respect for human rights, decent labour conditions, environmental protection, and anticorruption.  The process follows six steps which integrates all four aspects in the regular business operations. All four aspects should be included in each step, to get a holistic understanding of the challenges and opportunities the company has and how to manage them. It’s about having a process to identify and handling risks; having a proper Code of Conduct; and a process for reporting and following up on implementation.  (Background knowledge: Description of each step) 

1. Start by analysing the risks and opportunities of the company’s operations. As you evaluate the situation, you will know what needs to be changed, but also get ideas on opportunities which change can bring about. It could be seeking out tax cuts for installing cleantech, or how expanding diversity could open up for new consumer groups or partners.

2. Second, prioritize. No company is perfect and not everything can be done at once. Prioritize risks in areas with greatest materiality, which has the most direct impact on the company’s value creation. After you have a set of priorities, set clear goals with deadlines and methods for how to reach them. Perhaps needless to say, it is crucial to allocate sufficient resources for the changes to actually be implemented. Integrate the plan with your regular business and reporting cycle for the sake of efficiency.

3. Establish a Code of Conduct. We recommend all Swedish companies to have a Code of Conduct which reflects the UN Global Compact principles and ILO’s eight core conventions, and a clear anticorruption policy.

4. But a Code of Conduct on paper by no means leads to sustainable operations. It has to be lived and implemented. The fourth step is to ensure that the goals you have set is being implemented – both internally and externally.

5. Just as companies follow up and evaluate other performance factors, sustainability performance should be evaluated. By including sustainability performance indicators in the regular internal audit process they are perceived and respected like other corporate tasks and values. And just as with financial results, sustainability performance should be reported. No company is perfect but some are more

ambitious than others, and communication is key to build credibility and value among the company’s interests groups. Since 2017, all large and all public owned Swedish companies are obliged by law to do sustainability reporting, in line with GRI (Global Reporting Initiative).

6. The last step is to take action on goals which have not been met and risks which have not been addressed. This naturally feeds back into the first step, as you reassess opportunities and risks. Sustainability is a continuous work in progress.

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Swedish public sector – Leveraging 55 bn USD purchase power to improve labour conditions

One good example of how the method applies and creates change in practice is procurement by Swedish public hospitals.  The buying power of public authorities is significant. Swedish authorities alone buy goods and services for approx. 55 billion US dollar per year.  A large proportion of the surgical instruments used in Swedish public hospitals, like scissors and forceps, are manufactured in Sialkot, Pakistan. In 2007 hazardous working conditions and widespread use of child labour was unveiled at the manufacturing sites. In response a new public procurement policy was adopted by all the county councils in Sweden, which includes labour rights criteria according to ILO’s core conventions and are included in all public contracts for surgical instruments.  When following up on the manufacturing sites in 2014 it was found that significant improvements had been done since the new policy had been installed. Prohibition of child labour was strictly enforced, wages were paid in accordance with minimum wage and employees were not forced to work overtime.

The working conditions at these manufacturers stood in stark contrast to others in the area which faced no such demands from their buyer, demonstrating the impact of procurement has and what an effective tool it can be to support positive socioeconomic change.

SDG 8: Decent Work and Economic Growth

Source: Konkurrensverket, 2011http://www.konkurrensverket.se/globalassets/om-oss/upphandlingsreglerna---en-introduktion-pa-lattlast-svenska.pdf Swedwatch, 2014 http://www.swedwatch.org/en/reports/healthier-procurement

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IKEA - A global planet and people positive business strategy

A player with even larger purchase power is the global furniture company IKEA. IKEA’s value chain affects millions of people on a daily basis and the way it is operated has the power to change whole communities.

To be a socially, economically and environmentally positive force has pushed IKEA to take a greater responsibility for the communities in which they operate and to expand their business into areas which are not their core.

IKEA works with responsible sourcing through IWAY: the IKEA Way on Purchasing Products, Materials and Services. It sets out sharp sustainability requirements for environmental, social and working conditions which all IKEA first- and second-tier suppliers must follow.

IKEA also runs a transparent and reliable system for responsible recruitment of migrant workers at first-tier suppliers in identified critical areas, to provide economic opportunities for people at the margin of the economy.

Last but not least, IKEA also invests in and owns its own renewable energy production, to power all their store worldwide and be energy independent by 2020. And by 2020 they plan to double their investment in renewables.

Not only because it is right for the planet – but because it enables IKEA to lower their product prices and reach even more consumers in price sensitive markets. In fact, today IKEA is the second largest producer of renewables in the US!

SDG 8: Decent Work and Economic Growth

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Sweden Textile Water Initiative – Decreasing water consumption by 8% with new industry guidelines

But few companies have the purchase power to change their industry alone. They have to collaborate. Industry collaboration is another proven effective tool to make change, which the Sweden Textile Water Initiative (STWI) has demonstrated. The textile sector has many challenges, but one denominator capsulate most of them – water. Overconsumption and chemical pollution of freshwater has a significant impact on the local environment, the working conditions, and the profitability of the manufacturers in countries like India and Bangladesh where freshwater is a scarce resource. To gain a better understanding of the challenges faced by the industry and find the right mechanisms to address them, major Swedish textile and leather brands such as IKEA, Lindex and Björn Borg, together with the Stockholm International Water Institute, formed the Sweden Textile Water Initiative in 2010 .  The 27 member companies developed joint guidelines for sustainable water management based on their best practices for water and energy saving and minimal chemical usage.  In 2016, 119 factories in India, China, Bangladesh, Turkey and Ethiopia were included in the initiative. So far, the total water consumption has decreased by 8 % in these factories, corresponding to the daily water need for nearly 50 million people. The factories have improved their profit margin along the process. The initiative have caused several legislators in these textile cluster regions to adopt the guidelines as industry norm, convinced by their better practices. In 2017, STWI plans to expand to Hong Kong, Myanmar, Pakistan, Indonesia, Cambodia and Vietnam.  SDG 6: Clean water and sanitation

Source: STWI

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Atlas Copco – Navigating difficult markets with the UN guiding principles

But very often Swedish companies find themselves as individual suppliers to larger projects, with limited capacity to steer procurement and project processes. In markets with limited or corrupted state control of rule of law this poses a great risk for involvement in corruption and human rights abuses.

In 2013, conflict and disputes regarding land rights grew around the construction of the Hidroituango dam in Colombia. The Swedish mining and construction equipment company Atlas Copco had sold products to the consortium that is responsible for constructing the dam, and Atlas Copco and the Swedish Foreign Mission was made aware by Amnesty International of the human rights issues surrounding the project.

Atlas Copco decided to follow the UN Guiding principles on Business and Human Rights and investigate the issue in collaboration with local NGOs, the industry peer Scania and Swedish governmental representatives in Colombia. In accordance with the UN principles they conducted internal training and a human rights based due-diligence, and provided access to remedy to the afflicted.

Today Atlas Copco has a zero-tolerance approach to bribery and corruption, including facilitation payments, and a range of internal controls in place that includes human rights due diligence on beforehand of high-risk projects, to prevent any support of corruption or human rights abuse.

SDG 16: Peace, Justice and Strong Institutions

Source:Atlas Copco Annual Report 2013Amnesty InternationalUN Guiding Principles on Business and Human Rights

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Pågen – applying resource-efficiency throughout the value chain to increase profits

Pågen is one of Sweden's leading bread exporters with an annual turnover of 220 million euro. They are representative of your average Swedish company – mid-sized, reliant on European exports, and with a family connection remaining at its core. Their breads are sold as fresh produce, at a higher price than competitors with longer shelf life but more conservatives. Because of the short time frame to match demand with supply, the baking industry’s profit margins often are quite low, at the most around 6-8 % but usually lower. All breads which are not sold are returned to the bakery at a cost of hundred thousands of dollars per return percentage. To keep return costs down is key. Based on this insight Pågen has worked towards maximum reuse and energy-efficiency to cut return costs, and simultaneously build on their brand as a caring family bakery – their motto being “Baked with love”. The transport logistics are organised to achieve fewest number of miles and trucks are continuously being replaced with more fuel-efficient vehicles.  The mills are situated close to the bakeries and the grains are cultivated within a radius of 100 miles from the mills to shorten transport routes. All returns from stores are reused as yeast or sold to local farms as animal feed.  Energy from the entire baking process – ovens, compressors, cooling machines and exhaust air ventilation – is being reused. By integrating sustainability in the entire value chain, Pågen has been able to reduce CO2 emissions, waste and energy usage – and cut costs. They have identified the key challenge in their business and applied sustainable practices to increase profit margins while meeting consumer demands. 

SDG 12: Responsible Production and Consumption

Source: Pågen

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Spotify – Investing in universal 100% paid parental leave

Spotify is a sound streaming service which has redefined the way people listen to music, by giving subscribers instant access to millions of songs at the cost of one CD a month. By allowing users to play music directly – without downloading any songs – Spotify has attracted more than 100 million users worldwide. Spotify operates in a fast-changing, technology-driven industry. Their business relies on innovative, creative employees who can develop their services and brand to remain competitive.  In 2015 Spotify announced that all their 1,600 employees around the world, women and men, are eligible for up to six months of parental leave with 100% pay. The global policy recognises the universal importance of a healthy work- and family life balance, and aims at giving men and women equal opportunity to combine family life with career ambitions within Spotify. Not only is it a decent benefit with respect of equal labour rights, it is also a way of differentiating Spotify from its competitors. The goodwill generated by the new parental policy will attract and keep international talents necessary for Spotify’s growth. And according to Spotify the policy has already increased worker productivity and profitability.

SDG 5: Gender Equality

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Trine – enabling everyone to yield returns from solar power

1.2 billion people are in need of access to electricity today . And with solar panel prices falling rapidly, off-grid solar power is quickly becoming an interesting investment prospect.

The social innovation start-up Trine saw an opportunity to match the unmet energy demand with the growing investment appetite and created a crowdfunding platform which enables anyone to invest in solar energy projects in developing countries, providing remote communities with electricity.  Trine lists upcoming projects on their website together with information about project start, duration, the expected CO2 reduction, expected financial return and risks involved. The minimal investment is $25 and the return of investment is about 5-6 percent. Upon successful conclusion of a project’s funding, the investment is transferred to the solar partner as a part of their loan. With access to affordable solar energy the consumers’ energy costs can be reduced with up to 50% compared to the energy sources currently used. So far, Trine has provided over 100 000 people with clean electricity and their purpose and goal is to end energy poverty altogether.  

SDG 7: Affordable and Clean Energy

Source: World Energy Outlook 2016. International Energy Agency, 2016

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H&M – leading a revolutionary 100% circular business plan for 2040

H&M is a leading global fashion company with more than 3,600 stores in 61 markets worldwide, and online shopping in 23 countries. H&M has been known for being an affordable fashion retailer. But pushed by their consumers, the company has become a sustainability pioneer. They have faced major challenges and learned how critical responsibility and trust is to their company value. In April 2017 H&M presented a new revolutionary, circular business plan - going further than any other fashion company. The company has committed to use 100% recycled or other sustainably sourced materials by 2030 and to become climate positive throughout its entire global value chain by 2040.

In other words, they are going all in. H&M aims to use their size and scale to lead the way to a circular economy. And as one of the world’s largest fashion retailers H&M has the potential to fundamentally shift one of the largest global industries - making fashion sustainable and sustainability fashionable. 

SDG 13: Climate Action

Source: H&M

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Companies in the lead

Evidently, the sustainability shift creates new opportunities to develop innovative solutions and find new revenue streams. There is a growing demand for sustainable and resource-efficient goods and services. Companies which act and integrate this in their core business today will be the winners in the markets of tomorrow.  This is also a reason for the Swedish Government to actively support Swedish sustainable business development. We want Swedish companies to continue to be global industry leaders and trusted partners in the future. So that they can continue to contribute to our societies’ welfare with job creation and clean growth. In Sweden – and abroad.

Here you see some of our most sustainable Swedish companies in your country.

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Want to know more?

If you want to come into contact with Swedish companies, know more about Swedish sustainable business or investing in Sweden, you are always welcome to contact the Swedish Embassy and Business Sweden. We are dedicated to Swedish trade and investment promotion and work in close partnership with the Swedish industry.

Thank you for your time!