The Swedish way to transforming your company

Author: Nino Kvantrishvili

Senior Manager, Sustainability and Partnerships

Sweden was an early bird with regard to sustainability thinking. The Swedish government introduced the discourse on sustainable development in the early 1990s. Until that point in time the focus was laid on the ecological dimension of sustainability. 

For many companies, sustainability is an obvious necessity and a part of their core business, while others may feel it is a discouraging challenge due to concerns about reduced profit margins, or a need for commitment at management level, or merely a lack of knowledge about sustainability. But, whether a company operates globally or is limited to Sweden, sustainability is an important component of its long-term profitability – and a worthwhile investment.

Sweden and Swedish companies have long been at the forefront of the sustainability drive and businesses have contributed to positive social development through their sustainability efforts and programmes in the countries where they operate. Future-minded business leaders have employed techniques and responsible business models while taking an active role in opposing corruption, which has made Swedish companies attractive to international business partners.

Many of the Swedish companies today are at the forefront in integrating a sustainable approach to business in their strategies and daily management. Swedish companies have a long history of active work in the field and are widely viewed as pioneers.

Why is sustainable business important?

Sustainable business is essential to businesses seeking to ensure long-term value creation and manage business risks and opportunities related to sustainability. It is also important in ensuring that enterprises constitute a strong, positive force actively seeking to promote UN and Swedish sustainable development objectives.

Enterprises and their activities are fundamental to economic development. Their role, the production, distribution and sale of products and services in open markets within the framework of existing laws and regulations, is a vital one. Thus in a market economy, they are indispensable to a society’s sustainable prosperity, welfare and employment. As the activities of some enterprises can also have a detrimental impact on society, it is essential that businesses work to minimise their impact and manage risks. If long-term, sustainable growth is to be secured, it is in society’s interest that enterprises be encouraged and given the right conditions in which to pursue their activities. This is particularly relevant in today’s globalised world where businesses operate in markets everywhere, where there are challenges to face, and public administrative capacity in many countries is unequal to the task of implementing national legislation in conformity with internationally accepted standards.

Why is sustainable business important to the Swedish government?

Sustainable business strengthens both long-term value creation and our competitiveness, and contributes to the achievement of societal goals.

• Swedish enterprises that enjoy good relations with their stakeholders and the world at large strengthen their risk management processes and are more attractive to business partners at international level.
• Governments have a responsibility to protect the environment, uphold human rights, ensure good working conditions and promote anti-corruption measures, gender equality and diversity. Business enterprises bear a responsibility for their impact on society with regard to these issues.
• Sustainable business represents values which the Swedish government and Swedish society seek to safeguard and promote.
• Companies with long-term, sustainable business models are more likely to survive in the long run.
• Sustainable business strengthens companies’ long-term international competitiveness.
• Enterprises that take a long-term view of value creation more readily attract the most talented workforces. Their financing costs are also lower due to reduced risks associated with their business operations.

International Rankings

Sweden has been named the most innovative country in the European Union according to this year’s European Innovation Scoreboard. Among the country’s emphasized strengths are: digitization, research, lifelong learning.  Between 2015 and 2022, the EU has improved its global position in innovation work and compares well with other strong innovation countries such as Australia, Canada, South Korea and the USA. The European Innovation Scoreboard is presented annually and carried out by the European Commission.

International investment company RobecoSAM, which specializes in sustainability investments, ranks Sweden second of 150 countries in their RobecoSAM Country Sustainability Ranking (last update April 2022), based on environmental, social and governance (ESG) indicators.

Internationally, Sweden continues to fare well in energy and environmental technology, coming fifth of 180 countries in the 2022 Environmental Performance Index.

The World Economic Forum’s Global Gender Gap Report assesses and compares national gender gaps based on economic, political, education and health criteria. In the 2022 report, Sweden was ranked fifth of 146 assessed countries, surpassed by Iceland, Finland, Norway and New Zealand.

Corruption has been identified by the World Bank as one of the greatest threats to growth. Sweden ranks as the fourth least corrupt country in the Transparency International’s Corruption Perceptions Index 2021 (published in 2022), together with Norway and Singapore – and with the three countries of Denmark, Finland and New Zealand sharing the top position. The index ranks 180 countries and territories by their perceived levels of public sector corruption.

Promoting sustainable initiatives

The Swedish government expects all Swedish companies, private or state-owned, to respect human rights in all their operations. It encourages the private sector to follow the OECD’s guidelines for multinational companies, to apply the ten principles of the UN Global Compact and follow the UN Guiding Principles on Business and Human Rights.

The Swedish government also aims to inspire companies to increase their sustainability efforts and does so by placing demands on its own enterprises and promoting sustainable initiatives in general. The Swedish government owns 46 companies of various sizes, two of which are listed companies. In 2007, Sweden became the first country to demand sustainability reports from state-owned enterprises. The reports have to comply with guidelines from the Global Reporting Initiative (GRI).

In 2012, Sweden took another step by asking state-owned companies to set several sustainability goals. The targets are to be set by the company boards, with focus on diversity, environment issues, human rights, working conditions, anti-corruption measures, business ethics and gender equality. The targets must also be measurable, specific and relevant to the companies’ operations.

Nevertheless, ultimately sustainable business practice should be driven and owned by the private sector, with each company deciding if and how it will work with sustainability. Striving to lead by example, the Swedish government has a dedicated platform for international sustainable business, aiming to help dialogue across borders and achieve positive change, and also has an Ambassador for Sustainable Business.

The various aspects of sustainable business

Currently, Sweden is one of the world’s leading nations when it comes to innovating, implementing and exporting cleantech solutions in areas like construction, recycling and urban planning.

The combination of a high level of environmental awareness and knowledge with strict environmental legislation has led Swedish companies to be environmentally innovative and efficient in their operations. Low-impact production techniques, in particular within industrial production, are now often exported to other countries.

Let’s take a look at how important access to renewable energy has been to investments and jobs in Sweden. More than 54 percent of Sweden’s energy production now comes from renewable sources. One important part is the country’s waste management system, thanks to which 99.2 percent of household waste is reused or recycled (2019). A lot of the waste is used to produce biofuel, district heating and electricity and many city buses run on biogas derived from waste and municipal sewage. In recent years, we have also seen an increase in the use of heat pumps, another contribution to a greater proportion of Sweden’s energy coming from renewable sources. In the electricity sector hydropower constitutes the main source of renewable energy, although we have seen huge investments in onshore and offshore wind farms in Sweden in the last couple of years.

These are just some examples of the many interesting things happening in Sweden in the area of sustainability. Sweden’s successful experience and knowledge in implementing green technologies could be used by many countries around the world, not least where the challenges of developing sustainable infrastructure in line with the needs and demands of a growing population must be overcome in order to generate economic growth.

Sustainable business is a profitable business

Long-term sustainable growth is only achieved through ambition and action. Ambitious long-term goals with a clear sustainable vision combined with hyper local short-term solutions and actions. It becomes one of the drivers of growth for Sweden with new industries, innovations and jobs created. And similarly for your business, investing in sustainability can reduce waste (and costs), create new business models and revenue streams and increase employee engagement and loyalty, to name a few benefits. Sustainability and profitability go hand in hand and it also offers practical guidance for executives on how to integrate sustainability into strategy and operations.

No doubt, the Swedish way of doing business is “doing the right thing” and if the Swedish approach were more widely imitated, we would live in a more inclusive, healthier and happier world.

Sources:

https://sweden.se/work-business/business-in-sweden/sustainable-business

https://www.cairn.info/revue-l-europe-en-formation-2009-2-page-157.htm