The Diplomat: How Sustainability Can be Good Business ​

THE DIPLOMAT

Often times the mainstream media paint a story about a country that might not capture the full picture. International Business Review goes above and beyond to present you with a new perspective to the politics, the business, the people, the culture and the very essence of a country through the eyes its diplomats, in The Diplomat.

The ambassador of Sweden, His Excellency, Mr Dag Juhlin-Dannfelt, writes exclusively to International Business Review about sustainability in the Swedish business landscape, and the country’s milestones in the adaptation of green technologies towards sustainable economic growth.

a look at Sweden

How sustainability can be good business

Many people talk about sustainable business but what does it really mean? Well, the term sustainable business is usually used to describe how companies have integrated environmental and social sustainability to be a core part of their operations and the work companies do to ensure that their activities have a positive impact on society, the environment or the economy. Efforts to reduce emissions of carbon dioxide, transparency, fair pay, promotion of equal career opportunities, and involvement with local communities are some examples of sustainable business initiatives.

One way of defining sustainable business is to base it on the four focus areas of the UN Global Compact: human rights, working conditions, anti-corruption and the environment. Within these four areas, companies are responsible to avoid and mitigate adverse effects of doing business – regardless of where in the world their operations and business relations are conducted. At the same time, many companies face major challenges in markets where regulations and control mechanisms for protecting human rights and the environment, or inhibiting corruption, are either lacking or absent. In these cases, it is especially important that companies meet international guidelines and standards for sustainable business and avoid the pitfalls and shortcomings of prevailing local practices.

And how are Swedish companies faring when it comes to sustainability? Actually, 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. In the latest the RobecoSAM Country Sustainability Ranking (2019), Sweden was ranked first of 65 countries, based on environmental, social and governance (ESG) indicators.

Let’s take a closer look at the different aspects of sustainable business.

The environmental aspects of sustainable business are perhaps the first thing that comes to mind and they are very broad and include areas such as paper recycling, the sustainable use of resources, minimising environmental footprints and reducing water consumption. Cleantech – a term used to describe products or services that improve operational performance, productivity or efficiency while reducing costs, inputs, energy consumption, waste or pollution – is another important part of sustainable business. Internationally, Sweden continues to fare well in energy and environmental technology, coming third in the Global Cleantech Innovation Index 2017, after our Nordic neighbours Denmark and Finland.

Gender equality and meritocracy should not be overlooked and are very important aspects of the way companies work with sustainable business. Companies can promote equality by making it possible for parents to combine work and family, encouraging shared participation in childcare, and giving women and men equal opportunities to rise to leadership positions. 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 2020 report, Sweden was ranked fourth of 153 assessed countries, surpassed only by Nordic countries Iceland, Norway and Finland.

Corruption has been identified by the World Bank as one of the greatest threats to growth. Sweden ranked fourth on Transparency International’s Corruption Perceptions Index 2019. Since July 2012, Sweden’s legislation categorises the giving or acceptance of bribes as a serious crime. The legislation is largely a result of Sweden adopting anti-corruption conventions in collaboration with the EU, European Council, UN and OECD. Since 1997, the OECD has had a convention prohibiting the bribery of overseas public servants in international business relationships; to date, 44 countries have ratified the convention.

The Swedish Government is also aiming to inspire companies to increase their sustainability efforts and is doing so by placing demands on its own enterprises and promoting sustainable initiatives in general. The 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. These reports have to comply with guidelines from the Global Reporting Initiative (GRI).

In 2012, Sweden took another important step by asking state-owned companies to set several sustainability goals, and to report on them in 2014. The targets are to be set by the company boards and should 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.

Of course, 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. 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 Government has a unit within the Ministry for Foreign Affairs focusing on issues related to sustainable trade and business, and also has an Ambassador for Sustainable Business.

Sustainable business is a profitable business.

For many companies, sustainability is an obvious necessity and a part of their core business, while others may feel it is a discouraging challenge. This can be based in 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 are operating. Future-minded business leaders have employed techniques and socially responsible business models whilst taking an active role in opposing corruption, which has made Swedish companies attractive to business partners on the international stage.

For example, Sweden plays a prominent role in cleantech sectors with several companies as leaders in their fields. 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 our waste management system where 99.2 percent of the 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 our 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.

And we can see that the access to green and affordable electricity has attracted more investments to Sweden, for example in data centres and green batteries.

Data Centres

Cloud computing has grown many times over the last decade and the data centres risk becoming an environmental threat. Sweden has seen a growth of investments in data centres in the last couple of years with investments by Facebook, Amazon, Google, Microsoft and many others. The access to renewable electricity is important for these companies in order to strengthen their green profile. The electricity cost is also an important factor.

Other factors such as political stability with a high level of transparency and predictability in the decision-making, an easy-to-do business environment with quick approvals in the planning process are also important. But a reliable power supply, low energy prices and an abundance of renewable energy sources e.g. hydropower, geothermal power, biomass and wind has made Sweden an attractive location for data centres to emerge.

The procurement of renewable energy, government initiatives to build smart cities, which will increase the deployment of edge computing, and the growth in digital economy initiatives and industrial tech spend are expected to drive further data centre investments in Sweden.

Green Batteries

The transport sector represents 25 percent of Europe’s CO2 emissions and sustainable mobility is one of the key focuses of the European Green Deal and a key component in the electrification of transportation is green batteries.

That is why it is interesting to take a look at the Northvolt investment in Skellefteå. In this northern Swedish town two lithium ion battery gigafactories are under construction. Northvolt will be a European supplier of sustainable, high-quality battery cells and systems. Founded to enable the European transition to a decarbonised future, the company has made swift progress on its mission to deliver the world’s greenest lithium-ion battery with a minimal CO2 footprint.

Northvolt cell manufacturing will be powered by 100 percent renewable energy and it will need a lot of electricity, at least 300 megawatts – which is twice the consumption of the whole of Skellefteå. The municipally owned power company Skellefteå Kraft is confident, however, and claim that they can provide “the world’s cheapest, most stable electricity, and it’s 100 percent renewable”.

Furthermore, the establishment of the battery factories – one of the biggest industrial investments in Europe – is set to bring thousands of new jobs. After decades of dwindling population, when at one point over a thousand flats with the public housing company were standing empty, Skellefteå is now preparing to grow from 72,000 inhabitants to closer to 100,000. This has given rise to other sustainable growth opportunities, such as:

Together with Northvolt and EIT InnoEnergy, Skellefteå Kraft is investing in making Skellefteå Airport a test centre for electric commercial aircraft.

Sara Cultural Arts Centre in Skellefteå will open in 2021 and is planned to be one of the world’s tallest wooden building – and the world’s most energy-smart cultural centre. Skellefteå Kraft has entered into a collaboration with ABB to connect the building’s energy system to the city’s. Artificial intelligence will then control the flow of energy in the cultural centre for use where it is most needed.

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.

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