Sustainability through a Swedish lens

What the world can learn from Swedish companies

The full title of one of the most widely spread photographs in the world is AS17-148-22727, but it is more widely known as The blue marble. It’s an image of our planet taken on the 7th of December 1972 by the Apollo 17 crew as their made their way to them moon. It displays earth from an altitude of 45 000 km and beneath the clouds you can make out the shapes of the Arabic Peninsula, the African continent and the Madagascar.

A Swedish Hasselblad camera took this iconic image. In the same way it reflects a view on the world through a Swedish lens, I will try to take a broad view on how sustainability and profitability can be combined, trough my own Swedish perspective.

The definition of sustainable development came about in 1987 and was phrased by a UN commission lead by former Norwegian prime minister Mrs. Gro Harlem Brundtland. It concluded that a sustainable development is one that meets the needs of the present generations without compromising the ability of future generations to meet their own needs.

If we use fossil fuel as energy it will inevitable result in a higher concentration of green house gases in the atmosphere. That causes the planet to heat up witch then is a factor that will limit our children’s abilities to meet their own needs as global warming is affecting their living conditions. And that’s why it’s unsustainable. If we instead harness the energy of the renewable resources that are the sun, the wind or the waves, it will not cause any emissions at all and therefore does not affect our children’s ability to meet their needs.

There is a story of how one of the astronauts on Apollo 17, as they moved further and further away from our planet, suddenly held up his hand and realized he could obscure the entire planet with his thumb. That’s how insignificant we are in the universe. We live on a small planet that looks like a blue marble in a remote corner of a galaxy that in itself is only one among thousands of other galaxies.

The story is said to have provoked a new thought among the general public during the early 1970s: the realization that all our resources at our disposal are on just this tiny blue marble. We cannot anticipate getting an intergalactic shipment with new stuff from another planet — we have to use the resources we have already in the best way possible.

And as with all resources — be them material, monetary or human — there’s really only two ways you can use them: smart or stupid.

In order to link sustainability with profitability we have to ponder on the issue of why companies actually exist. The answer is in the first chapter of all economic theory textbooks: companies do exist in order to provide the goods and services their customer wants. Which leads us to the next question: what makes companies successful over time? The ability to being able to predict the future need of goods and services that the customer will have.

Over the past few years, I’ve had the opportunity to meet with business people in America, Asia and Europe. What has struck me is how many of them that has chosen to use sustainability to increase their profits. But they don’t always do it for the same reason as you might expect.

In Bejing someone told me about how Hisense, a Chinese appliances manufacturer who marketed energy efficient fridges experienced great interest from consumers. To them, it wasn’t primarily about reducing their environmental impact, but rather about the savings that they could get from buying a fridge that used less electricity.

In New York, I met someone from Vale, the mining company, which was putting a lot of time and effort into increasing the working conditions into their mines. It’s not only done in order to prevent employees to get killed in accident (and a number of them do every year) but there was also the financial benefit to it. If you don’t have to stop production in order to clean up after somebody got mashed in one of those giant blenders that crush rock in order to get the metals out, you obviously save lots of time and money.

If this all sound a bit harsh and cynical and not as if these companies have embraced sustainability from a ethical standpoint, from an altruistic vision of making the world a better place, consider this: it’s not moral, but money that makes the world go round. In my opinion there’s little evidence that the European way of imposing its own moral values on other regions of the world is a good way of helping the world become more sustainable. More often than not, it only pisses people of. As long as the results of any action towards a better, more just and sustainable world can be measured, the reason for doing it or the means by which it is done, becomes less relevant.

Let’s put it another way: it doesn’t matter how noble you are, unless you make a profit your company will eventually run out of cash. The good news is however that using resources more wisely — be it material, monetary or human resources — will always pay off.

Always and everywhere, without exception.

And so trying to deploy your resources in a smarter way is the way to make your company more innovative and more profitable at the same time. The paradox of combining profitability and sustainability is the fact that if you look for ways to save money, it’s very hard to find something as people are either protecting their budgets against unnecessary cuts or their current routines against unnecessary critique. The way to do it is to look at how resources are used. Where they are used in a stupid way — like having the light on in an office when nobody is there — there’s money to be made.

This might sound like an awful lot like common sense on the most basic of levels and yes, it is. And that’s why it is working. And I would argue that is also the single most important reason behind the fact that there are so many Swedish companies that are perceived as leading in terms of embedding sustainability into their business practices.

Like other countries we’ve managed to create a tax-funded welfare state that does take care of its own citizens, protects our environment and that have imposed a number of rules and regulations to ensure that the quality of life is high in Sweden. Having to comply with all these rules and regulations that in many aspects are second to no other countries, Swedish companies are molded in a way that gives them competitive advantages when they conduct business in other countries.

A lot of these rules and regulations also makes sense from a resource management point of view and in a way it is this the world can learn from the way Swedish companies operate: it applies a lot of common sense.

I’m aware of the fact that this might disappoint a lot of readers looking for that secret formula that has made so many Swedish companies top various lists of the most sustainable enterprises in the world. But really: the secret formula is neither a secret nor a formula. The recipe is in all its simplicity is: add common sense when managing your resources. And in its essence is that choice between smart and stupid.

Let me give you a few examples on how this is applied.

One of the most fun cars I’ve driven lately is the Volvo V60 plugin-hybrid. It has one diesel and one electric engine and enough batteries to power the car for 50 km, which is actually more than most people living in urban areas drive on an average day. In order to conserve energy the engines stop when the car stops and the battery is charged when breaking, just like a lot of other modern cars. After all, common sense teaches us that having the engine running while going nowhere is… just stupid.

In Sweden, almost all electricity comes from clean energy sources such as water, nuclear, thermal or wind, which means that the environmental benefits of running the V60 on battery are great. However, that isn’t the primary reasons for to purchase the car are not its sustainability credentials. Rather it’s the fact that it’s indeed very fun to drive (the electrical engine also ads extra boost when accelerating) and that the cost of driving it’s so much lower than running on diesel which in Sweden will set you back almost 1,5 euros/liter (4 dollars/gallon).

Like many other airlines the national carrier of Sweden, Norway and Denmark is experiencing financial turbulence. That’s whyScandinavian Airlines have initiated a company wide cost cutting scheme and one of the more conspicuous costs in their operating budget is of course the fuel. Apart from the obvious things such as replacing their old MD80s with newer, substantially more energy efficient Boing 767-800s, Scandinavian Airlines have also rethought the very way they fly. Common practice is that a flight gets a preliminary time slot for landing when it’s in midair but will have to wait until it reaches its destination before a final slot is given, something that often causes flights to have to circulate before receiving the final go-ahead from the control tower.

The continuous decent practice used by Scandinavian Airlines means that as soon as the aircraft reach cruising altitude, they get a precise landing slot on their destination and start a constant gliding decent. This way the aircraft can reduce the power needed, reduce the distance of the flight and save fuel. On an average flight between Stockholm and Copenhagen, this translates to savings of as much as 500 kg of fuel. However, to the passenger the fact that Scandinavian Airlines flies smarter than other airlines isn’t the real benefit but the fact the it shortens the journey with 8-14 minutes.

The same resourcefulness applied by Volvo and Scandinavian Airlines when it comes to raw materials can also be applied on human resources. A few years ago I received a letter from my bank, the SEB Group, informing me that they’ve started to offer customer service in 23 languages. But, as it turned out, they hadn’t hired any new staff. Instead they had mapped their “language inventory” among its staff and found that they spoke 23 languages. Having done that, they invested in new software that soon allowed customers to choose from a menu of languages as they called in and was then routed to a representative who spoke that tongue.

Anyone who has been forced to have anything to do with banks in other countries know how frustrating it can be trying to make yourself understood in a language you’re not entirely comfortable with. By deploying previously unused resources of their customer service representatives, SEB was able build stronger relationship with the customers who now felt better understood by the bank.

Ikea is another Swedish company that uses a lot of common sense and use language as an asset when providing better service. If you find a member of the staff at an Ikea store (which I realize can be a bit of a challenge as they want you to find as much as possible yourself) you will find that they have little flags attached to their name tags, indicating the number of languages they speak, allowing you to ask questions on what those strange product names translates to in your mother tongue.

As one of the most successful fashion retailers in the world, it might come as a surprise that H&M does not own any factories. Instead, the chain relies on thousands of factory owners in countries such as China, Vietnam, Cambodia and Bangladesh to produce all those new fashion items every week. During the last year or so, there have been a number of reports in media on the appalling working conditions in the garment industry of Bangladesh. Even though dozens of people have been killed as factories have caught fire or collapsed, the bigger problem is the wages that aren’t high enough to support a living.

Even though H&M has a rigid system of checking that the H&M code of conduct is followed in the factories they employ, the Swedish retailer hass a new method of trying to tackle the systemic problem of low wages in the country. On one hand H&M is lobbying for raising the minimum wages in the country by having its CEO meet with the prime minister of Bangladeshurging her to change the labor laws. On the other hand, H&M buyers are educating factory owners on the business case for higher wages.

There’s much more common sense to this than what firsts meets the eye. Since it’s impossible to live on what you earn if you were to work normal hours, a lot of the workers in the garment industry in Bangladesh routinely sign up to work longer hours or more days in the same factory or by taking on a second job. Often working all days of the week without time to recover, this will eventually take its toll on the quality of their work. As H&M is only interested in buying garments that meets their quality standards, this means that the factory will loose money for every garment that does not. What might first seems like a counter intuitive measure becomes a clear business case once you apply some common sense and recognize that the workers are a mismanaged resource and it is that which causes the unwanted effects.

If there is a Swedish way of embedding sustainability into the business processes that is shared by the above mentioned and other Swedish companies, it is the way common sense is applied wherever possible. I would even argue that it is not about applying a certain Swedish version of common sense, but rather just remembering to apply it. And that is something that countries could easily do, no matter where they are located or regardless of what industry they are in.

If you want to do as the Swedes, recognizing that resources only can be used smart or stupid is a good start and asking where resources aren’t currently being used cleverly a constant source of innovation.