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Opinion: Lessons from Sweden in sustainable business

What can Swedish companies teach the world about sustainability? asks Susanne Arvidsson, associate professor in accounting and finance at Lund University, in this opinion piece first published by The Conversation.

Opinion: Lessons from Sweden in sustainable business
Sweden's biggest companies have started to integrate sustainability into their business models. Photo: Melker Dahlstrand/imagebank.sweden.se

There is an increasing trend among companies across the globe to report on their sustainability. As well as information on the company's economic performance, this includes information on how it is handling social, ethical and environmental concerns. It is a trend driven by customers, suppliers, employees and banks in recognition that these are just as important elements of any business.

Often, the level of information provided by companies is criticised for being inadequate. But my recent research into Swedish companies shows that the quality of information does appear to be increasing. It also shows what areas are in need of further improvements to make this practice worthwhile.

For years Swedish companies have been regarded as among the best in corporate communication – in general and in sustainability reporting in particular. Their excellence in disclosing information on their performance on the sustainability arena is confirmed in both academic research and comprehensive reports like major accountancy firm KPMG's on global sustainability trends.

Until recently, whether or not a company reported on its sustainability was voluntary in most countries. But from the financial year 2017, a new EU directive requires every so-called “public interest entity” to report on the social and environmental impact of its business model.

Having recently studied sustainability reports from the 30 largest listed Swedish companies over the period 2008-2015, there's a lot to be learned from them. It includes household names like retailer H&M, telecoms company Ericsson and car maker Volvo. It makes clear that big and profitable companies can be more accountable when it comes to sustainability reporting.


Sustainability reports help hold companies to account. Photo: Håkon Mosvold Larsen/NTB scanpix/TT

None of these companies is perfect. My research shows that they too are learning all the time when it comes to their sustainability reporting. Over the seven-year period that I looked at, the information goes from being quite brief and general to more elaborate and detailed.

This is an increasingly important part of demonstrating business ethics. In these sustainability reports companies communicate how they take responsibility for their impact on society. This is done by disclosing their efforts to integrate social, environmental and ethical concerns into their business practices.

Most importantly, my research shows that Sweden's biggest companies have started to integrate sustainability into their business models. Volvo's business model is built on three pillars: economic, social and environmental. This holds true for large companies that you may not have heard of too. Take Assa Abloy – it's the world's largest lock manufacturer and has a market cap of $22.6 billion. In its business model, sustainability is accentuated in all processes from innovation and product development to logistics and sales.

The more recent reports show that several companies have also started relating their sustainability goals to risk management. They increasingly see how things like climate change and environmental issues will impact on their bottom line. For example, Sandvik, SEB, and Volvo are good at relating their sustainability goals to risk management. They highlight risks throughout the value chain and sometimes also discuss how these are being managed.

Room for improvement

There is, of course, room for improvement in all the companies. In some, this integration of sustainability into their business models is more tentative. It is clear that this is a new process for them and they are still working on efficiently integrating sustainability at the heart of their business model.

In particular, I found there were many that failed to realise how engaging in various sustainability activities can help their bottom line. Instead, sustainability is seen as more of a corporate social responsibility exercise. But relating sustainability to the bottom line is critical for any company – not least because shareholders often use this against their company having a focus on sustainability goals.

Another area for improvement is what gets included in sustainability reports. It is evident that developing valid and reliable measures of sustainability is tricky. Often concrete targets and time frames for achieving a sustainable goal are simply left out, leaving vague statements such as an aim to decrease CO₂ emission and waste.

This also proves problematic when it comes to comparing the sustainability performance of different companies. Even where there is sophisticated reporting, the lack of a universal system of measures makes it difficult for investors to assess which companies are better.

The ConversationDespite these shortcomings, the growth in sustainability reporting in recent years is significant. It shows that companies are thinking about and forcing themselves – as well as others – to act in a way that profits wider society as well as their financial earnings. And Swedish companies offer inspiration to others that there is a business case to put ethical concerns on the same plain as economic ones.

Susanne Arvidsson, Associate professor in Accounting and Finance, Lund University

This article was originally published on The Conversation. Read the original article.

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OPINION & ANALYSIS

OPINION: How I learned that Sweden is a nation of secret queue-jumpers

Swedes have a reputation as a nation of orderly queuers. But it doesn't take long living here before you realise that for things that matter - housing, schools, health treatment - there are ways of jumping the line.

OPINION: How I learned that Sweden is a nation of secret queue-jumpers

Soon after my daughter was born, I emailed Malmö’s sought after daycare cooperatives to get on their waiting lists. 

I didn’t get an answer from any of them, so a year later, I began dropping her off at the daycare allotted to us by the municipality. 

It was housed in a concrete structure so grim-looking that it was used as the gritty backdrop to the police station in The Bridge, the Scandinavian Noir crime drama based in Malmö. Getting there involved taking a lift that frequently smelled of urine. The rooftop playground was (after we had left) used by local dealers to stash drugs.

But to be fair, it was close to our house and in other ways, perfectly adequate. 

A year later, though, I got a call from one of the cooperatives I had emailed. My daughter Eira was next in line. Did I want to come to meet the staff and existing parents?

When I arrived, I discovered I wasn’t alone. My friend, a Swede looking to establish herself in Malmö after a decade in London, was there, as were several others.

Listen to a discussion about queue-jumping on Sweden in Focus, The Local’s podcast. 

Click HERE to listen to Sweden in Focus on Apple Podcasts, Spotify or Google Podcasts.

I soon had a distinct feeling of being outmanoeuvered, as I watched her identify the parents in charge of new intakes and get to work on them, asking intelligent questions, demonstrating her engagement, and generally turning on the charm. 

A few days later I discovered that, even though I’d been told Eira was top of the list, my friend’s son had got the place. 

This was my first lesson in Swedish queuing, and it is a pattern I’ve seen time and time again.

Swedes, I’ve learned, generally respect a queue if it’s visible, physical, and not about anything particularly important. But when it comes to waiting lists for things such as housing, schools, and healthcare, many people, perhaps even most, will work their contacts, pull strings, find loopholes, if it helps them jump the line. 

When it was time for the children of the parents I knew to go to school, several of them — all otherwise upstanding law-abiding people — temporarily registered themselves at the addresses of friends who lived near the desirable municipal options, and then, after their children got places, moved back.

When I protested weakly that by doing this were depriving someone else’s child of their rightful place, they simply shrugged. 

When Eira joined Malmöflickorna, a dance gymnastics troupe that is a kind of Malmö institution, the other parents whispered to me that joining the troupe helped you get your child into Bladins, Malmö’s most exclusive free school, as the troupe had longstanding links. 

When it comes to accessing health treatment, I’ve learned, it doesn’t pay to stoically wait in line. When I was recently sent for a scan, I immediately rang up the clinic my primary health care centre had chosen for me. The receptionist spotted a time that had just become free the next day, and slotted me in, saving what could have been months of waiting. 

If you’re looking to buy a house, I’m told it pays to develop good relationships with estate agents, as sometimes they will sell a house without even listing it. And there are all sorts of ways to jump the long rental queues in Swedish cities, some involving paying money, some simply exploiting contacts. 

I’m not, myself, much of an operator, but I’ve also learned to take advantage of any opportunities that crop up. 

A year after we had lost our battle for the daycare place, the same Swedish friend got in touch. She had managed to upgrade to an even more sought-after cooperative. (This one has had world-famous novelists and Oscar-contending film directors as present and former parents.)

There was a place free, and she was in charge of the queue. Did we want it for Eira? The queue at this daycare, I soon discovered, was pure fiction. The municipality has since cracked down, but at the time, places went to the friends and contacts of whichever parents happened to be on the board, or failing that, to people in the queue who seemed the right kind of person. 

It didn’t seem right, but of course, we took the place. 

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