Despite the size of the Nordics with fewer than 30 million people, the region can boast that it is the birthplace of globally-leading fmcg companies that are also at the forefront of sustainable innovation, including the likes of IKEA, Carlsberg and LEGO. What is it about Nordic region that enables business and sustainability goals to effectively combine and more importantly to be implemented?
First of all, it is clear that the benefits of hosting a wealth of large industry players in one region enables both cooperation and competition, spurring innovation. Studying the past, this capability to innovate and reach results faster is particularly visible through the competition between Finnish Nokia and Swedish Ericsson and the early development of mobile phones in the 1990s, which later turned into collaboration. Looking at the present alongside future plans of Nordic-origin multinationals, innovation is increasingly focused on sustainability and commitment. The goals and decisions taken by Nordic companies are felt globally and are part of shaping the agendas and benchmarks for other companies. Their Nordic background is a common factor that allows companies to grow alongside each other, building off the others’ capabilities.
Such a collaborative approach not only enables scaling up of investment, but also provides the safety net of risk sharing. Therefore, working in tandem with otherwise competitors or collaborating with players from other industries and categories, allows them to not only benefit from more significant investment buckets, but also share research and development and feed off one another’s technological capabilities and innovation pipeline.
To provide a very clear illustration of such a collaborative sustainability driving attempt, Swedish steelmaker SSAB and Volvo announced in 2021 their joint exploration of steel made from hydrogen-reduced iron from the HYBRIT pilot plant in northern Sweden. With SSAB noting that the steel industry accounts for 7% of global direct carbon emissions, and further in the supply chain, steel and iron production also accounts for 20% of emissions associated with an electric car. Both companies are collaborating for the greater good, developing an important step forward in the car industry.
While on the one hand, the region’s environmentally-focused initiatives and a wider sustainable perception are clear, the impact remains questionable. Nordic countries top the list of countries with the largest ecological footprint per capita, according to the Global Footprint Networks, placing them well above the European average. Therefore, there is a disconnection between the initiatives taken by Nordic companies and the consumption patterns in the region, whereby the latter and lifestyles are not shifting fast enough to lower ecological footprints, while sustainability has been elevated on domestic agendas.
Source: Euromonitor International from Eurostat, WU Global Material Flows Database
Note: Domestic Material Consumption measures the total amount of materials directly used by an economy to meet the demands for goods and services from within and outside a country
To further the progression of a fairly thorough sustainability agenda, the Nordic region must create a plan of action that will reduce the impact on the planet. However, this is a challenge. Many of the green plans, while they are extremely clear in terms of the “What” of the agenda, lack clarity on the “How” side, leading to the perception that green plans without clarity are a way of posturing environmental consciousness without really acting on it, thereby limiting consumer trust in sustainable innovation as a result.
Companies need to consider the entire value chain when it comes to emissions that significantly contribute to the environmental impact of their products and services beyond their own operations. For a sustainable value chain, a company needs partners, services and distribution channels that also meet their environmental goals. Some Nordic companies have developed around the idea of informing and simplifying decision-making around sustainability for businesses and consumers. Creating a sustainable alternative, the path of least resistance is at the centre of SaaS platforms such as Swedish Worldfavor, which is helping companies make sustainable business decisions, and consumer apps such as Danish-founded Too Good To Go, which is connecting restaurants and consumers to reduce food waste in foodservice and retail.
While there are hurdles to overcome to bring sustainable innovation into action, the Nordics continue to foster environmental innovation through grants, NGOs and governmental subsidies and, of course, venture capital.
Based on Euromonitor International’s Voice of Consumer Survey, 63% of global consumers worry about climate change, making the environmental agenda front and centre to businesses around the globe. Companies and wider industries are experiencing and responding to a shift in the importance of climate action and sustainability efforts, whether this stems from a push from consumer interests, government legislation or an internal goal to reduce environmental impact.
Despite increased awareness, extended commitments and expected opportunities, hurdles to overcome are mounting. This is true for both companies and consumers. Consumers navigate around green-washing initiatives while attempting to make informed decisions in terms of what is a more sustainable choice. Simultaneously, companies face a plethora of environmental regulations, while considering priorities and possible goals. As expectations around environmentally-adapted products evolve, the need for consumers and companies to be able to easily make informed decisions on how to act purposefully is increasingly important to pushing the bar further and to make sustainability a mainstream part of any business.
Please explore Euromonitor International’s Sustainability the Nordic Way report to find out more about the ways the Nordic region is approaching the action and the “How” side of the sustainability equation.