Finnish companies are forerunners in sustainability, but for how long?
A couple of years ago, Finnish skin care and cosmetics company Dermoshop decided it was time to make the bottles in which the company’s products are sold more sustainable. After extensive research, trial and error, the team at Dermoshop came up with a thinner version of the bottle, saving raw material equalling 25,000 new bottles annually. In addition, the amount of recycled plastic raw material was increased to 50-100 percent.
“There is no legislation demanding us to make our bottles thinner, and of course it would have been easier not to do this project”, says Suvi Markko, CEO of the company, and continues: “However, I think sustainability work is best done when guided by your inner compass rather than steered from the outside. At Dermoshop, we are sustainable also when nobody is watching. We have done a lot of other work in the field of sustainability, in addition to the bottle project.”
Dermoshop is a great example of how Finnish companies usually do sustainability work: they do not make a fuss about it. Bragging is not considered a virtue in Finnish culture, which means Finnish companies are not always good at telling the world about all the good deeds they do.
We are sustainable also when nobody is watching
Still, Finnish companies are among the most sustainable ones in the world. According to a report conducted by Morningstar in 2022, Finnish listed companies were rated the second most sustainable in the world (the Netherlands were on top). Although the ranking only concerned listed companies, it is not far-fetched to assume that there is a trickle-down effect on other companies as well, as listed companies with high standards often require high standards of their subcontractors.
Petri Vuorio, Director at the Confederation of Finnish Industries EK, confirms that Finnish companies are generally good at sustainability and other ESG issues, partly due to cultural reasons.
“The Nordic countries, including Finland, have the most ambitious climate targets in the world, aiming for carbon neutrality by 2035. This is also reflected in how Finnish companies operate”, Vuorio explains.
As law obeying people, the Finns have excelled in corporate governance for a long time already. The social side of ESG tends to be in a better-than-average shape in a country known for equality and low hierarchies.
Stina Wikberg, Sustainability Director at the Finnish Chamber of Commerce, confirms that companies nowadays take sustainability issues seriously.
“We have seen a big shift in the last few years. Earlier, companies asked if they had to do this or they wondered what was the least amount of effort they could put into sustainability work. Today, I would say the majority of our member companies understand that sustainability can be a competitive advantage and they are willing to put in efforts. More and more companies realise this is an investment rather than a cost.”
A few years ago, sustainability and other ESG issues may have been considered nice-to-have things in the corporate world. Not anymore, though. Nowadays, sustainability is a topic which no company can ignore, at least not if it plans to stay in business in the future.
According to Petri Vuorio, the demand for sustainability comes from many different directions.
“It is not only the legislation that requires companies to be more sustainable; the demands also come from employees, from customers and from financiers.”
A company that has done its ESG homework will, for example, find it easier to negotiate with financiers. It will also find it easier to attract the right talents, and what is more, it will probably also be able to charge more for its services or products. There are studies that suggest that Finnish consumers might be willing to pay more for products that have been produced in a sustainable way. As Stina Wikberg puts it:
Sustainability cannot be out-sourced to just a few persons; it has to permeate the organisation
“The legislation should be seen as a minimum rather than a standard. Every company should aim higher than what the legislation requires, because that is the only way to stay on top.”
As the megatrend of sustainability sweeps around the globe, more and more countries and companies realise that sustainability work has a lot of benefits, not only for the planet but also for their finances. This means Finnish companies need to gear up, if they want to maintain their leading position, otherwise others will soon catch up.
“We cannot just be content with how things are now, because other countries are picking up speed. They are challengers and challengers tend to run faster”, Petri Vuorio says, adding:
“At this stage, it is still possible to make sustainability into a competitive advantage, because Finnish companies are in a good position. Many large international companies have increasing sustainability demands on their subcontractors, which means Finnisch companies have a good momentum to gain new customers. I would even say, this is a once in a lifetime opportunity.”
What then should a company wanting to gear up its sustainability work do? Where to start? Suvi Markko, CEO of Dermoshop, has a few good tips. First of all, it is not enough to hire a sustainability manager.
“Sustainability work is like quality work was a couple of decades back. First companies hired a quality manager, but after a time they realised that everybody needed to get involved in order for quality to improve. Similarly, sustainability cannot be outsourced to just a few persons; it has to permeate the whole organisation. Otherwise company culture will eat sustainability for lunch.”
Why companies should take sustainability seriously
Naturally, sustainability work should be based on a will to save the planet. However, there are other more selfish reasons to join the movement.
Getting financing is easier for a company that can present a solid report of its ESG work. And what is more, the terms of the loan will probably be better, the more sustainable the company is.
Many larger companies require their subcontractors to meet certain criteria. These demands will increasingly be about sustainability in the future.
Getting skilled employees is increasingly important for a company aiming for success. A company with a sustainable agenda will find it easier to attract talents as they usually look for a meaningful job.
More and more consumers want to make conscious choices – and they are also willing to pay for it. Being sustainable is a way of attracting consumers with purchasing power.
A company taking sustainability seriously will be more valuable, as its outlook is better. It also has more pricing power as customers are often ready to pay more for sustainable options.
Source: Confederation of Finnish Industries EK