1. Introduction: The Case for Action
Expönentiality Cheat Sheet
Weâre just a few months into a new and pivotal decade, and the global coronavirus pandemic has changed life as we know it. Turning a crisis into an opportunity is of course a clichĂ©âand before the coronavirus crisis we were already on the brink of another, slower sustainability disasterâclimate change. Somehow it is easier to mobilize resources to solve the critical, short-term, immediate problems, as opposed to the climate crisis which has been underway for decades. The pandemic has created an unprecedented, terrible reality that will change us in ways we canât even anticipate. But itâs also a wakeup call, and a chance to rethink how we conduct business. It has presented a tabula rasaâa clean slateâan opportunity to restart business based on sustainable principles.
Business cannot thrive on economic returns alone. As we lay out in this book, we need to measure success beyond profit to motivate change. And just as health workers, fire departments, police forces, and many others have been on the front lines of the COVID-19 pandemic, itâs time for business leaders to step up to the front lines of the sustainability crisis.
COVID-19 has created a lot of fear and uncertaintyâbut this means that it is a leadership imperative. In reaction to the pandemic, companies can demonstrate in unprecedented ways their commitment to purpose and society. The businesses that are authentic will build trust, loyalty, and resilience.
The pandemic also highlights the importance of science and facts, a point we underscore in this book. In this case, COVID-19 has shown us that human health and the health of the planet are inseparable, that we must resist fake news and convenient truths, and that partnerships are key to solving major challenges. Now more than ever, concerted global action for a more sustainable world is urgently needed.
While we grapple with the seismic shifts in our society and economy brought on by the pandemicâthe full consequences of which we canât yet predictâwe cannot lose focus on the myriad challenges that the planet and humanity are facing. Climate change, rising inequality, and unsustainable resource use continue to demand our attention and action. This is not a head-in-the-sand moment. It is an invitation for the world to change directionâfaster and more decisively than ever. It is also an opportunity for the private sector to exercise much-needed leadership in finding solutions rather than adding to the problems. With just ten years left to achieve the UN Sustainable Development Goals (SDGs) agreed by the worldâs nations in 2015, all sectors of society need to mobilize for a decade of action.1
Courageous and visionary business leaders are already heeding that call, inspiring others to set big, bold goals. There has also been a remarkable shift among investors , including influential mainstream investors, toward prioritizing sustainability and factoring the impact of climate change into investment decisions. Citizens around the world have been raising their voice for change, in ever larger numbers. Business leaders can no longer turn away. This book is a wake-up call because there is simply no time to lose.
Sweden may be a small country, but it has long punched above its weight. It is admired around the world for its progressive actions on sustainability, both as a nation and within the business sector. In this book, we share some of the essential ingredients in Swedenâs âsecret sauceâ for corporate sustainability leadership. We draw extensively on our own leadership platforms and experience as well as that of other business leaders who share the same commitment to sustainability.
There Is No Business as Usual in a Turbulent World
Concerted global action for a more sustainable world is urgently needed and the challenges we face are more complex than ever. While it is encouraging to see that setting sustainability targets has become business as usual for many companies, most targets are still based on achieving incremental improvements. Leaving a better world for our children requires not just some action from the business world, but exponential solutions. Sustainability is not a trend; it is a condition for future business success, and we need to up the game.
Itâs important to keep in mind that sustainability is not philanthropy. It is much broader than environmental impact, corporate citizenship, or corporate social responsibility. It is not a stand-alone issue but affects every aspect of a company, and therefore must be connected to the core business and aligned with overall corporate strategy. We define sustainability, in the business context, as an integrated approach to minimize a companyâs negative impacts and maximize its positive social, environmental, and economic impacts, while creating long-term value for all stakeholders. We see sustainability as critical to the success of todayâs companies.
Over the next 30 years the world population will likely reach ten billion people, all wanting the same opportunities for a decent life. Despite global economic gains, more than 700 million peopleâsome 10 percent of the worldâs populationâstill live in extreme poverty.2 At least two billion people worldwide live in areas affected by fragility, conflict, and violence, where the intersection of poverty, high population growth, environmental degradation, natural hazards, and protracted conflict leaves them especially vulnerable.3 Unprecedented mass migration and movements of people have led to some 150 million people being displaced (equivalent to the worldâs tenth largest country), due to conflict and humanitarian crises. The current geopolitical instability, economic turbulence, protectionism, and polarization exacerbate global inequality and threaten peace and prosperity. While globalization has opened up new markets it has also contributed to supply chain complexity and risks of labor exploitation.
People and planet depend on one anotherâbut this mutual dependency is not reflected in current measurements of economic growth. Gross domestic product (GDP ) is an increasingly inadequate indicator of growth, productivity, and value from the perspective of sustainable development, and the relentless pursuit of higher GDP has resulted in environmental destruction and a narrow notion of human wellbeing netted at the expense of a fair and inclusive society. The UN Sustainable Development Goals , the worldâs plan to build a better world for people and the planet by 2030, call for a recalibration, with only a decade left to shift direction.
As many Swedish business leaders in this book point out, they are well aware of the privilege of birthright, coming from a country where basic needs are met, and where they can rely on the benefits of social democracyâthe right to free education, healthcare, and other aspects of a stable, well-functioning society. Part of their passion for creating purpose-driven companies stems from a recognition of the importance of balance: the drive for profitability is tempered with a sense of responsibility to create positive impact in the world, and leave a worthy legacy, with sustainability as a central, defining aspect.
As CEO of Scania, Henrik knows that transport is a big part of the problem, responsible for 24 percent of direct CO2 emissions from fuel combustion, according to the International Energy Agency, and road vehicles account for nearly three-quarters of transport CO2 emissions.4 But he is also convinced that Scania can be part of the solution, by driving the shift to fossil-free commercial transport. This book is partly the story of that journey. For her part, Elaineâs years of experience with technology and digitalization have brought her to the same point of deep commitment to act, to realize the substantial sustainability benefits Information and Communication Technology (ICT) can deliver, but also to raise awareness aroundâand preemptâits emerging challenges.
Our case for action is for business leaders, the primary audience for this book. Business has more influence and power than ever before. In the past 20 years, the number of companies with a market capitalization above $100 billion has more than doubled from 37 in 1999 to 98 companies in 20195 and many companies today are larger than governments. CEOs and other executives are expected to step up and do their share to contribute to sustainability. While we are seeing the welcome appearance of individual CEO activists, this needs to become the normânot the exception.
Encouragingly, the financial world is waking up to the climate crisis and the costs of sustainability inaction. The financial risks of climate change are now firmly on the agenda of many banks, insurers and other financial institutions and growing numbers are putting a stop to investment in the fossil fuel economy. In 2019, the European Investment Bank announced it would cease funding fossil fuel projects by the end of 2021. Sustainable investing and Environmental Social Governance (ESG...