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Sustainability Survey

The Sustainability Survey is a report from SEK entirely focusing on the sustainability efforts of exporters. This encompasses everything from their sustainability requirements on suppliers and customers, to planned investments to reduce their climate impact.

The results and analysis for the six issues included in the Sustainability Survey are presented below. In total, 201 exporters participated in the survey and the interviews were conducted in the period between April 4 and May 5, 2022.

A few conclusions

  • The share of exporters planning to invest in reducing their climate impact remains relatively high.
  • Eight out of ten exporters consistently set sustainability requirements for their suppliers, including climate/environment, human rights, labor conditions and anti-corruption, which is a very high proportion.
  • A significantly lower share of exporters consistently set sustainability requirements for their customers, which indicates that companies have room for improvement in managing sustainability risks across the entire value chain.

Are you planning any climate-impact-mitigating investments in your operations in the next 12 months?

In total, 63 percent of exporters state that they are planning climate-impact-mitigating investments in the next year. This represents a marginal reduction compared with last autumn when the corresponding figure was 66 percent. More large companies than small companies state that they plan to invest in the green transition.

As the underlying reasons behind investments are wider than primarily lowering their climate impact, it is likely that a greater share of companies are planning investments than shown in the results. In these cases, a positive investment side-effect may be a lower climate impact.

A relatively high proportion, two thirds, plan to invest to reduce their climate impact. The motivation behind the investments may be that companies consider green investments to be profitable. The aim may also be to future-proof the company or the investment may be due to stricter regulations.

In cases where a company is not planning any investment, this does not necessarily mean that it does not care about the company’s climate impact. This could be due to the company already having invested or because the nature of the operations negating such a need, for example, IT development.

The marginal decline indicates that geopolitical unrest in the business environment has not affected companies’ willingness to invest in measures to mitigate climate impact, at least not in the short term. On the contrary, rising energy prices resulting from the war in Ukraine may accelerate investments that reduce energy consumption.

Large companies generally have a greater capacity than small companies to implement climate-impact-mitigating investments. While 75 percent of large companies plan to invest, the corresponding figure for small companies is only 42 percent. The often complex, resource-intensive and costly nature of business transformation projects may explain why some small companies postpone investments.

Do you consistently set sustainability requirements for your suppliers in the following areas?

Roughly eight out of ten exporters consistently set sustainability requirements for their suppliers in an export transaction. The Sustainability Survey’s findings show that companies apply a broad approach in their supplier requirements specifications and include requirements in several sustainability areas – climate/environment, human rights, labor conditions and corruption.

Setting sustainability requirements is significantly more prevalent among large companies than small ones. Three out of ten small companies say they set no requirements at all. This could be due to an imbalance of power between buyers and sellers or due to large companies having greater resources that allow working systematically and consistently with their suppliers. Moreover, regulations have a greater impact on large companies than small companies.

The Survey’s findings indicate that exporters are more likely to set requirements for their suppliers than for their customers.

Do you consistently set sustainability requirements for your customers in the following areas?

Slightly more than one third of the companies consistently set sustainability requirements for their customers that include climate/environment, human rights, labor conditions and anti-corruption. In other words, at 42 percent the proportion of companies who do not set requirements is higher than the proportion that do. One in five companies answered that it was unaware of whether the company imposes requirements on its customers, thus indicating that many companies still have much to do in terms of taking sustainability risks into account across their value chain. From a historic perspective, the focus has often been on sustainability risks in the company’s own operations as well as in the supply chain, but it is becoming increasingly important to have control across the entire value chain, including end users.

Once again, the difference between large and small companies is clear. While four out of ten large companies consistently set sustainability requirements for their customers, only two out of ten small companies do the same.

Have you found that sustainability requirements from your customers have changed over the past year?

In total, 60 percent of exporters perceive that their customers have set more stringent sustainability requirements in the last year, which is in line with last year’s survey.

Large companies are more likely than small companies to experience raised requirements, which may be due to higher expectations for large companies to assume responsibility for their impact.

A high proportion of exporters are experiencing that customers continue to raise their sustainability requirements. This corresponds with SEK’s perception, namely that customers are now generally setting increasingly stringent requirements for their suppliers. When customers set requirements for their suppliers, strong pressure for change is created. This means that if exporters want to be relevant in the future, they need to have a credible sustainability agenda.

Have you noted any competitive advantage for products and services with a lower climate impact than equivalent products?

Two out of three exporters stated that products and services with a lower climate impact than equivalent products entail a competitive advantage. The findings also indicate that these advantages are noted by more large companies than small companies. The question is new for the 2022 Sustainability Survey and accordingly, there is no reference to any previous measurement.

That a large share of companies perceives offering products and services with a lower climate impact as a competitive advantage indicates that customers are increasingly making conscious choices. By extension, this means that companies who are unable to offer such advantages to their customers will decrease in relevance and find it difficult to compete. Swedish exporters are often relatively advanced in their efforts to transition their operations to reduced climate impact and may thus have a competitive edge.

The findings indicate that one in five Swedish exporters notes no competitive advantage between a product or service with a lower climate impact and an equivalent. A similar proportion say they are unaware of any competitive advantages, which may arise from the relatively low climate impact of some products and services.

The fact that such a large proportion of exporters still considers a lower climate impact product to create value is interesting given the challenges of measuring the actual demonstrable climate impact of a given product or service.

Have you found that sustainability requirements have changed over the past year?

Three out of four exporters have noted more stringent sustainability reporting requirements over the past year, with a significantly higher proportion for large companies compared with small. Four out of ten small companies have noted no change in sustainability reporting requirements. The question is new for 2022 and accordingly, there is no reference to any previous measurement.

Requirements in terms of sustainability and transparency are increasing from all stakeholders, be they customers, investors or employees. The above findings indicate considerable pressure stemming from customers, in total, 60 percent of exporters perceive that their customers have set more stringent sustainability requirements in the last year.

Requirements from investors and financiers for greater transparency, disclosure and accountability could be an explanation for the high share of respondents who believe that reporting requirements have increased.

That more large companies than small companies have noted more stringent sustainability requirements may be due to small companies having simpler financial needs and thus not being encompassed by banks’ requirements for sustainability information, for example.

 

 

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