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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 views on sustainability requirements to completed and 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, 200 exporters have participated in the survey and the interviews were conducted in the period between October 1–29, 2021.

Has the company made any climate-impact-mitigating investments in its operations in the past 12 months?

The climate-neutral transition has already begun for many companies. In total, 64 percent of exporters state they have made climate-impact-mitigating investments in their operations in the past 12 months, somewhat down on 69 percent in the spring. Not surprisingly, considerably more large companies (73 percent), rather than the small companies (47 percent), have completed investments.

Just over half – 51 percent – of the small companies state that they have not made any investments in the past year aimed at mitigating their climate impact. The corresponding figure for large companies was 20 percent.

Large companies generally have a greater capacity and customer base than small companies to implement investments in climate-neutral operations. The transition could be complex and demanding in terms of resources and expense, resulting in some companies postponing and remaining cautious about such investments. One factor that could be significant for the desire to invest is the pandemic, which created major uncertainty and resulted in many companies being unable to or not daring to make investments.

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


In total, 66 percent of exporters are planning climate-impact-mitigating investments in the next year. This is a slight reduction compared with in the spring when the corresponding figure was 70 percent. More large companies (75 percent) than small companies (49 percent) state that they plan to invest in the green transition.

Sweden’s success with its commitment to the Paris Agreement requires the country’s largest exporters to invest in mitigating climate emissions. Investments are also required to strengthen the long-term global competitiveness of the export industry.

However, two-thirds of companies is a relatively high proportion, demonstrating that companies believe that green investments are profitable and that decisions are governed by increasing demand and not merely because of more stringent legislation. Be that as it may, it is surprising that more companies are not investing in their operations given that there is only one path ahead. It will be costly to refrain from investing in sustainable operations. Given the high ambitions across several industries that are investing in the transition, it is surprising that more are not investing in their operations to reduce their climate impact. A sympathetic interpretation could be that companies have already made investments to mitigate their climate impact. A more pessimistic explanation is that companies are not prioritizing sustainability issues enough. And a realistic interpretation could be that small companies have been unable to or not dared to invest during the pandemic.

More measures are being taken to increase the speed of the transition, such as a raised guarantee framework for government guarantees. The aim of the green guarantees is to enable major investments to be made in industries that contribute to the green transition.

Will you require external financing for these investments?

In total, 74 percent state that they can carry out climate-impact-mitigating investments without the need for lending. This is just as high a proportion as in the spring and demonstrates that many exporters have strong finances. Only 22 percent state that they require external financing for their investments and the need is somewhat larger for small companies compared with large companies.

One explanation behind why so few companies require financing could be that the investments that are planned are relatively minor. Another explanation is that SEK’s Export Credit Trends Survey demonstrates that exporters have very strong liquidity, meaning that they can shoulder the expenses themselves. The majority of exporters expect an increased order intake in the coming 12 months, and seven of ten expect unchanged financing requirements. Altogether, this means that many companies have a strong financial position.

Do you routinely set sustainability requirements for your customers?

Just under half (47 percent) of exporters consistently set sustainability requirements for their customers and suppliers in an export transaction, which is down compared to spring when the share was 54 percent. The difference between large and small companies is clear. While 56 percent of large companies routinely set sustainability requirements, only 30 percent of small companies do the same.

Sustainable operations and ESG (Environmental Social and Governance) factors have become increasingly important, which is as noticeable in legislative efforts and reporting requirements as it is among consumers.

Large companies have better prerequisites than small companies to keep themselves updated in the broad flora of regulations and norms. Moreover, governments across the world, particularly in Europe, are setting more stringent requirements. The EU Taxonomy – that helps to identify and compare environmentally sustainable investments – that is now being drawn up, is one example of this.

Sustainability can sometimes be considered costly, but not setting requirements can be even more expensive in the long run. Identifying and managing sustainability risks is becoming increasingly common. Investors are considering sustainability as a risk in their investment decisions and many companies have integrated sustainability risks in their operational processes. Media and consumers are also evaluating companies with a more in-depth approach today compared with the past.

During the past year, has the company declined any potential transactions due to any party not meeting the sustainability requirements stipulated for the companies or for the transaction?

Only one of ten companies (11 percent) has, during the past year, declined a potential transaction due to a party not meeting the sustainability requirements stipulated for the company or for the transaction. This is significantly fewer than in the spring when 20 percent stated that they had declined a transaction for these reasons.

A positive interpretation is that an increasing amount of companies are meeting sustainability requirements leading to the seller not needing to decline a purchase. On the other hand, a negative interpretation could be that the requirements that are placed are not so stringent and the threshold for approval of transactions is lower.

This is also an issue in which the results differ between large and small companies. Considerably more large companies have declined a transaction due to sustainability requirements compared with small companies. An explanation is that large companies typically maintain a greater focus on sustainability issues and have therefore greater resources. Small companies may experience a lack of expertise or capability to place requirements on subcontractors. Since relatively few are affected by the consequences of having sustainability requirements, this suggests that there is potential for improvement in the governance of requirements in conjunction with transactions.

According to the Swedish Agency for Growth Policy Analysis, the reliability of the information that companies receive from their suppliers and subcontractors is one of the primary obstacles for companies that want to identify and manage their climate-related risks.

Regulations and norms apply to all companies even if the requirement specifications take longer for small companies to completely fulfill. The large companies are more quickly affected by the issue, but in time, small companies will also be affected.

Do you perceive that sustainability requirements from your customers have changed during the past year?

In total, 51 percent of exporters perceive that their customers have set more stringent sustainability requirements in the last year. Compared with the spring, this is down from 63 percent. Large companies believe to a greater extent than small companies that requirements have increased. Just over half of small companies do not believe that the sustainability requirements from their customers have changed.

The pace of increased requirements seems to have plateaued compared with the spring survey. One explanation could be that companies have become used to more requirements related to sustainability and as such, do not react to them to the same extent as before. Small companies often act as subcontractors for large companies, which could be a reason why they do not perceive the requirements to be as stringent compared to those of large companies.

The trend toward more stringent sustainability requirements is clear. Some years ago, it was mainly those who were interested in the environment that concerned themselves with sustainability issues, while the topic is now a megatrend. Companies are increasingly reporting their carbon footprint, environmental impact and social responsibility.

ESG factors are now something that every company must consider, partly because this is what customers expect, and partly because companies must be able to manage sustainability risks to attract investors. By investing in the green transition, Sweden’s exporters and their subcontractors can strengthen their competitiveness while reducing their climate impact.

Banks and other financial players play an important role in contributing to the industry’s transition in terms of meeting more stringent legislative requirements as well as financing investments in the green transition.

 

 

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