Regardless of where in the world businesses takes places, the environmental impact of operations affects us all. Awareness of humanity’s global environmental impact has increased in recent years, not only within the political sphere, but also within companies, among their investors and customers.
But it is not only risks that businesses need to be aware of, there are also great opportunities for companies committed to improving the environment or, at least, working to reduce their negative environmental impact together with their customers. The company's products or services can have a positive impact on the environment as they themselves can help to provide solution to environmental challenges. Take, for example, the energy sector or the packaging industry.
Nonetheless, in most cases, business and industry have some form of negative impact on the environment and in certain cases effects are global. The impact of carbon dioxide emissions on the greenhouse effect is one example, other operations may bring about local effects, such as the pollution of lakes and forests due to chemical dumping. On a larger scale, however, local effects such as loss of biodiversity and acidification also have global consequences.
Below are examples of environmental-related business opportunities as well as risks that should be included in a company’s analysis. When your company performs analysis of its environmental impact, it is important to review the entire value chain – which means a life-cycle analysis from raw materials to end customer and waste management, in Sweden and abroad. Measures to reduce negative effects and increase the positive impact may involve increased investments in areas such as materials and manufacturing processes, but may also involve smaller measures, such as reviewing paper consumption or choosing the most efficient office lighting. Once again, please note that the list below is not exhaustive.
Opportunities and risks
Efficient use of resources
One of the best ways of reducing the negative environmental impact whilst, at the same time, boosting competitiveness, is to become more resource-efficient. By using your resources in the best possible way, you can reduce both the company’s costs and adverse environmental effects. By reducing your raw material, energy and water costs, which account for a large part of the manufacturing cost, you can also increase profitability. See more information under the heading "Energy" below.
In the food sector and other industries where residues and waste is common, these should be re-used and recycled to the greatest possible extent by, for example, using them in secondary products such as animal feed. In industries where customers and consumers often dump leftover products, companies should encourage and facilitate the recycling and reuse of products. This can be done, for example, by offering better sealed packaging so that products last longer.
The demand for organic consumer goods is on the rise and in many instances businesses can improve their margins by offering ecological products. In many countries, organic food, clothing, skin care and toys are in great demand. The criteria for organic labelling can differ from country to country. For this reason, it is important to investigate the rules that apply in the country where you are going to sell products. It is also important to find out what certification is required and what customers are asking for in that particular market.
Contact Business Sweden for more information on specific business opportunities and certification rules in different markets.
The company's energy consumption needs to be carefully examined from both an economic standpoint and a sustainability perspective. Making investments that contribute to lower energy consumption can turn out to be very profitable and they can often pay for themselves over a short period of time. The energy that companies use should also come from renewable sources in order to minimise the environmental impact.
Read more about the benefits from energy rationalisation at the Swedish Energy Agency website. The Energy Agency offers several support services to companies that want to make their operations more energy-efficient:
- Energy Efficiency Network - Increase your company's energy-related skills, receive advice from experts and exchange feedback with other companies.
- Environmental studies – before making an energy-efficient investment, aimed at small businesses with fewer than 50 employees. The company can apply for grants to undertake different types of studies prior to making a future investment for reduced energy use in operations.
- Support for energy mapping – companies can receive up to SEK 50,000 to carry out an energy survey with proposals for profitable investments. The Energy Agency’s offices support companies before, during and after their energy mapping.
Read more about energy-efficient small and medium-sized companies at the Swedish Energy Agency.
Many Swedish companies have production facilities in countries where development is lagging when it comes to efficient energy use. Wherever this is the case, Swedish organisations can contribute with knowledge and, in some cases, provide solutions for more efficient production, which in the long-term will prove profitable for both suppliers and businesses.
There are vast business opportunities for companies that can offer solutions that facilitate lower energy consumption for both B2B customers and consumers. Such products can range from energy-efficient machines and robots, to energy-saving lamps, washing machines and packaging. Sustainable consumption is one of the global sustainability goals and several countries are actively working to reduce consumers' negative environmental impact.
Swedish companies are at the forefront of green technologies. The country has a long tradition in this field and has advanced knowledge and skills when it comes to ‘greening’ industrial processes and making them energy-efficient. Many countries are investing in sustainable cities and there are excellent business opportunities in this field for Swedish companies.
Most companies contribute to environmental pollution in some way through their product releases, not least through greenhouse gases that are driving global warming. This happens either directly through their own business processes or through those of suppliers and partners. These are the most polluting industries today:
- Waste Management
- Construction, building and demolition
- Mining and quarrying
- Activities that use chemicals to a great degree, such as dry cleaning, workshops, laboratories, etc.
According to WHO statistics, more than 80 percent of populations in urban areas around the world are exposed to air pollutants that exceed WHO limits. Air pollution has a serious negative impact on both people and the environment. It is therefore important that you conduct assessments of your environmental impact throughout the international value chain and look at possibilities of implementing more environmentally-friendly alternatives.
As far as possible, you should use environmentally-friendly alternatives in your production and ensure that your plants and facilities are equipped with efficient cleaning filters to reduce environmentally harmful emissions.
Trees bind carbon dioxide and in Sweden we have rigorous regulations to ensure that forestry companies replant trees as they are cut down. In countries without legislation there is great risk that forests are harvested without replanting – which contributes to global warming.
More information about pollution can be found on the websites of the Swedish Environmental Protection Agency and Greenpeace.
Regarding use of chemicals in both manufacturing and products, there are several laws and regulations to keep in mind. Many organisations are fighting for legislation to become even stricter and for more hazardous substances to be banned from markets. Hazardous substances are spread through the air and water and adversely affect animals, nature and humans alike.
The EU Chemical legislation, REACH is the most modern and advanced legislation of its kind. REACH places demand on users of chemicals, making businesses responsible for the chemicals they make availabl on markets. To an increasing degree, all chemicals substances are now covered by REACH, for example those found in clothing, furniture and paint. More information on REACH can be found on the Swedish Chemicals Agency website.
Awareness is increasing and consumers around the world are demanding poison-free and environmentally-friendly products to a greater extent. In addition to complying with the legislation, companies should review which chemicals are being used and replace them with more environmentally-friendly alternatives.
You will find more guidelines for companies about chemicals on the websites of the Swedish Chemicals Agency, as well those of Greenpeace and the Swedish Society for Nature Conservation (SSNC).
When people in Sweden just turn on the tap they get perfectly potable drinking water, and that is exactly what they expect. But in most parts of the world, water is in short supply – 650 million people are currently without clean water access. A host of public health problems arise due to the lack of clean water and according to Unicef, 800 children die every day from various diseases caused by contaminated water.
Companies need to review their management of water throughout the value chain, in terms of consumption as well as pollution and recycling. A lot of water is consumed in the agricultural and manufacturing sectors, often at the expense of the local population’s water supply. Several industries also use chemicals that can cause pollution of the local population’s drinking water, as well as neighbouring lakes and seas.
WaterAid has, in collaboration with its partners, published a report and carried out case studies that analyse businesses’ commitment to water, sanitation and hygiene (WASH). The report may be downloaded from the following link.
Sweden Textile Water Initiative
Sweden Textile Water Initiative (STWI) is a network of Swedish companies that work together to reduce water consumption in the production chains of the textile and leather industries in Sweden.
STWI has developed some common guidelines that provide suppliers with clear instructions on how to work towards increased water efficiency, prevent water pollution and manage wastewater in the production chains. They work together with 119 factories in India, China, Bangladesh, Ethiopia and Turkey, which have so far reduced their overall water usage by eight percent – a figure corresponding to the daily needs for water consumption of 50 million people. Guidelines are available in English and Chinese on STWI's website.
You will find more information about water issues and how your company can tale action, together with other information at: Stockholm International Water Institute, UN Water, and WaterAid.
Waste is a major environmental problem, which is on the rise. It applies to everything from waste water, sewage and chemical leakage, to consumer products and household waste. Businesses are responsible for waste management and are encouraged to recycle and reuse their waste and contribute to the circular economy shift.
Plastic waste in the ocean is an enormous threat. Many animals are injured and die every year and the plastic is broken down into small particles that are eaten by fish and which we then assimilate via the fish we eat.
Companies can contribute to a better environment through innovative solutions, but they are also responsible for managing their own waste as effectively as possible. In addition to waste from production, transportation and sales, companies are also responsible for how products and their packaging are dealt with after leaving the company. It is important that you consider the entire life-cycle of products and take responsibility for how they can be recycled or reused by end customers.
The laws and regulations in Sweden and the EU regarding waste involving hazardous products stipoulate that organisations have a duty to know which of these rules apply to them, and to fully comply. All companies are encouraged to follow the same best practices even in overseas markets. This may sometimes be difficult if there is no effective infrastructure in place for sorting, retrieval and handling. Most often, larger industrial parks are better equipped and there is a more sustainable alternative in the choice of manufacturing industry.
Waste management is in itself a multi-billion industry and more and more countries today see waste as a resource. In some countries, because there has been a lack of public waste management, innovative companies have arrived on the scene that collect and purchase sorted waste in a price-per-kilo model. Nonetheless, in many countries, the waste industry is linked to corruption and illegal activities, child labour and health risks and fatalities. It is therefore important that you complete a life cycle analysis and consider your company’s waste management and how it affects people and the environment.
You can read more about waste management in Europe and Sweden on the websites of the Swedish Environmental Protection Agency, Municipal Waste Europe and Avfall Sverige (the Swedish Waste Management Association).
Circular economy drives new business opportunities
The circular economy is increasingly becoming the spotlight at the political level – a model which is based on reuse, repair and where waste is seen as a resource. Products need to become more durable, more recyclable and over time replace non-renewable materials with renewable ones. The Swedish government appointed a special investigator in 2016 whose aim is to promote the circular economy shift and the investigation has now submitted its report, “Från värdekedja till värdecykel - så får Sverige en mer cirkulär ekonomi" (“From Value Chain to Value Cycle – how Sweden will achieve a more circular economy") – Swedish only – to the government. The commission will primarily focus on products intended for the consumer market.
More information about Sweden's environmental policy can be found with the Ministry of Environment and Energy.
At the EU level, the EU Commission has devised a plan to stimulate the transition to a circular economy that will boost global competitiveness, promote sustainable economic growth and create new job opportunities. You can read more about this at the EU Commission’s website.
Businesses are also key players in realising the Paris agreement. There are several risks that need to be considered, but there are also great business opportunities for innovative organisations that can find solutions to help the world achieve these goals. More information concerning the Paris agreement can be found on the Government’s website (Swedish only).
There are several support programmes for companies that develop environmental technology and want to export, for example, through the Demo Environment of the Swedish Agency for Economic and Regional Growth and the various tools of the Swedish Energy Agency. There is a variety of support available, depending on what stage of business development your company finds itself in. The website of the state-funded initiative Swedish Cleantech provides information on what advice and funding is available to Swedish companies.
To avoid risking human rights violations, your company should take the following actions:
- Follow laws and international guidelines. Ensure that you understand national laws relating to human rights in the countries in which you operate. At the very least, you should always follow international guidelines. This is particularly important where legislation is inadequate or non-compliant.
- Include environmental aspects in your analysis of opportunities and risks. Assess your company’s performance to determine whether there is a risk of negative environmental impact, and if so, identify high risk business situations.
- Make use of national and international guidance tools (see guideline documents on the right).
- Establish a clear environmental policy that explains your company’s position regarding violations, and ways of responding if and when these are detected. Read more about this in step 3 and 4.
- Collaborate and discuss with organisations and NGOs in the markets where the company operates.
- Using ‘due diligence’, carry out a thorough business inspection of your potential partners before making critical business decisions. Read more about this in step 4.
- Educate and inform your partners about laws, risks and the company’s code of conduct. Read more about this in step 4.
- Communicate your policies clearly to suppliers and request that they do the same with their subcontractors. Read more about this in step 4.
- Implement a whistle-blower function where employees and partners can report any suspected shortcomings. Read more in step 4.
- Contact Business Sweden if you have any general questions concerning sustainability or if you want to know more about the risks and opportunities in a particular market.