We now begin to focus attention on business in Scandinavia and

consider why would we desire to consider sustainability and CSR in Scandinavia.

I will offer evidence that indicates Scandinavian companies are sustainability

and CSR leaders.

Pointing to such evidence like the selection of firms to such rankings as

Dow Jones Sustainability Index and Corporate Knights Global 100.

But before I do, I wish to address some common criticisms I've encountered in my

decade or so that I've been exploring sustainability and CSR in Scandinavia.

Because I've found these criticisms can stand in the way of drawing valuable

lessons.

These criticisms are associated with Scandinavia being relatively small

countries and the perception of homogeneity in Scandinavia.

Now, I continue to teach sustainability and CSR focus courses

in which I've brought hundreds of students from the US business schools.

And I predictably hear at least one or a couple of students each round

say something to the effect of sure, this Scandinavian stuff is all well and good.

But the US is very different than Scandinavia, it's much bigger and

much more heterogenous in cultural composition.

There couldn't possibly be any lessons I could learn from Scandinavia.

That's true.

With that sort of mental mindset, one probably will not take any lessons.

I would like to say though that it's perhaps no different

than any benchmarking exercise.

If I go to a Toyota manufacturing site to learn about the Toyota production

system and lean manufacturing, but I spend all my time and attention focused on

the differences between the automobile industry and whatever industry I

happen to come from, I probably won't learn much from that experience.

But if I begin with an open mind to consider Toyota's production processes and

what lessons I might draw from it while considering

the different contextual factors that exist in my company and

industry, then there's likely something that I can learn.

Next, I often hear that the countries of Scandinavia are very small and

the people are very homogeneous.

With an implicit assertion this is why the sustainability performances must be so

high here in Scandinavia.

There may be something through this if we dig into the degree to which smallness and

sameness could help to engender a sense of community and and

an increased embeddedness of business within the community.

But one could also point out that there are many countries

in the world that are quite small and

there are many places in the world that are comparatively quite homogeneous.

And these are not places where one always finds sustainability and

CSR leaders as one does in Scandinavia.

So in other words, just because a place is small or

comparatively homogeneous does not alone make it a sustainability leader.

These are indeed important contextual factors one must take into account when

attempting to consider how to apply lessons in one's own context.

But they do not explain the strong performances in and of themselves.

So maybe, just maybe there could be something to learn here.

And I would like to offer a further word about small and homogeneous and

it's because of the smallness of the Scandinavian countries that many

Scandinavian firms are said to develop their domestic strategy in day zero and

their international strategy on day one.

Scandinavian countries represent rather small markets,

where many Scandinavian firms must go abroad almost from the start.

This is particularly the case in Sweden for example, which is home to many

large global corporations of the likes of Volvo, Ericsson, and H&M.

A US firm could grow quite large within the confines of the United States.

Take the American retailer Target Corporation as example which is a Fortune

50 company whose revenues comes almost entirely from within the confines

of the United States.

This means Scandinavian firms are often adept at engaging with cultural and

regulatory frameworks far different than within their home countries and

with people who may look and act very different from them.

All right, now let's explore some evidence that indicates Scandinavian companies

are sustainability and CSR leaders.

First let's consider overall performances.

Now assessing sustainability and

CSR performances by company is notoriously difficult.

I'm talking about concepts that have numerous definitions and for

which measurements are oftentimes poorly defined.

So we should always treat efforts to measure sustainably and CSR and

rank companies in terms of high to low sustainability with a degree of scrutiny.

The Dow Jones Sustainability Index or DJSI is one of

the more relied upon efforts to asses the sustainability performances of companies.

Each year the Dow Jones assesses the sustainability attributes

of the world's largest 2,500 publicly traded corporations and

identifies the top 10 to 15% within each industry to be part of the DJSI.

In the study by one of my favorite scholars, yours truly,

I found that Scandinavian-based firms were three times more likely to be selected to

the Dow Jones sustainability index than US-based firms.

Corporate Knights Global 100 represents another effort to measure

the sustainability performances and practices of companies.

In another study of which I was part with colleagues, we found Scandinavian firms

were 19 times more likely selected to the Global 100 than their US counterparts.

And in another study, the scholar Maria Yolberg constructed a by country index

of companies selected to the Dow Jones Sustainability Index, Global 100,

and another sustainability and CSR-minded ranking, FTSE For Good.

It should come as little surprise to you that she also found

Scandinavian countries were overly represented for

having their companies selected to these sustainability and CSR indices.

The US in contrast, was grossly underrepresented.

Now, we must keep in mind that these performance rankings

are inherently flawed.

It is perhaps similar to the flawed nature of business goal rankings.

Any one in and of itself quite frankly is not very trustworthy.

But when we collect a suite of such rankings,

we may begin to see something of substance emerge.

In the case of Scandinavian companies, it seems that by whatever measure you choose

to use, they come out as global leaders in sustainability and CSR.

Now let's consider some actual practices of Scandinavian companies that may be

consider supportive of strong sustainability and CSR performances.

Here we also engage with attention that Michael Porter and colleagues have

traditionally placed on competition in achieving a competitive advantage.

Because the Scandinavians have achieved strong sustainability and CSR performances

largely through attention to cooperation and achieving a cooperative advantage.

Take the Swedish retailer IKEA as example.

IKEA is arguably the most well known Swedish export, with its distinctively

blue and yellow stores appearing in countries throughout the world.

IKEA's mission to offer a wide range of well-designed,

functional home furnishing products at prices so

low that as many people as possible will be able to afford them.

Scandinavian's history of innovate design loans itself

nicely to support the first component of IKEA's mission.

However, Scandinavia's standing as one of the most expensive regions of the world

does not bode well for producing goods at low prices.

So like others in their industry, IKEA's supply chain is migrated to low cost

regions of the world to produce it's low cost goods.

And like other end supply chains in developing nations,

IKEA faces a host of environmental and social challenges.

Now IKEA has responded to these challenges by calling for,

quote, cooperation with credible, well-informed partners, end quote.

This has included cooperating with organizations like UNICEF and

Save the Children to cooperatively address the incredible challenges

associated with child labor.

UNICEF and Save the Children cosponsored the seminally important research titled

What Works for Working Children that found in the face of child labor problems,

a hasty pullout by a large company,

prompted by the threat of a consumer boycott, for

example, could inflict greater harm on the children who are left behind.

These children may be forced into alternative means of generating money,

such as prostitution.

In many ways that would not be feasible without the credibility of an organization

such as UNICEF backing it, IKEA has made real long term commitments in regions

where child labor problems exist by staying rather than pulling out.

Speaking of IKEA's commitment, UNICEF stated,

I wish more companies had the courage to follow IKEA's example, stay on and

actively work on the problems and take genuine social responsibility.

With the guidance of Save the Children,

IKEA has adopted a policy to always do what is in the best interest of the child.

This is in stark contrast to the prescription that a company should always

do what's in its own self interest, that is to say maximize profits.

But perhaps over the long run, this is actually a more profitable way to

run a business as IKEA now enjoys a much more stable supply chain,

has engendered the support of credible organizations willing to speak on behalf

of IKEA in a time of crisis.

And moreover, one detects a great sense of pride amongst IKEA employees for

this work.

IKEA also has a long standing cooperation with the environmental

NGO WWF to encourage sustainable forestry practices.

And there are countless other examples by leading Scandinavian firms that embrace

such forms of cooperation by engaging with organizations who

may often times be skeptical of big corporations.

In 2002, the major Norwegian extractive company Norsk Hydro formed a cooperative

partnership with the NGO Amnesty International,

to more effectively address human right challenges

Norsk Hydro encountered as it worked in challenging regions throughout the world.

Norsk Hydro very humbly acknowledged that he did not possess the competencies

necessary to address the complex challenges associated with human rights.

And it looked to Amnesty International, an organization that had been

quite critical of large corporations in terms of human rights for help.

As Norsk Hydro explained, quote, Norsk Hydro and Amnesty International have

signed a cooperation agreement to bolster human rights work.

Amnesty will offer Hydro its expertise in connection with the company's

internal training of managers and employees on the handling of human rights

in the various countries Hydro operates in.

Headrow has extensive management development programs for

which Amnesty will provide training on general human rights questions

in addition to supporting the company in the study of concrete cases, end quote.

So Norsk Hydro willingly opened itself up to a critical stakeholder and

effectively said, let's cooperate on this challenging issue.

The Danish brewer Carlsberg offers another great example of the cooperative

approach to business to address sustainability challenges in Scandinavia.

Instead of going it alone,

Carlsberg assumed a leadership position to cooperate with governmental agencies,

grocery store chains in Denmark and industry peers on the issue of recycling.

The result is a system of deposits and take back systems established at grocery

stores across the country where Denmark has achieved the world's

highest bottle and can recycling rates, well north of 90%.

Carlsberg could not have done this alone.

Perhaps you noticed that I said Carlsberg worked with industry peers on this issue.

And I did not say the more commonly used expression, competitors.

The language we use shapes our mental frames in the activities we take on.

And you are more likely to encounter cooperative language

in a Scandinavian context than what I was accustomed in a US business context.

H&M is a good example of this, where the expression,

industry peers, is commonly invoked throughout their communications.

Now the expression competitors sneaks in their from time to time,

as well as it should, in areas that H&M is truly competing.

But when it comes to many, if not most, issues associated with sustainability and

CSR, we're often discussing items where industry peers are more likely

to better address in cooperation with one another than in competition.

We'll discuss a few more practices of Scandinavian companies when we engage with

Novo Nordisk.

Hopefully now you have a better sense why it is so

phenomenally interesting to consider sustainability and CSR in Scandinavia.

2.3) Why explore sustainability & CSR in Scandinavia?

Sustainable Vikings: Sustainability & Corporate Social Responsibility in Scandinavia

Meet the Instructors