In what way will the green transition and increased CSR focus affect Nordic businesses in 2020?
By Anders Stubbe Arndal
There is, to my mind, no doubt that the climate agenda which has featured so prominently in recent years will continue to fuel societal and commercial development in the Nordic region in the years to come. In Denmark, we’ve seen the passing of the first Climate Act, introducing an ambitious and broadly supported set of binding climate goals, and in a European perspective the EU’s recent agreement for climate neutrality by 2050 is another example of the increased focus on the area. With the EU 2019 climate agreement comes a need to step up green investments, and considerably so.
The new climate goals and the green transition which not only the energy sector but indeed every sector of business and society will be facing in consequence of those goals call for massive investments, rearrangements and legislation. All of this cannot but impact Nordic businesses heavily.
The financial markets, too, are adapting towards a greener profile, and investments in sustainable products and businesses are on the rise. There are several Nordic funds and foundations offering and specializing in investments in companies that contribute actively to pulling the world towards enhanced sustainability, e.g. by focusing on the UN’s 17 Sustainable Development Goals (SDG). Sustainable investments take note not only of the expected return but also of the degree to which elements such as climate impact, environmental issues, equal treatment of employees, general social responsibility, etc., are integrated into and supported by companies’ business models.
Green transition and SDG are thus more than buzz words – they are increasingly actual competitive investment parameters. It will likely drive a meaningful and strong growth in Impact Investments. In 2020, Nordic companies should prepare for growing expectations from employees, business partners, investors and customers when it comes to their focus on compliance and sustainability. The expectations go beyond merely complying with rules and regulations, implying also that companies take an active approach to sustainability and ethical standards – in the case of large companies accompanied by statutory reporting obligations. Focused and targeted CSR efforts that are deeply rooted in management and employee behavior cannot only serve as a defense against reputational damage and illegal acts. Used strategically, increased CSR and SDG awareness is also an opportunity for businesses to stand out in a competitive market. The increasing focus among businesses on CSR and sustainability should, of course, be reflected in their values and codes of ethics but is also driven by legal and commercial parameters.
The requirements to be met by companies range from voluntary measures to both soft and hard law. In this respect, it may be relevant to look at different types of standards, including both legal requirements and non-binding guidelines, with the SDGs and the OECD guidelines as prominent examples. Both standards attract great attention these years, as do member-based organisations’ own standards such as Global Compact. There has been a clear trend in recent years of voluntary measures influencing legislators’ regulation of companies. Today and in the years to come, it is therefore of the utmost importance for companies to be able to document their efforts within both the traditional CSR area but also in respect of their work with and contribution to the SDGs– for commercial as well as legal reasons, and the demands on companies for greater openness and transparency continues to grow. Thus, financial statements and corporate policies and reports have become channels for companies to communicate their CSR, their green achievements and their work with and contribution to the SDGs.