Stitching fashion with the thread of sustainability - AFRY Insights

Sustainability in motion

Written by Tiina Pajula
19/01/2023

 

The urgency of climate change and other environmental, social and economic concerns are motivating businesses to take action for a green transition and move towards sustainable solutions and production. Leading-edge companies today want to make a real impact, but in the cross pressure of different demands and the need for fact-based information, this is not always easy.

A new way of planning– both in the short and the long term – is required. Traditionally strategies are built based on financial metrics and prospects. Environmental and social issues are monitored separately, and they are reacted to when there is pressure from, for example, customers or regulators, or when criteria of various sustainability programmes need to be met. Until a few years ago, environmental topics were primarily used in communication and marketing in the form of environmental claims. Next, they became a part of product development. Recently, more and more companies have been moving to a multi-agent perspective: Instead of pursuing a separate sustainability strategy, advanced companies aim for one corporate strategy, where sustainability with its three pillars is at the core.

Finnish Kesko is a leading trade sector company in Northern Europe operating in the grocery trade, the building and technical trade and the car trade. Kesko has around 1,800 stores engaged in chain operations in seven countries. The retail sales of K Group, which is Kesko and K-retailers together, totalled some EUR 15 billion in 2021.

Riikka Joukio, EVP Sustainability and Public Affairs at Kesko, tells us: Kesko is the only company in the world to have been on 'The Global 100 Most Sustainable Corporations' list every year since it was launched in 2005.

Riikka Joukio says:

Kesko’s sustainability vision is to enable sustainable choices for its customers and drive change throughout the value chain.

Sustainability is embedded in Kesko’s growth strategy that is based on investing in three main elements: customer experience, digitalisation and sustainability, emphasises Riikka Joukio, the company drives 'sustainability in action'. This includes minimising the impact on climate and nature, as well as challenging suppliers and encouraging customers to make sustainable choices.

Bold targets require a solid plan

Kesko aims to reach carbon neutrality by 2025 and cut emissions from its operations and transports down to zero by 2030, in only eight years. In addition to Kesko's operations, emission reduction targets extend to the whole value chain. For Kesko, one of the most important means to make energy consumption more efficient is the ingenious heat recycling system used in K-food stores. It utilises the condensation heat generated as a by-product of refrigeration for heating the premises.

Moreover, Kesko supports the well-being and success of its personnel by fostering diversity and inclusion and offering equal opportunities for both current and future employees. On the governance side, it says that it creates long-term value by embedding sustainability in everything it does as a part of everybody’s job.

Ideally, corporate strategy is based on solid, science-based information providing a foresight-driven foundation for doing sustainable business.

Riikka Joukio, EVP Sustainability and Public Affairs at Kesko
Riikka Joukio, EVP Sustainability and Public Affairs at Kesko

To understand what changes are needed, the current situation must be well analysed. This is followed by setting targets, identifying points for further action, monitoring the progress and, most importantly, communicating the process transparently both internally and externally. The identification of effective measures requires a comprehensive assessment.

You get what you measure

Riikka Joukio describes that in addition to international indices, such as the Dow Jones Sustainability Indices and other leading ESG ratings, Kesko monitors five internal key performance indicators covering climate and supply chain data, the share of sustainable products, and the well-being of people. However, obtaining reliable data about multiple products and their value chains is a challenge, and this area still requires continuous development at Kesko, says Riikka. Developing reliable sustainability measurement currently appears to be one of the key actions.

As part of the sustainability strategy, Kesko also decided to set sustainability-related criteria for the corporate share-based commitment and incentive plans. In addition to financial indicators, the award plan includes targets linked to emission reductions and international sustainability indices and ratings. This stresses, for example, the requirement for energy efficiency investments to proceed annually to allow for reaching the overall emission reduction targets.

Future-looking strategies require a new level of planning and cooperation. Businesses need to create new ecosystems and collaborate more closely. While the transition brings challenges, it also offers great new business opportunities.

This article was originally published in the Autumn 2022 Bioindustry edition of AFRY Insights.

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