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How Arwidsro incorporated sustainability into their business strategy

Meet Maria Björkling: Head of Sustainability and Business Developer at the real estate company Arwidsro.

Ever since Maria set foot in the company, she has worked to incorporate sustainability into Arwidsro’s business strategy and make them strive for a green transition, despite the fact that they are not yet covered by the Annual Accounts Act on Sustainability reporting. So why do they measure and follow up on their sustainability work? We sat down with Maria to hear about what value it adds to their business strategy and how it improves their competitiveness.

An incredible journey of development and growth – that is one way we can describe Arwidsro’s past business years. Simultaneously, they have succeeded in working and progressing their sustainability agenda, even though it is not mandatory for them. There are two main reasons as to why, according to Maria.

– I think there are two parts to this. One part is that we have pressure from our investors where we have three bonds issued – two green bonds and a green hybrid bond. When the first bond was issued in 2020, our sustainability work was still in its infancy. We fumbled a little and asked ourselves: What should we prioritise? What should our approach be?

Thanks to an external push, Maria and Arwidsro got their priorities sorted.

– We started looking at what investors and the market prioritised and began to emulate it. The focus so far has primarily been on energy consumption, emissions and green assets. When working with external financing, it is essential to be able to measure, follow up and report our sustainability work.

From external to internal focus

Despite the fact that the industry in general has an immature approach towards sustainability, Arwidsro has transformed their sustainability work from being an external agenda only to applying it internally as well. This leads us to the second part, as emphasised by Maria.

– I got the management team on board and together we decided to take the “less complex approach” in focusing on getting started and quickly achieving visible results. So we started using Position Greens ESG platform to measure energy consumption and emissions according to the GHG protocol

Getting the management team on board is something that many companies struggle with. Maria believes that it is essential to enter the conversation confidently and inform management how the organisation should work with sustainability. It is a crucial issue. Just as integral it is for companies to set financial goals, a similar mindset should be applied to setting goals regarding sustainability.

– Corporate management, including the CEO, tends to have a low level of knowledge regarding sustainability. Therefore, you must address your suggestions. The worst thing that can happen is that they will say no. I also believe it’s essential to keep the discussion on a high level. Avoid getting into details, and instead highlight your arguments such as: 

  • How your competitors work with sustainability
  • What your investors are asking for
  • Which regulations and frameworks come into force 

Communication is key when it comes to collecting data

When collecting sustainability data within scope 3, Arwidsro’s tenants’ actual consumption and emissions are central. The communication strategy toward the tenants has been essential for Maria to be able to collect data successfully. 

– First, we sent a general letter to all tenants with information about why we are collecting information. Next, we sent a questionnaire via email, and we have been in contact with several participants by phone as well. Although we did not reach a 100% response rate, we got 88% in the first year. I am not completely satisfied just yet, but still quite happy about the engagement the survey participants have been showing.

The answers Arwidsro received have varied depending on the tenants’ internal resources and conditions.

– Some larger grocery stores have an internal resource that identifies and collects relevant data from different business locations. In contrast to the responses given by smaller businesses, for example self-employed individuals, the answers have been of a private manner, e.g., “I have my car, and I recycle my waste.” This communication has given us the opportunity to get input from our tenants and provide feedback and updates regarding how they compare to other properties, says Maria.  

Value creation leads to business success

Creating value is deeply connected to business. For Arwidsro, their sustainability work has opened a lot of new doors.

– Since we started working actively with sustainability we have seen an increased interest from our tenants in joining our sustainability journey. Instead of us contacting our tenants, we have now started to see the opposite scenario – our tenants reaching out to us. That adds a different kind of value compared to what we are used to.

Something that began as a reporting exercise based on external requirements quickly escalated into excellent value for Arwidro’s internal operations. 

– Reporting emission and energy consumption gives us additional benefits along the way, such as certifications. This allows us to do something concrete, instead of just setting up strategies and goals. It has been an educational journey and a slight wake up call to learn how little we still know about this topic, and how unregulated it is.

Sustainability is also one of the few areas that can not thrive by itself. It requires collaboration, coordination, as well as being a natural part of every process in the organisation. In addition, Maria believes it is highly beneficial to the culture and the business model too.

– Sustainability benefits both internal collaboration and corporate culture. Sustainability issues are very closely linked to our company’s values. During the autumn last year, we set a sustainability goal for all employees. By doing this we managed to integrate sustainability into our entire business model and strengthen these values ​​internally.

Top 4 recommendations to get started with sustainability reporting

Starting to work with sustainability might feel overwhelming at first. Here are Maria’s best tips on how to get started with sustainability reporting:

  1. Begin with the essential areas! Think about what areas there are and what you can start measuring. In this way, you will create a roadmap. If you begin with setting visions, goals and strategies, you risk spending a lot of time formulating and visualising without ever realising them. Still, in the end, getting the organisation involved and working with concrete things is a crucial part of being successful in working with sustainability.
  2. Start with yourself! Commitment will get you very far, not doing what others want you to do or what is expected of you. Without thinking about your challenges, start with what you can measure and get going with it.
  3. Take responsibility! Think about the company’s obligations of sustainability.
  4. Embody sustainability work in corporate management! The sustainability work needs to be rooted within corporate management, because without approval on the top level, it will be challenging to incorporate it into the business strategy.

“More companies will likely adapt if cost requirements are introduced”

It’s not just milk and honey. According to Maria, many businesses have just started working in accordance with the EU Taxonomy, which Maria now thinks should be a hygiene factor. 

– The EU taxonomy is starting to become diluted. Before, I could use the EU Taxonomy as an effective tool to improve energy and investors’ requirements, but now, you only report what you are required to. Instead, I would like to see more mandatory reporting and that every company should take responsibility and pay for their emissions. Because that would drive investments towards reducing and measuring emissions instead of having to pay for it.

I understand it is not easy, but I think it would make a difference. More companies will likely adapt if cost requirements are introduced.

Maria thinks that Sweden should introduce more cost requirements and less reporting. Reports like GRI and others are great, but increased reporting does not lead to any improvement in itself. It will require that those who report have their own driving force.

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