No one can accuse the Swedish government of lacking ambition

The Swedish government’s so-called “generation goal” aims to reduce pressures on the environment by 2020 (2050 for climate change) to sustainable levels, based on 16 national environmental quality objectives. Underpinning this are ambitious government targets, forward-thinking legislation and big vision. Add to this a conforming populace and a close, if at times testy, partnership between government and business and these characteristics have allowed Sweden to leapfrog to a lower-carbon, more gender-balanced society.

So in December 2009, Swedish prime minister and then-EU president Fredrik Reinfeldt set off to Copenhagen’s COP15 summit with optimism. Carbon emission rates can be decoupled from economic growth – his 20-year experiment proved it: between 1990 and 2008, the country reduced its carbon emissions by 12% while its economy grew 50%.

No other sector embodies the Swedish approach better than energy, where the government uses its role as regulator, owner and partner to lower carbon emissions, raise the proportion of renewable fuels, and create a more efficient electricity market. Key to this approach is creating the conditions for long-term rules in the energy market. Sweden has imposed the world’s highest carbon tax on fossil fuels for industry, households and transport. Although the cement, steel, aluminium, pulp and paper industries still enjoy exemptions, to ensure continued international competitiveness.

Through the Renewable Energy Directive, Sweden has attained 43% renewable energy, which is especially high in heating. Big petrol stations are required to supply at least one kind of renewable fuel, which has spurred the growth of ethanol and biofuels to 5.1% of total fuel consumption. The government’s goal is to raise this to 10% by 2020. The state also provides tax relief for specific industries to reduce their energy use.

With the highest tax burdens and perhaps the most expansive welfare programmes in the world, doing business in Sweden demands an acceptance of complex labour and environmental regulation. More recently, and particularly since the Conservatives took office in 2006, the state relies increasingly on instruments such as tax cuts, liberalisation of infrastructure and partnerships.

In bed with business?

The current pro-business government regards building partnerships with companies as key to achieving sustainability goals. Look no further than Stockholm’s Royal Seaport and its smart-grids project.

“The Swedish government stated that the smart grid is a national priority,” says Tomas Wall, smart-grids project manager and vice-president for research and development at energy provider Fortum. “The city has been a key driver; they took the initiative and placed high environmental requirements on all partners. They set the direction and targets, which we help realise.” The Swedish Energy Authority is funding 40% of the 30m kronor (€3.2m) pre-study, which will shift to implementation as early as 2014. “There is no other place in the world which can fulfil such far-reaching goals,” Wall says.

If there is a thorn in the side of the government’s low-carbon vision, it is state-owned Vattenfall, one of Europe’s largest generators of electricity and heat. The company has been highly criticised in its major markets in Germany and Sweden in 2009 for a lack of transparency, mismanagement of its nuclear holdings and stubborn reliance on coal. In 2009, 51% of electricity was generated through fossil fuels, while 49% of heating was based on hard coal. Despite this, Vattenfall was supposed to spearhead the development of a sustainable energy system but is falling well short of its mandate.

As a result, the Swedish government has undergone a steep learning curve on how to better manage its 57 (42 wholly owned) businesses. Like Vattenfall, many have high sustainability impacts – such as mining company LKAB, which is transplanting two entire northern cities to continue its operations. The national liquor store, Systembolaget, is challenged to find a balance in sustainable consumption of alcohol.

“Some companies were doing a lot and others not. Our focus has been on increasing transparency. We thought reporting could be a tool to drive the work,” says Jenny Didong, responsible for state-owned holdings at the ministry of enterprise. Consequently, in 2007, the ministry passed a decree that all state companies must report according to the GRI and be third-party verified. “No-one says that companies should skip annual reporting, or that it costs too much money. We wanted to give sustainability information the same status as financial information,” Didong says. By 2009, almost all companies reported and 83% were verified, compared with 10% among the 100 top Swedish companies.

Internationally, the initiative has received kudos for raising the bar on sustainability reporting among publicly owned companies. The Netherlands has followed suit and Spain has been at least partly inspired by the approach.

It is this no-nonsense pragmatism and the acceptance of a little short-term pain for long-term gain that singles out Sweden’s politicians as leaders in the sustainability space.

Astrid von Schmeling, based in Stockholm, specialises in sustainability strategy and communications. She is a former managing director of the magazine Tomorrow: Global Sustainable Business.

The writers of the Sweden briefing are part of One Stone. In addition to Stockholm, One Stone’s partners and associates are based in Edinburgh, Sydney, Malta and Portland, Oregon. One Stone has more than two decades’ experience working with multinational companies to guide sustainability leadership strategies and provide focused sustainability communication.

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