A changing world
Global macro trends, from population increases and higher standards of living to resource shortages and climate change, rapidly alter the conditions for SCA’s business operations. By analyzing the external environment and trends, and maintaining close customer and consumer dialogs, SCA can leverage these drivers, thus enabling the creation of long-term sustainable growth.
Growing and ageing population
The world’s population is growing and living longer. The global population is today just over seven billion. The UN predicts that this figure will grow to more than nine billion by 2050. This growing population is resulting in an increased demand for hygiene products and thus creating favorable growth opportunities for SCA. The greatest population increase is expected to occur in Asia, Latin America and Africa, which means that having a presence in these markets and offering adapted products will be strategically important. SCA is prioritizing growth in selected emerging markets, such as China, Southeast Asia, Latin America, Eastern Europe and Russia.
An ageing population will put more pressure on the elderly care system and an increasing number of elderly people will require homecare. We are, at the same time, becoming healthier and continuing to lead active lives at an older age. More elderly people increases demand for incontinence products, both in mature and emerging markets, as the occurrence of incontinence among people over the age of 65 is expected to be between 15 and 20%.
Higher standard of living
At the same time as the population is growing, the level of poverty in the world is decreasing. An increasing number of people now earn more than USD 2 per day (the World Bank’s definition of poverty) or have moved into the middle class. Once people’s most basic needs for food and shelter are met, hygiene becomes a top priority. This creates favorable growth opportunities for SCA. In emerging markets, SCA sells hygiene products and solutions that are specially adapted to consumers with limited resources.
Global insight into health and hygiene
Limited or no access to hygiene and sanitation is one of the greatest global challenges to be resolved. The knowledge that good hygiene improves health and well-being is growing worldwide. SCA continuously develops new hygiene solutions and educates, for example, young women about menstruation and puberty, as well as teaching children about the importance of good hand hygiene. Incontinence products enable elderly people to live more active and dignified lives.
Growing economies and a changing world
Globalization, urbanization, political decisions, the global economy and cultural dynamics all impact SCA. By trying to anticipate structural changes in our external environment, SCA is ensuring that it will capitalize on the benefits and tackle the challenges that arise as a result of these changes. Economic power relationships are changing and emerging markets, such as China and Brazil, are becoming increasingly important.
Changing customer and consumer behavior
Trends, technological developments and prevailing values cause customer and consumer behavior to change. Accordingly, the ability to anticipate and exceed customer and consumer expectations is becoming increasingly important.
- Sustainable consumption: Limited resources, political prioritizations and knowledgeable, aware customers and consumers are increasing demand for sustainable products and services.
- Digitalization: Many purchases are now made online, which is changing the rules of the game, for example, when it comes to product development, marketing and distribution. Customers and consumers are showing greater demand for digital solutions.
- The company behind the brand: More than ever before, customers and consumers are paying attention to the companies behind the products and services they buy and imposing greater demands on these companies in terms of corporate responsibility.
- Innovation: Innovative products, services and business models are required to respond to these changing behaviors.
As a result of the growing global economy and world population, an increasing number of people are now sharing the planet’s resources.
- Energy: The International Energy Agency (IEA) predicts that the global need for energy will increase by one-third by 2040, which will probably entail higher costs and, in some cases, an energy shortage. As a major energy consumer, this is an important issue for SCA and the Group continuously works to enhance its energy efficiency. New technology is not only resource-efficient, but usually also generates fewer emissions.
- Water: The UN predicts that two-thirds of the world’s population may live in areas with water shortages by 2025. Access to water is critical for people, industry and agriculture. SCA’s production operations are dependent on access to water and the Group is working to achieve its ambitious goals for efficient water usage.
- Forest management: Illegal felling and felling of forests with a high conservation value contribute to global deforestation and constitute a threat to biodiversity. SCA has a Group target for checking the origin of all wood raw material. Forests are a key component in SCA’s value chain and provide it with access to forest raw materials.
- Human capital: The economic progress of the world’s emerging markets and increasingly knowledge-intensive business is increasing the need for skilled labor and management. SCA is investing in the development and training of its employees and takes a strategic approach to meeting its future requirements for employees and expertise.
Climate change is one of the most critical environmental and social issues facing the world today. Authorities are setting targets to reduce CO2 emissions, and the private sector is expected to play its part. SCA is actively working to combat climate change by investing in new technology, efficiency enhancements and biofuel and wind power initiatives. SCA’s forests have a net growth that gives rise to the net absorption of more CO2 than emissions generated through the total use of fossil fuels in its own production operations.
Stakeholders influence SCA’s choices
SCA’s priorities are based on what is important for its stakeholders
THE MATERIALITY ANALYSIS highlights the issues that are significant to SCA and its stakeholders. It forms the basis of SCA’s strategy and sustainability work. The analysis is based on a survey of 1,100 external and internal stakeholders. SCA has conducted materiality analyses in 2008, 2010, 2012, 2013 and 2015. The results of the 2015 materiality analysis show that our stakeholders consider the following areas most important:
- Customer and consumer satisfaction
- Business ethics
- Health and safety
Innovation was ranked as the overall most important area by the Group’s stakeholders. By maintaining close proximity to its customers and consumers, understanding their needs and transforming this knowledge into products and services, SCA makes a positive difference in people’s everyday lives, which in turn strengthens the company’s market positions and brands.
Customer and consumer satisfaction received the second highest ranking by the stakeholders. Customer understanding and consumer insight determine the innovations SCA develops and how finished products and services are delivered to the market. A dialog with consumers is conducted through focus groups, in-depth interviews and other alternatives. A great deal can be learned from SCA’s sales representatives and SCA performs regular customer satisfaction surveys.
Business ethics were also considered highly important by the stakeholders. Free and fair competition is an important cornerstone in every society, and for every sustainable business operation. SCA has zero tolerance for all forms of corruption and unethical business practices and expects its suppliers to adhere to the same rules as SCA, in accordance with SCA’s Global Supplier Standard. In 2016, SCA implemented an initiative on ethics and integrity in order to increase focus on these issues in daily work, and enhance awareness of the risks and importance of responsible leadership. A culture characterized by integrity begins with two key insights: that surroundings have a major impact on the actions of individuals and that it is necessary to handle ethical gray areas. The training initiative began with the Executive Management Team and was then taken to 150 of the company’s top managers. About 1,000 employees will have taken part in the project by the beginning of 2017. It will then be incorporated into SCA’s leadership development activities.
Other key areas were human rights, resource efficiency, forest assets, corporate governance and product safety. A total of about 1,100 customers, consumers, suppliers, investors, analysts, journalists, NGO representatives and SCA employees participated in the analysis. The stakeholder groups’ results have been weighted to provide a more balanced view of the results.