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Using Shared Value for Climate Action

A look into FSG’s project with Swedish construction company OBOS

As the fight against climate change intensifies, the most ambitious governments and cities are setting aggressive carbon reduction goals. The government of Sweden is committing to zero net carbon emissions by 2045. To reach Sweden’s goal, carbon emissions will need to decrease by 5-8% over last year’s level every year until 2045. In Sweden, the reduction from 2016-2017 was a mere 0.5%, and from 2017-2018 it was 1.8%. The pace of change and innovation to accomplish this goal requires a dramatic transformation, and the responsibility for meeting these targets rests largely at the local level. Local governments have many competing priorities, and often do not have the plans, capacity, or tools to act swiftly to reach these goals. Companies can play a critical role in climate action by providing products that have a lower carbon footprint, and by reducing the carbon footprint in their value chain and production processes.

In the next three years, Sweden needs to build more than 700 new preschools to keep up with demand. OBOS engaged FSG to help evaluate the idea for a carbon-neutral preschool product in the fall of 2019. The Scandinavian construction company wanted to understand the opportunity for business and social impact inherent in this social challenge, or simply put: the opportunity to create shared value. The preschool is modular and prefabricated in a Swedish factory using locally sourced Swedish wood (which has much lower carbon emissions than cement and steel). The project involved estimating the difference in carbon emissions that a decision to build an OBOS carbon-neutral school would imply for a city government. FSG, with the help of Swedish sustainability firm Forever, interviewed city employees to understand their needs, and Swedish policymakers to understand upcoming changes in regulation and standards. A market analysis and competitor scan helped us better understand the landscape and positioning for OBOS. And to think beyond the preschool product, we did a shared value journey mapping exercise to identify other opportunities for shared value for OBOS in the coming 5 years.

Based on initial comparisons of carbon emissions embodied in the material, construction, and energy use, FSG found that a small city could achieve up to 3% of their needed carbon reductions for a year by opting for a carbon-neutral preschool instead of a standard preschool. For Sweden as a whole, switching to carbon-neutral preschool construction for all preschools would represent 0.2-0.5% of the needed reductions each year.

We learned a lot from city employees throughout the project, many of whom felt pressure to meet emissions targets, but did not yet have a plan for how to reach them. City employees in charge of making construction decisions shared that they face a complex set of priorities and tight timelines, and are looking for solutions from the private sector: “The best thing companies can do is to offer climate-friendly alternatives, with clear and broadly accepted standards for measurement. Make it easy to do the right thing.”

The shared value journey mapping highlighted other opportunities to use shared value for climate action. The construction sector accounts for about 20% of emissions in Sweden, and OBOS is now pursuing carbon-neutral offerings for housing. Over the longer term, OBOS is exploring how it can tackle other environmental and social challenges.

For business leaders across industries and geographies, this example demonstrates the important role that new products, and shared value strategies, can play in climate action. Anchoring the analysis in country-level goals and potential for impact, along with first-hand perspectives from the day-to-day decision-makers at the city level highlighted areas of innovation and helped clarify the company’s unique competitive positioning.

Learn more about FSG’s Shared Value services >

Carina Wendel

Former Associate Director, FSG