Working with sustainability and environmental issues today not only has a positive impact on the world but also provides a competitive advantage for companies. Since 2007, Clas Ohlson has actively integrated sustainability into their entire operations. Tina Englyst, Chief Legal Officer and Head of Sustainability at Clas Ohlson, explains what they are doing in the production chain to reach their goal of becoming climate-neutral by 2045.
“Our sustainability work actually started with the supplier chain, but it has since expanded to encompass our entire value chain. Today, we focus on three areas: the planet, people, and society. For the planet, we have set ambitious goals aligned with the Paris Agreement, and we’ve committed to being climate-neutral by 2045,” says Tina Englyst.
Clas Ohlson has chosen to integrate climate efforts across the entire organization, rather than having a separate sustainability department. Tina further explains that Clas Ohlson plans to halve their emissions by 2030, and in their own operations, covering scope 1 and 2, they aim to be climate-neutral by 2026. They also have a goal to become fully circular by 2045, which involves incorporating recycled materials that can be reused in their production chain. Unlike many other companies, they have chosen to include the entire value chain, including production, in these goals.
A Sustainable Supply Chain
Clas Ohlson's sustainability journey began with the supply chain by implementing a code of conduct for suppliers. “It really started with the supply chain, and we introduced a code of conduct that all our suppliers were required to accept to even be considered. It includes requirements for environmental standards, working conditions, human rights, a ban on child labor, and similar aspects,” Tina explains.
She also describes how they ensure compliance with these requirements. They opened offices in Shanghai and Shenzhen in southern China to establish a team of auditors who visit factories to ensure production aligns with their standards. All new suppliers are inspected, and existing suppliers undergo regular follow-up inspections.
“We categorize findings from factory audits as green, yellow, or red. Red findings are zero-tolerance, meaning that we cannot place orders with those suppliers. This is one way we ensure that our sustainability standards are upheld in our supply chain.”
Challenges in the Supply Chain
Sustainability issues in the supply chain are often related to awareness. Tina notes that some manufacturers in Asia may not even know how their factory performs in terms of environmental standards. For example, they might struggle to answer what type of energy their factory uses. Additionally, Clas Ohlson often represents a small percentage of a factory's overall production, which can limit their negotiating power. Tina believes awareness is growing over time, but certain areas still need development.
So, what can buyers do?
“We have started conducting more environmental audits at our factories than we used to, to bring these issues to the forefront. If more purchasing companies do this, these issues will get addressed.”
Tina also believes that as legislation becomes more harmonized and the EU imposes requirements, the challenges in the production chain will be easier to tackle.
Balancing Sustainability with Profitability
A company’s sustainability efforts must balance with profitability. What happens during an economic downturn when there is pressure to offer cheaper products while still prioritizing sustainability? Tina remains optimistic that the two can coexist. One way Clas Ohlson achieves this is through their spare parts range, which has seen significant growth in recent months.
“Yes, I think you can combine the two because we can offer a spare parts range that helps our customers save money. We sell window seals so our customers can consume less energy. We offer solar products that allow customers to save money and use less energy. So, I absolutely believe sustainability can thrive, even in a challenging economy.”
There are companies that prioritize low prices over sustainability, but according to Tina Englyst, prioritizing the production of durable and environmentally friendly products gives a competitive edge.
“Our customers believe that Clas Ohlson offers great value, and we intend to maintain that. But we also want to highlight our uniqueness by saying that we are not only affordable but also sustainable.”
Tina Englyst’s Tips for Sustainability:
1. Involve the Board and Management:
“The importance of sustainability must be on the agenda of the top decision-makers. I also believe that it should be integrated into the business, not kept separate, for success,” says Tina.
2. Consider the Whole Chain:
“Think about packaging, materials, design, quality, and after-sales service. What happens when the customer is done with the product? Are there spare parts, or can it be recycled? Design a product with a circular approach from the start, considering the materials you use.”
3. Think About Where You Source Products From:
“As a buyer, consider where in the world you're sourcing from. Would it be smarter to source from Europe for shorter transportation distances? It may not be cheaper overall to source from the other side of the world.”