Magdalena Gerger, CEO of Systembolaget: Why Brands Must Make Sustainability a Higher Purpose

Today’s consumers are experiencing an eco-awakening and are more conscious about the impacts of their purchases on the environment. Therefore, the demand for sustainable products is higher than ever before, resulting in growing market opportunities for retail organizations across the globe.  

Magdalena Gerger, CEO of Systembolaget, helps us understand how the focus on sustainability has affected the retail industry in terms of operations, leadership, customer experience and more.  

   

Why is there a growing urgency for sustainability in the retail industry? And do you think there is a link between this urgency and COVID-19? 

The urgency comes across all parts of our societies and applies to all solutions. It is a question at the heart of everything we do these days. Retail is an industry at the forefront of it. Many retail organizations have expressed a higher purpose in sustainability as there is a constant flow of consumption.  

We at Systembolaget have also done the same — making sustainability a higher purpose where everyone can get involved. It has made sustainability initiatives aspirational and interesting for both our suppliers and consumers.  

It is the same for employees. These days, organizations that want to attract talent will start by explaining how they have a meaningful role in creating a better planet and better social conditions. This goes for owners and investors too. 

Is it linked to the pandemic? Yes. The pandemic has snowballed effects and increased the pace and clarity of society’s thinking. Fundamentally, sustainability was there before. It has not changed in actual content or desire to do better things for the planet. 

 

What are some immediate sustainable initiatives retailers can implement in their organizations? 

Everyone, retailer or otherwise, needs to start creating the right conditions and ask themselves, “What is it all aiming to do?” They need to express that clearly, set goals and ensure the following structures point in a sustainable direction:  

• Operations: Identify tasks in your organization that can be fixed and trigger your suppliers to do more. Once you start solving these issues, you will see a positive effect and it creates a hunger for more.  
• Products: The opportunities are endless when it comes to what is on your shelves. It is about designing your channel and products in the most sustainable way and thinking it through from start to finish. At Systembolaget, we have achieved our goal of providing more organic choices. It is now an overwhelming part of our offering.  
• Climate-smart packaging: This area requires a bit of education. Not everyone thinks about paper wrap packaging for a top-quality wine; but now it exists, and our consumers are choosing this product.  
• Relationship with suppliers: Do not come with finished solutions, work together with your suppliers instead. For example, regarding our climate-smart packaging — it was a co-creation and not a direct order of “We want this.” 
• Social aspects: It is vital to have human rights policies and the best working conditions throughout the supply chain.  

Additionally, transparency and communication are essential when it comes to showing consumers the results of a sustainable cause to make them realize that they are making a difference.

   

What are the biggest challenges when it comes to maintaining sustainability in all levels of the supply chain?

Breaking things down into manageable changes that have effect is a challenge. At the heart of that is traceability — that goes for whatever product we are talking about. Take clothing for example: What were the raw materials for this product and how was it produced? How were the working conditions? What about water consumption?  

In our value chain, traceability is needed from the start. When we make a promise together to produce a sustainable product, we must try our best to guarantee it. Therefore, it is a challenge to have consistent traceability and transparency throughout the value chain. Without traceability, it is difficult to track any progress or improvements. 

Another obstacle is having a common and right approach to ensure carbon emissions decrease and working conditions improve. We encounter so many challenges in different viewpoints, cultures, languages and definitions of sustainability. This is why good communication is key in turning ideas into action.

 

In your opinion, how has sustainability changed the role of the CEO?  

The sustainability movement and requirements have changed the role of the CEO and C-suites more than anything else in the last century. This is because it requires CEOs to take responsibility for the whole value chain, society and the carbon footprint left over time. It requires leaders to think long-term and look at many more aspects.  

Nowadays, it is much more challenging to communicate and lead. A CEO is now an informal leader of a much bigger group of people than their own company. I find myself leading local and international politicians, supply chain and transport operators, and raw material producers. I also spend much more time with NGOs and academics. To be deep and broad at the same time is a challenge — to have the required knowledge and to apply that in your own context.  

There is one more huge movement, which is the technology shift that can be a tool for companies to improve their sustainability practices. We need to learn, grasp and use new technology together in the best possible way to achieve sustainability goals. However, I think the greatest change of them all is for leaders to be more visionary, inspirational and drive their organization to a higher purpose.

 

What are the most effective tech adoptions in retail to build business resilience and flexibility? 

Digitalization and new techniques are a whole new toolkit and have many advantages if utilized correctly. With e-commerce, it has become easier to connect both your products and green initiatives to your customers. Information handling is helpful here via digital techniques. Personalized services are now made possible with technology to enhance customer experience. 

In addition, automation in retail creates an efficiency that saves money and reduces carbon emissions. It also helps with traceability as I mentioned earlier. With automation, we were able to create a sustainability platform to collect important information from our suppliers. 

A big retail trend made possible by technology is having an omnichannel presence. At Systembolaget, it is common now for customers to get information online and purchase what they want at our stores. Better yet, some customers even bring their own containers! There is a keener interest in purchasing locally which plays a big part in sustainability.  

 

*The answers have been edited for length and clarity.