Operator Session: Introducing sustainability with Aikito and Klarna

Take Away 1: Starting early makes sustainability a value add rather than a cost centre

Starting your sustainability journey can feel overwhelming. The wide range of issues and at times, political correctness, surrounding the topic can make some organisations hesitate to engage. The advantages of implementing sustainability from the very beginning rather than waiting are, however, substantial. 

By considering it early, you can integrate sustainable features in your product and service design from the outset, as well as make sustainability a central business lever which will conduct the business as a whole and support the growth of the company. Early integration increases the possibility of making it into a revenue and culture builder. On the flip side, starting later can make the integration with growth and revenues harder (although still possible) and risks sustainability becoming more of a cost centre. 

Title chart: Sustainability as value drivers (Northzone 2022)

As a young, new prop-tech company offering simple loans to landlords and tenants to pay for upfront costs when building commercial spaces, Aikito did just this. The team has grown the company ground up with sustainability as a priority from the start and is on a mission to build with purpose.

The building industry is infamous for its environmentally unfriendly and unsustainable methods. Overall buildings are responsible for 40% of all global emissions. Commercial spaces are renovated every 7-10 years, offering an opportunity to rebuild sustainably more frequently than in buildings replaced or built. Still, Aikito’s experience is that although everyone agrees that promoting sustainable practices in the building industry is important, consumers will often not go out of their way to research more sustainable alternatives and few know how they can actually make a difference. 

“Many people don’t know that they can be more sustainable by using the amazing technology and materials that already exist. As most of our clients do not build spaces on a regular basis, adding sustainability to a long to-do list is overwhelming. We make it our responsibility to inform our customers of the options available and how it won’t add any difficulties or increase costs.” highlighted Lisa (Aikito).

For Aikito, a first step was pinpointing where they were sure they could make a difference, and making these part of the commercial offering. With every loan Aikito lends, they now offer a free consultation with a sustainability expert to help their customers save money on energy efficiency and lower their carbon footprint. In some cases, the ROI is the same length as the loan meaning that energy savings can be used to pay off the loan instead. Customers love this value add and it links sustainability directly to Aikito’s growth potential and vision.

“Sustainability was already at the forefront of everyone’s mind from the beginning,” explained Lisa (Aikito), “which meant there was never any friction on the subject internally. Naturally, this made it easy to implement.”

Take Away 2: Start with impact, continue with ESG

From our own playbook: ESG is process driven — it focuses on the how — the internal principles, processes and practices that dictate the way in which an organisation operates, or behaves. Impact is outcomes driven — it focuses on the what — the social or environmental outcomes of an organisation’s operations or behaviour.

Both companies testified to the importance of understanding your impact before designing your internal processes. In the sustainability world, this is often referred to as a double materiality assessment – understanding where you can have the greatest impact but also where the risks and opportunities of the sustainability agenda might influence you the most. By addressing your position from an impact perspective, you can also shape processes and practices to best align with the company’s vision.  

When Klarna started its sustainability programme and subsequently launched its first ESG strategy in April 2021 on Earth Day, the company gathered information through stakeholder surveys and interviews on how the business was impacting the planet and society, openly building in public its sustainability vision. “We also chose to bring an external partner in for materiality assessments in order to ensure an unbiased view”, recalled Lisa (Klarna).

Example Klarna materiality assessment 2021

Source: Klarna ESG Report 2021

The resulting strategy split into three pillars: climate change mitigation, financial wellness, diversity and inclusion. It has since been extended to six areas with vote with your wallet, effortless donations and encouraging circular shopping.

In its first pillar, climate change mitigation, the company has focused extensively on reducing its carbon footprint, e.g. by switching to renewable electricity sources in its offices, and has been a leader in implementing an internal carbon tax where Klarna taxes itself for its carbon emissions which is then spent on high-impact climate projects. 

“Our internal carbon tax is a way for us to hold ourselves accountable for our greenhouse gas emissions and is designed to incentivize the company to take real action to reduce our carbon footprint.” said Lisa (Klarna).

Klarna’s second pillar is financial wellness which links directly to the company’s services. The company is constantly working on and improving its product offering, with the aim that customers have full control. Additionally, external surveys and research have helped Klarna stay on track when meeting the needs of its customers.    

Its third pillar is diversity and inclusion. Social governance aspects are important to get right from the get-go. Klarna routinely sends out employee engagement surveys as this is key to understanding employees’ expectations and managing their contribution to the company’s vision and ultimately satisfaction.

The three additional pillars that resulted from Klarna’s materiality assessment focus on integrating sustainability directly into its consumer offering. For example, Klarna’s in-app CO2e Emissions Tracker, which launched in 2021, helps consumers better understand how their purchasing power impacts the planet. In 2022, the company launched a new donation mini-app, pledging to match consumer donations towards planet health causes during Earth Week, later opening this up to other charities to support the important issues their customers care about.

Take Away 3: Transparency and inclusion sustain the ride itself

Klarna is a consumer-focused company with over 450,000 partners. As a category-leading company, there is an expectation on the business as an example to follow. Instead of developing its work behind closed doors, Klarna has focused on improving sustainability communication, strengthening its ESG governance and reporting, and thereby sharing relevant content and data disclosure to position itself in this way, with an emphasis on transparency. This communication allows for greater customer satisfaction, and employee engagement and it pushes them to new levels. 

“While the push from investors for more transparency has been felt by many companies like Klarna in recent years, regulatory requirements that will come into effect in the coming years, such as the Corporate Sustainability Reporting Directive in the EU, will not only increase the disclosure requirements but also the reach of such regulations. Many companies that have not been required to report and really consider ESG in their business conduct will now have to.” explained Lisa (Klarna). 

It’s imperative to be aware of where your company might be lacking or need more support to cover those areas and continue positively growing forward. Klarna assesses this through continuous regulatory heat-mapping and interpreting new regulations’ impact on its business model. This allows the company to highlight what is working, where improvements should be made, and what can be taken further. 

Aikito has also integrated transparency into its operations. Making sure the entire company is engaged with the sustainability team, at every stage of their processes, means its priorities seamlessly fit into different projects. Its ‘Sustainability Wiki’ (a Notion page) ensures the team is aligned with the company’s vision, language, offerings and vendor partnerships that can be integrated as products into their solutions.

No company is the same, yet there is so much to learn from each other. The aim isn’t to set unrealistic goals and expectations, but rather to hold accountability for what can be improved and continue pushing forward in the right direction.