Scandic Hotels: Case Study inSustainabilityBy Arturo Cuenllas

Nowadays “greenwashing” is a popular term. Weare aware of companies such as BP Oil and manyothers being accused of greenwashing, claimingeco-consciousness or launching products andservices that are less than legitimately green. Butfew people know that the term was originally coinedto criticize hotels that encouraged guests to reusetowels for environmental reasons but made little orno effort to recycle waste: “Dear Guest…Save theplanet! Keep your towels…” Meanwhile, theunaware housekeeping department was flushingthe toilet four times or leaving the faucet runningwhile cleaning a room. Jay Westerveld, anenvironmentalist who accused hotels of thesepractices, coined the term in 1986.

Believe it or not, nearly 30 years later, most hotelsaround the world are still doing the same thing:urging guests to save the planet by reusing theirtowels while applying unsustainable practices intheir operations. No wonder why consumers are thefirst to be skeptical about hotels claimingsustainability practices. This is because, as JohnGrant stated in his book, The Green Manifesto,green marketing is a principle, not a proposition. It’snot what you say you believe in, it is what you showthat you do that counts. Sustainability istransforming the way companies operate. Thecurrent trend is to integrate sustainability into allcompany activities. “Formerly, sustainability was a

department, one that gathered information,reported internally and externally and thus policedthose activities of the company. Now, sustainabilityis thought of as a mindset and a set of toughprinciples, which everyone in the company shoulduse in its daily work”.

Scandic hotels: the role model for sustainability

Scandic’s goal is to be one of the mostenvironmentally sustainable hotel chains and theyare definitely accomplishing this.

We need role models!

The good news is that there are such models -incredible companies like Scandic. Thesesustainable companies are at the forefront ofenvironmental and social practices. They haveorganized themselves in such a way that everymanager and rank-and-file employee is empoweredto be innovative in sustainable practices. Thesecompanies have embraced sustainability to a pointwhere it becomes part of the company culture; andit actually pays off. Innovation happens as acontinuum within day-to-day working practices,improving the bottom line by reducing energy andwater consumption or waste, or by designing newproducts and services that have less environmentalimpact.

Sustainability, in this context, is viewed as a never-ending path that requires continuous improvementsand new goals. Jacquelyn A. Ottoman in The NewRules of Green Marketing reminds us that the newrules call for businesses to excel by beingproactive, aiming to surpass minimum compliancestandards. Indeed, they set the standards by whichthey and their competitors will be judged. So, iftoday we have decreased our carbon footprint by65%, our goal for the following years will be tobecome carbon neutral by purchasing andproducing 100% of electricity from producers who

SCANDIC HOTELS A ROLE MODELOF SUSTAINAIBILITY

"These companies haveembraced sustainability to apoint where it becomes partof the company culture; andit actually" pays off"

only use renewable fuels. Such sustainablecompanies are not satisfied with simply reducingwaste -maybe from 2kg to 0.7kg per guest per night;they strive to divert all waste from going to landfill.Regarding social aspects, no matter how much theyhave contributed to social activities -for example2,000 hours of community volunteer work- they arewilling to increase their contribution even more insubsequent years.

Sustainable companies such as Scandic Hotels knowthat true ecological sustainability is not a cost to thecompany. To the contrary, it is a source of profits anda real competitive advantage. The holistic perspectiveof the theoretical framework for sustainability providesa triple bottom line: (1) the environmental dimension:how can we minimize environmental impacts in ourorganization? (2) The economic dimension: how canwe maximize our economic profit? And (3) the socialdimension: how can we maximize the social well-being of all stakeholders?

As Dr. Brian Nasstrass says: “there are two indicatorsyou’ll know that a company is taking seriously aboutsustainability. Number one, sustainability is built intothe strategic planning of the organization. Until it is inthe strategic plan, they are still playing around with itand are not serious about it. And secondly, whenpromotions or remuneration of the organization’ssenior executives are based on their performance onsustainability goals”.

These truly sustainable organizations believe thatsustainability is neither a fuzzy word nor a patch toapply in order to comply with environmental regulationor with the corporate social responsibility report. Theygo beyond what is expected from regulators and otherstakeholders. Hotel chains such as Scandic not onlyinspire their employees, but also their guests and therest of their stakeholders.

A truly sustainable pathway never ends; it requirescontinuous innovation. Hotel chains such as Scandicenhance organizational knowledge by making everyprocess of its operation more efficient. This is not onlyexecutives and managers thinking about how theycan cut costs in order to increase the bottom line, butalso the majority of employees participating withactions and ideas toward sustainable practices.Scandic analyzes the whole life-cycle approach of thehotel, from its very beginning, in the design andconstruction phase, through its operations andrefurnishing, until its end. They analyze upstreamprocesses: how waste and environmental impactscan be reduced through the value chain. It involveschoosing the right suppliers and co-innovating withthem.

Real sustainable companies are also sociallyresponsible and committed to social programs. Theyare involved in a continuous and sincere dialoguewith their customers and employees.

Are customers rewarding sustainability practicesin hotels?

Although many customers demand sustainability,hotel operators are concerned about whethersustainability increases or decreases hotel bookings,costs and profitability. Mainstream hoteliers perceivesustainability as large investments and additionalcosts not worth taking on. There is a problem ofunawareness and lack of education. Working toachieve sustainability requires a new mindset. Itrequires knowledge. Notwithstanding, Scandic hasshown us that sustainability actually pays off. It savesbusinesses money in the short, medium and long-term, but also increases brand awareness andpositioning –credibility-. Yet this could only bepossible if you’re a truly sustainable company and notthe greenwash we’re used to seeing- hotel chains thathalt their green efforts after the first year. Or one ofthose hotels that abandon their environmental effortsright after obtaining their EMAS certification(Environmental management decision-making incertified hotels by M.J.Bonilla-Priego, J.Najera,X.Font,). Nevertheless, these hotels still claim to begreen.

When Carlos Ghosn, CEO of Renault-Nissan, wasasked three years ago about his commitment todeveloping the electric car (Nissan Leaf) in thedocumentary The Revenge of the Electric Car hesaid: “I am very confident about what’s coming. What

"A truly sustainable pathwaynever ends; it requirescontinuous innovation. Hotelchains such as Scandic enhanceorganizational knowledge bymaking every process of itsoperation more efficient"

I don’t know is how fast it is going to come.Somebody asked me the question: what do you thinkabout the theory that global warming is not theproblem? I say, that’s not the issue. No matter howmuch I am convinced that global warming is an issueor is not. That’s not the plan…the public is expectingthis from us!”

Are then customers expecting hotels to be committedto environmental and social practices? The latest

research from Cornell University (Hotel Sustainability:Financial Analysis Shines a Cautious Green Light. ByHoward G. Chong and Rohit Verma) may reinforcethose skeptical opinions against environmentalstrategies. The study concludes that earning a greencertification does not automatically result in a largerevenue bump nor a revenue fall. In short, green isnot a “silver bullet” strategy.

In spite of the “Green Gap” -consumers are not willingto pay premium though they ask for green products-real sustainable hotel chains, like the one I ampresenting in this case study, can indeed gain acompetitive advantage. Truly sustainable companiesare able to share values with customers, and thusincrease their loyalty. They can approach a

competitive advantage by gaining credibility andcreating more demand for their products.

“‘Green’ itself is not actually a functional productbenefit,” as John Grant states in his Green Manifesto.“It does nothing for me directly nor fulfills the USP(Unique Selling Proposition).” But green productsoften have secondary benefits; they can be moreefficient, durable, affordable or basic, or they can behealthier, better made… Customers would go for thesustainable property, all other things being equal.However, Scandic knows that sustainability is notenough by itself to provide value to its guests. AndersEhrling, Scandic’s CEO and President, mentioned inthe company’s annual report: “Today guests expectan experience, not just a bed. We have to developeverything –service, food and design- to exceed ourguests’ expectations”. (Scandic’s annual report 2012)

The beginnings: the Natural Step Sustainabilityprinciples

Sustainability is defined as the development thatmeets the needs of the present without compromisingthe ability of future generations to meet their ownneeds. But how do we know if we are compromisingfuture generations? The metaphor of the funnel sim-ply tells us that, as time passes, there is increasingpressure on companies due to resource constraints,as a consequence of increases in per capita con-sumption and population. The current world popula-tion is now 7 billion people and expected to be 10 bil-lion in this century. So the challenge for sustainabilityand the change for individual organizations is how tonavigate into the future; how can companies be suc-cessful in their markets without hitting the walls of thefunnel?

Scandic Hotels was one of the first hotel chains to be-lieve that it is a good strategy to do the right thing forthe environment, and earn money at the same timeby sharing values with its guests. They linked cus-tomers and employees with a shared vision about theenvironment and social issues. Scandic Hotels arenot only customer and employee focused but theyunify core values for both of them as well. As formerCEO Ronald Nilsson prognosticated: “Tomorrow’smarket is about mutual values. Scandic had beenlooking inward –as many hotels today do; only focus-ing on the product and services- instead of outward atthe values of the market. The next generation won’ttolerate insensitivity with the environment”.

How did this great strategic story of sustainabilitybegin? In 1992 Scandic Hotels was about to declarebankruptcy. Between 1990 and 1992 the hotel chainreported losses of approximately US $50 million. Anew CEO, Ronald Nilsson, was hired to make atremendous turnaround. Contrary to common

"Scandic Hotels was one of the firsthotel chains to believe that it is a goodstrategy to do the right thing for theenvironment, and earn money at thesame time by sharing values with itsguests. They linked customers andemployees with a shared vision aboutthe environment and social issues"

wisdom, which said that any environmental programcould only be carried out if the company was firstfinancially healthy, Nilsson made environmentalresponsibility one of the core values from the verybeginning of the turnaround. At the same time hedecentralized the company, giving more power ofdecision to managers and front-line employees. IfScandic was to be truly customer focused, employeesneeded to be empowered to make the right decisionsand act accordingly. Such a strategy required a greatpsychological and cultural change, not possible toaccomplish if it weren’t for Nilsson’s leadership.

Nilsson knew about the Natural Step and its successin implementing sustainable principles at IKEA.Scandic was going to be transformed into the “IKEAof hotels,” and the overall guiding spirit was tocommunicate the new shared values with thecustomers. The Natural Step, a Swedish non-profitorganization, was primarily chosen because it was notthe traditional environmentalist NGO telling you whatto do. Instead, they gave Scandic –just as they didwith IKEA- the scientific principles of sustainabilitywith which to start building a share metal model withinthe organization. Once the Natural Step frameworkand methodology was taught to the whole company –all 5,000 of its employees at the time- in a period of 6months they were on their way toward sustainablepractices. Only in the first two years theyimplemented 1,500 actions, reducing costsstraightaway in energy and water and waste disposal,as well as improving best practices and eliminatingharmful chemicals –cleaning products.

Leading The Natural Step was Dr. Karl-Henrik Ròbert.Dr. Ròbert was a cancer researcher who becameenthralled with the mission of developingsustainability principles at their roots. Together with agroup of scientists, he created the four systemconditions of sustainability. The Natural Stepmethodology was the perfect framework forsupporting businesses.

In his book The Natural Step Story, Dr. Karl-HenryRòbert asks: What is a sustainable society supposedto look like? Or, what are the mechanisms by whichhuman society could damage nature? Nature isdamaged by the concentration of substances, which

are continually rising by being dispersed outside theEarth’s crust faster than they are returned to it (i.e.fossil fuels). Nature is also damaged if concentrationsof substances produced by society, that is,combinations of elements (i.e. pesticides, herbicides,CFC –chlorofluorocarbons- etc.) are continually risingbecause the rate at which they are dispersed exceedsthe rate at which they can be broken down. And,finally, nature is damaged if the basis for naturalcycles and biological diversity are continuouslydiminishing through physical means (deforestation,ecosystem manipulation, soil erosion, altering watertables, poor management of cropland, etc.)

The four system conditions of sustainability wereestablished:

(1) System Condition 1: In a sustainablesociety, nature is not subject to systematicallyincreasing concentrations of substancesextracted from the earth’s crust. According tothe first law of thermodynamics matter cannotbe created or destroyed, so every single atomof mercury, lead, zinc, cadmium, gas, oil orcoal that we extract from the earth’s crustmust end up somewhere in our biosphere.Sustainable options are: switching torenewable fuels and materials such as wood,fibers, ceramic, glass...

(2) System Condition 2: In a sustainablesociety, nature is not subject to systematicallyincreasing concentrations of substancesproduced by society. According to the secondlaw of thermodynamics, energy becomesmore dissipated and less useful. This isreferred to as the entropy of a system. Justas with System Condition 1, SystemCondition 2 puts special emphasis onsubstances that are unusual in nature suchas dioxins, herbicides, pesticides or CFCsand many other chemicals harmful for theenvironment produced by society.

(3) System Condition 3: In a sustainablesociety, nature is not subject to systematicallyincreasing degradation by physical means.Agriculture and forestry are not practiced inways that lead to a loss of nutrients,extinction of species, or sinking sub-soil waterlevels. Sustainable options are to buy foodfrom farms that grow crops sustainably andobtain materials from environmentallymanaged forestry plantations.

(4) System Condition 4: In a sustainablesociety human needs are met worldwide. Thissystem condition recognizes people’sconstant striving to improve the ways in whichwe satisfy both our needs and those of otherpeople. For companies, this is largely amatter of getting better at giving customers

what they want, while using fewer resources.Sustainability cannot be applied if “fairness”has not been met. This means to strive for ahypothetical situation in which at least themost basic human needs are fulfilled globally.

Nilsson chose Olaf Ivarsson as the head ofpurchasing and head of environment. But he didmore: he promoted this position to an executive level.Ivarsson was a great upstream thinker and toughnegotiator.

The four System Conditions had to be translated intothe hotel’s reality and common language. Ivarssonknew that the only way this process could succeedwas by integrating every environmental aspect intothe hotel operations. So every single hotel had todevelop their action plan toward sustainability.Scandic corporative offices would co-lead andcoordinate with the rest of the hotels. The keysuccess of this environmental program was to providea base knowledge for the whole organization throughseveral educational seminars and courses, so theycould build a common framework or share a commonmental model, from which everyone could make theirown decisions.

Consequently, every hotel could have clear guidelinesto start its way to sustainability. These guidelineswere collected in an environmental policy whichstated actions such as: (i) develop products andservices so that we use nature’s resources assparingly as possible; (ii) choose raw material andrecyclable packaging –products that do not fulfill thiscriteria should not be used; (iii) strive to useenvironmentally safe and recyclable energy sources;(iv) reduce waste and promote waste reduction; (v)choose, influence, and educate our suppliers to helpus implement our environmental policy, (vi) developan environmental network of enthusiasticrepresentatives from each hotel, (vii) every year,review the results of our environmental policy andestablish goals for future development…

Co-innovation with suppliers: upstreamprocesses

Ivarsson led many co-innovative actions withsuppliers, such as working with the laundry supplier toremove chlorine bleach from its laundry processes.Scandic also worked with the dishwashing liquidsupplier to reduce detergent dosage in washingmachines for breakfast dishes -the amount ofdetergent needed for breakfast dishes is not as highas for lunch or dinner.

In 1995 Scandic was the first hotel chain to design theeco-room. This means that rooms would be designedand built for their eventual disassembly and that they

would utilize ecologically benign components. Withthe goal of returning rooms to nature they created the97 percent recyclable room (designed together withcustomers, architects and furniture equipmentmanufacturers). The life span for eco-rooms is longerthan conventional rooms. Luxury, quality andsustainability can work together. The aesthetics of ahotel room can live in harmony with sustainability. Allthe interiors of the rooms were designed withenvironmental concerns in mind: reducing 30% ofmercury used in mirrors by reducing their size, usingwood for floors and parts of the wall, using cotton andwool instead of synthetic textiles, avoiding plastics…Even plastic and metal lamp parts were replaced withwood, etc.

Ivarsson also worked with suppliers to reduce the sizeof bar soap, once they realized that a typical guestused only about three grams of bar soap per stay,while throwing away the rest (the typical bar of soapweighed 15 grams). He also worked with suppliers toreduce waste of the 30ml shampoo bottles by gettingthe shampoo manufacturer to work together with thebottling company to create a new product. “A smallplastic bottle of shampoo per guest per hotel for thepast 12 years means millions of bottles,” saidIvarsson. So they developed a more natural soap andshampoo in a PET dispenser.

Empowered employees

Scandic and other sustainable companies know that,to be successful on the path to sustainability, theyhave to empower their employees.

Empowerment means recognizing and injecting intothe organization the power that people have with awealth of useful knowledge and internal motivation.The principles of empowerment assume thatemployees are willing to accept responsibilities andimprove their daily work processes and relationships.The outcome is a learning organization thatcontinuously innovates, taking advantage of its fullhuman resource potential. The contrary is acommand and control approach, exclusively orientedtoward following orders from the top, which normallytranslates into a waste of people and their knowledge.An effective sustainable approach such as that usedat Scandic is based on giving more accountability andresponsibility to its managers and rank-and-fileemployees, then hoping for more actions and results.Creativity is also key, and it wouldn´t happen withoutthese empowerment principles. Creativity is sustainedby principles such as eagerness to do the job,intrinsic motivation, to be able to think outside thebox, not being afraid of being punished if failing to putideas into practice, etc.

Sustainability training programs at Scandic were key

to creating this very powerful vision. Everybody wascommitted and convinced that this new sustainablepath was possible.

Peter Senge was the first to develop the concept of“shared vision” in his book The Fifth Discipline. Hesaid that a shared vision is not another managementconcept but a powerful force if it touches the hearts ofthe people. It generates a sense of connectednessand a shared passion by all business activities. Sothis shared vision hooked everyone into commongoals and objectives.

But how did this empowerment manifest itself inScandic’s employees? From its very beginning TheNatural Step Dialogue and Educational Programgathered 1,500 useful suggestions, which wereclassified as (1) short-term, concrete activities thatcan be carried out immediately -actions that requiredno investment such as best practices- (2) ideas thatneeded further investigation, and (3) ideas thatneeded investment consideration. Olaf Ivarssondeveloped a very simple but powerful indicator thatworked very well: the number of activities that werespecified in the local environmental plans (in whicheveryone in every hotel were involved) and thenumber that were actually achieved after six and 12months.

Ivarsson believed that an important way to keepemployee interest and engagement alive was to gobeyond the basic training level and to generate newand more challenging programs about every twoyears. So he developed the “Resource Hunt” programto promote very high levels of participation in hotels.In 1996 Scandic started to follow energy and waterconsumption and the amount of unsorted waste. Thekey aspect of this program was to create a reportingsystem SIR (Sustainability Indicator System) everymonth to measure progress. With this program theywere able to reduce 17% of energy, 36% of unsortedwaste and 14% of water overall. Average energyconsumption at Scandic’s Nordic hotels was thenreduced to 47kWh per guest per night, and waterconsumption to 235 liters per guest.

It is estimated that a typical hotel annually releasesbetween 160 and 200 kg of CO2 per m2 of room floorarea. Average energy consumption is 55 kWh perguest per night. Water consumption depends on thetype of facility and services (outdoor and indoor pool,air conditioning, whether the hotel is located in atropical area, etc.). However, a standard Europeanhotel could consume between the ranges of 170 to360 liters per guest per night. Regarding waste, theaverage for a normal hotel is 1kg to 1.5kg waste perguest per night.

Scandic’s hotels figures for 2012 were: (i) unsortedwaste: 0.5 kg per guest per night (ii) energyconsumption: 45.9 kWh per guest per night (iii) waterconsumption: 201.9 liters per guest per night (4) fossilcarbon dioxide: 1.9 kg per guest per night.

Having employees that are empowered towardsustainability practices also means providing theneeded resources and being able to measureenvironmental impacts and advancements. In thisway, Scandic developed different tools and systems,

which allowed hotels to compare their results. BrianNattrass and Mary Altomare stated in their book TheNatural Step for Business that hotels were publishingtheir figures against other hotels, and country againstcountry. Such empowered outcomes could be seen ina healthy and friendly competition among hotels withrespect to meeting environmental goals; throughachieving environmental indicators and through beingrecognized individually and collectively for thetangible contribution to protecting the environment.Scandic had the goal to involve every person in itsorganization: all 5,000 employees!

Empowered employees are needed to create aninteractive value creation process to educate guestsand to communicate with them about the company’senvironmental processes. Because Scandic is a rolemodel, it can take the task of educating its guests withlots of credibility. The rules of green marketing saythat marketing, in this context, is no longer aboutseducing people with empty promises; it is aboutengaging and educating guests. This educationalapproach with guests is based on building programsbased on knowledge rather than image; and this isdone by sharing enthusiasm and by giving yourcustomers ways to participate. This is not just selling“my brand” but sharing responsibility and involvingboth guests and employees in actions towardenvironmental and social concerns. Green marketingthen consists of involvement and participation ratherthan a superficial company image. (John Grant)

Scandic in Society

Thousands of different activities have taken place inthe Nordic Countries. All these activities have onething in common: they are based on personalinvolvement rather than fundraising. Activities whichinvolved personnel working hours such as offeringand serving lunch to the homeless, donating bed linento shelters, cooperation with schools and universities,etc. The “Scandic in Society” program aims tocontribute to the well-being of societies in which thecompany operates. Following the dialogue with teammembers, community programs were created in each

hotel. Individual hotels frequently enter intopartnerships with local authorities and Non-Governmental Organizations (NGOs) to findinnovative solutions for local community problems.

In 2005 Scandic also supported the breast cancercampaign of the Swedish Cancer Fund by providing 3million Swedish crowns. In October of the same year,Scandic’s guests could book a room at a “pink price”with 10 per cent of income going to the Pink Ribbonscampaign.Since 2006 every cup of ordinary coffee, espressoand cappuccino served at the Swedish Scandic hotelsis fair trade coffee. This means 9 million cups everyyear. Fair trade is an initiative designed to helpespecially small-scale farmers to survive in the globaleconomy.Products labeled with fair trade guarantee strictstandards worldwide on certain environmental, laborand remuneration practices. Fair trade means that aminimum price is paid for coffee, which gives morethan 20 per cent extra income to the growers for theircertified coffee. With that extra money they canprovide for their communities through differentactivities, such as the construction of schools.

Organic products not only benefit the environment byreducing environmental impacts, resulting in lesstransportation required (food miles), less soil erosion,no pesticides and herbicides... but they are also goodfor the community, as buying locally supports localfarmers. Since 2002 all Swedish hotels offer breakfastwith KRAV 22 eco labeled items. The Swedish KRAVorganic label stands for sound and naturalenvironment, solid care for animals, good health andsocial responsibility.

In 2004 Scandic introduced the disability coordinatorin the person of Magnus Berglund, who first enteredthe company as a cook but later had to abandon hisjob due to a joint muscle disorder. Magnus has beenScandic’s Accessibility Ambassador ever since,working to ensure that all hotels are accessible toeveryone. Scandic’s unique accessibility standardcontains 110 points, 81 of which are compulsory forall hotels, and the whole list is met in both new andrenovated hotels. In 2006 Scandic received the St.Julian prize for its contribution to increasingaccessibility. The UN has also recognized Scandic’sfocus on accommodation for guests with disabilities.

Omtanke

B. Nattrass and M. Altomare write in The Natural Stepfor Business that if omtanke could be translated intoEnglish, it would be analogous to “profound positivecaring and attention”. Nilsson described omtanke as

an essential core learning process in Scandic, “a wayof maintaining the values in the company in a verysolid way”. Omtanke could be seen as the glue whichholds everything and everyone together by beingopen and honest to each other and the rest ofstakeholders, by taking care of the shareholders, bymaintaining the highest integrity when working withfellow employees and by taking care of society.

Scandic Hotels share a vision of “Omtanke”, caringfor their guests and each other while caring for theenvironment and society. They have to be profitableby bearing a good spirit of enterprise and by doingthings efficiently. Without profits no company can besustainable. But at the same time, they know that theenvironment matters, so by being a role modelScandic thinks they can encourage others to do so.The same applies for being a socially responsiblecompany, taking a share of responsibility with thelocal and global community through the ScandicSociety Program.

It was Robert F. Kennedy who stated a long time ago,“Few will have the greatness to bend history itself, buteach of us can work to change a small portion ofevents. It is from numberless diverse acts of courageand belief that human history is shaped. Each time aman stands up for an ideal, or acts to improve the lotof others, or strikes out against injustice, he sendsforth a tiny ripple of hope, and crossing each otherfrom a million different centers of energy and daringthose ripples build a current which can sweep downthe mightiest walls of oppression and resistance”.Numberless diverse acts of courage and belief inwhich history is also shaped happen when rolemodels such as Scandic inspire others towardssustainable practices. Together with many greatsustainable companies, they generate differentcenters of energy in which sustainability isprogressively uplifting others in society.

We definitely need role models like Scandic for thesuccess of a sustainable society in the near future.