Mundus Brief: September 2020

The Mundus Brief is your chance to read a summary of what happened in Sweden last month and our chance to let you know what we’ve been looking into in our publications. We try to keep the Mundus Brief brief and entertaining; a counterbalance to our more serious news and analysis. We hope you find it an interesting read!  /The Mundus Team

Time to reset

Late summer is a serious time of year in Sweden, when its citizens pack away the beach clothes and prepare for business. This year, given the backdrop of corona, the style is modified in comparison with all previous years. Social distancing is still in place, and the advice is still to work from home if you can. But in comparison to many other OECD countries, the advice is very clearly to get back to work. That Sweden can do this now can be seen as something of a minor miracle, as the country has had to endure a forensic inspection of its pandemic policies, personal habits and even its sanity. In April and May the story looked quite bleak as the pandemic surged through Stockholm, and the global narrative around Sweden was caustic well into June, as increased testing identified many carrying corona. But July and August have seen a very different story emerge. Infections have fallen dramatically, and stayed low. Sweden’s model of no lockdown, but social distancing has been proven effective. Consequently the local and international media narrative around Sweden has changed, and it enables the country’s leadership to think systematically about the restart. Not just how to get going, but what direction to head in.

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Swedes love to plan

The art of planning has a long history in Sweden. A former head of corporate culture from SAS once told Mundus that this was due to the long winters. Those who were not already planning on how to survive them in Spring faced a grim six months come the Autumn.

Consequently, the processes for restarting Sweden post-Corona were already well in play prior to summer. Some of this was formal – the Stockholm Chamber of Commerce (Stockholms Handelskammare) initiated a thought-leadership exercise called Omstart Sverige, (literally translates as Restart Sweden), packed with leading Swedish economists, businesspeople and politicians. Omstart Sverige published its findings in late August, and then Dagens Industri conducted an online conference to communicate the visions of leading Swedes. The messages were an underlying cautious optimism that the worst was over, fiscal expansion funding a large investment in infrastructure and a greener future. Similar themes have been hinted at by leaks from the budget process, which will be formally announced on September 21. We will cover both of these processes in the next edition of the Monthly Policy Review.

But the messages through formal channels had already been communicated many times over by a series of Sweden’s business elite who have been highly vocal in international press about the need to ‘build back better’. Mundus has been stuck by the overweight presence of Swedish leadership cited in global media in their calls for a green transition. IKEA and Volvo cars are frequently cited, as are its pension funds, and recently Mundus listened to a webinar in which Tetra Pak spoke of its efforts to drive green sustainability in food packaging. Unsurprisingly, the company used long-term goals to drive short-term actions (ie business planning). In the same webinar, Electrolux’s CEO said that the appliances maker had chosen to double-down on the move to “sustainable living” during corona, and had raised extra debt to fund this. And Skanska, a Swedish construction firm reported that it had 500 people working in the sustainability function.

The Political Autumn

The budget direction appears clear. Sweden will run expansionary fiscal policies to fund a wave of investments designed to fix problems that have been identified in society. But there are many details left to fill in, and some major political challenges ahead for the Government, which is the topic of our lead story – ‘The Political Autumn’ – in the September edition of the Monthly Policy Review. One major decision that needs to be taken is a decision on whether to allow fuel refiner, and retailer, Preem to proceed with a multi-billion SEK investment in its refinery. Preem presents it as a massive investment into biofuels, but  environmental campaigners smell green-washing, and an ulterior motive of actually processing more Russian crude.

The Green Party is against allowing the investment to proceed, so the Social Democrats have a tough call to make. An even bigger internal dispute within the government lies around migration, where the Greens have threatened to leave the government altogether if a decision is made to restrict refugees and migration. A third nasty challenge for Stefan Löfven is the LAS law on employment protection. He signed up to making changes to employment security as part of the January Agreement deal. The Left Party is trying to create a trap to bring the government down if Löfven weakens job security. Can the PM steer clear of all of these landmines?

The Green Given

Europe’s Green Deal translates somewhat unusually into Swedish as the ‘Green Given’. The idea is that Europe will be carbon neutral by 2050, without leaving behind its citizens. Perhaps the Green Given can be thought of as an assumption that sustainability can be taken for granted. There is evidence to suggest that significant parts of Swedish corporates are moving with that mindset, and are cheered on by government. However, much of the apparatus of government is still rooted in the old carbon economy. Where the Swedish government acts is does so in small careful steps. For instance, recently it announced a subsidy to convert cars from petrol and diesel service to biofuels. But the budget allocation given to this was a miserly SEK 10 million, enough to fund just a few hundred cars conversions. The Government faces even bigger challenges to its signature biofuels policies. With transport fuels one of the greatest obstacles to achieving the vision of becoming the ‘first fossil-free, welfare state’, Sweden is relying on the development of its forests as a feedstock for biofuels. But Sweden’s policies to deliver the biofuels have relied on a cocktail of schemes, some of which run against European state aid laws. Until now, the Commission has provided a waiver allowing this to happen, but the waiver expires in December. If Sweden fails to secure an extension of the waiver its fuels market will descend into chaos. With less than four months to go fuels retailers such as OKQ8 and Preem are becoming very nervous, as indeed are their customers. This is the focus of our Monthly Policy Review article, ‘The Biofuels Dilemma’.

Given events, the September edition of the Monthly Policy Review has a strong focus on environment. In August, Green Party Spokesperson and Deputy Prime Minister, Isabella Lövin announced her departure from politics. We look at her career, from a journalist campaigning for fisheries to the top of Swedish politics, and her legacy.

And our final story, with a clear green theme, looks at south Norrland. Winds of Change: Renewables in Norrland looks at the emergence of Northvolt as a massive investor into Skellefteå and the construction of giant wind farms in the region.

Photo: Jonathan Petersson