Jorma Eloranta: “Bold decisions against climate change are needed now”

Jorma Eloranta’s words reflect his decades of experience in sustainability. The Grand Old Man of Finnish business life, believes that bold investments in sustainable technologies decide who will be successful in the future.

With a track record of 42 years chairing boards of directors and 28 years as president and CEO, Jorma Eloranta’s experience in management and governance is exceptionally extensive.

Eloranta retired from his position as President and CEO of Metso Corporation in 2011 but continues in roles including Chair of the Board of Directors of Stora Enso.

Profitability also means sustainability

In his various roles, Jorma Eloranta has seen how sustainability has become an increasingly important part of business. He points out that sustainability and profitability go hand in hand in the same direction.

“In the long run, only profitable enterprises can operate sustainably, and only sustainable enterprises can operate profitably. Sustainability and profitability support each other from perspectives including those of investors and risk management,” he says.

He believes climate and environmental factors will have a direct impact on the operating conditions of businesses in the future. Operations have to be ecologically sustainable. The business models of the best companies deliver financial targets at the same time as sustainable development principles.

The answers to today’s wicked problems will be found in technology, he says.

“I’m a true believer in innovation and technology. We have to be daring and bold. I see technological solutions as our key opportunity.”

In his view, an enterprise must be profitable to be able to invest in new technology. When he was chairing the Gasum Supervisory Board in 2008–2014, the company started to develop its liquefied natural gas (LNG) business.

“Although the business was small-scale to begin with, it was an opportunity not to be missed. Today’s positive development proves this.”

Sustainability will take us far

According to Jorma Eloranta, sustainability calls for long-term strategic choices. In due course, these choices will also generate results.

He was chair of the Board of Directors of Neste in 2012–2018, a period when the Board contributed towards the continuous improvement of the renewable diesel business model. The product’s consumption gained momentum thanks to regulations introduced in various countries as well as consumer choices.

A company using antiquated technology takes a big risk, he thinks.

“Even if their business keeps on running, their product and service quality will deteriorate. Soon their products will no longer sell, and their value added will decline.”

Consumers comment on quality issues or environmental problems associated with a company in contexts such as social media.

When business is sustainable and profitable, it is beneficial for humanity, Eloranta believes. Sustainable development offers better opportunities for success than acting against it or other megatrends.

“Biogas will be a big positive deal”

Society is seeking to regulate business and industry towards greater sustainability. Regulation has a specific impact on business activities, particularly in the energy sector.

Jorma Eloranta has gained a broad view and understanding of the energy market during his long career.

“Energy is an extremely political and regulated business in the European Union as well as nationally. Relative prices decide which energy forms succeed.”

At Stora Enso, the bioeconomy is a key part of the company’s future.

“Stora Enso’s product development starts from the forest – from renewable fossil-free raw material. Industrial and municipal waste streams provide the bioeconomy with new opportunities.”

Eloranta predicts that biogas may turn out to be a big positive for Gasum. The existing gas pipeline network can be used to distribute biogas. Natural gas is a good alternative to coal, a fuel that Finland is making determined efforts to phase out.

Liquidity must be secured in times of crisis too

This year, many companies have faced a new situation with the spread of the coronavirus pandemic. The sustainability and values of enterprises have been weighed in a difficult situation.

During the state of emergency, Jorma Eloranta has utilized lessons learned in contexts such as his military training.

“You must assess the situation first and then postulate a variety of scenarios. Typically, you outline the best, good and worst scenarios and assess how you will act in response to each.”

Actions must be prioritized, and the focus placed on the essential

“The first thing to secure is the company’s liquidity. After that, you’ll be able to use your own resources to make sensible decisions.”

In management and leadership, clarity is key. The roles of the board of directors, CEO and business units must be unambiguous.

Eloranta says that the task of the Board is to make decisions such as those securing liquidity, but it must not interfere with operational management.

“Clear, simple and straightforward approaches will yield good results. Live as normally as you can and focus on what’s most important”.

Customers react differently in different sectors, but companies should also remember the opportunities available alongside any decline in sales.

Adapt, renew, transform

Eloranta says that the development of communications has enabled speedy and efficient provision of information – provided that the facts are right.

“Employees must receive information and understand from that information that the company’s situation is under control. It’s important to communicate regularly and clearly and take employees into account. Calmness and honesty build trust and confidence, while erratic moves tend to erode them”.

Eloranta points out that there is a lot of false information circulating in the world. Not everything is known within enterprises, either. Mistakes will also be made. They must be acknowledged, and lessons must be learned from them.

Exceptional conditions are always a test for the company strategy.

“You must consider whether your mission, vision, ethicality and sustainability will pass the test. These aspects must not be forgotten, no matter how hard the times may be.”

Eloranta also advocates a humane and empathic approach for companies to their own employees. The capacity to be creative, bold and innovative is vital.

“Enterprises must renew themselves, adapt and act sustainably. Making profit does alone not suffice.”

3.9.2020