Our external environment
Drawing up Essity’s business strategy, we analyze the external trends and changes that are continuously ongoing. We identify the macro-economic drivers that we believe are most relevant to our business in order to leverage the opportunities and to manage the associated risks. We analyze how trends can impact Essity and how the company can benefit from these.
We maintain continuous dialogue with customers and consumers to develop products and services that meet needs and solve the challenges that many are facing in their everyday lives. The foundation of Essity’s strategy is a materiality analysis where Essity and company’s stakeholders prioritize the issues and areas that are deemed important for the company. Through this process, Essity creates a strategy for profitable and sustainable growth.
External trends and drivers
Growing and aging population
The world’s population is growing and living longer. This growing population is resulting in an increased demand for hygiene and health products and thus creating favorable growth opportunities for Essity. The greatest global population increase is expected to occur in Asia, Latin America and Africa. Essity is prioritizing growth in selected emerging markets, such as China, Southeast Asia, Latin America, Eastern Europe and Russia. An aging population is increasing demand for incontinence and health products, both in mature and emerging markets. For example, the occurrence of incontinence among people over the age of 65 is estimated to be between 15 and 20%.
Higher standard of living
At the same time as the population is growing, the level of poverty in the world is decreasing. Once people’s most basic needs for food and shelter are met, hygiene becomes a top priority. Increased disposable income and higher living standards are expected to drive demand for hygiene and health products.
Global insight into hygiene and health
Limited access to hygiene and sanitation is a major global challenge. There is a growing awareness of the relationship between good hygiene and health, and how this improves well-being in the world, as indicated by the UN’s 17 Sustainable Development Goals. Essity continuously develops new hygiene and health solutions and is educating, for example, healthcare and medical staff in incontinence and good hand hygiene. Young women are educated about menstruation and puberty, and children and preschool teachers are taught about the importance of good hand hygiene.
Increased prevalence of chronic conditions
Increased prevalence of chronic diseases and greater life expectancy of people with chronic conditions are expected to increase demand for such items as incontinence and health products.
The digitalization of our society entails substantial changes and opportunities. For Essity, digitalization offers a variety of opportunities to improve and evolve all parts of our value chain. We are digitalizing production, administration and logistics to achieve efficiency and quality improvements. In product development, we are working to create digital solutions that improve our offering to customers and consumers. Each year, Essity’s products are increasingly sold and marketed online.
Sustainable consumption and the circular economy
Conscious customers and consumers are increasing expectations on, and demand for, sustainable solutions. Essity’s objective is to develop products and services that are compatible with a sustainable and circular society.
The annual strategy process includes an analysis phase and assessment of the risks present in the business units.
The responsibility for long-term and overall management of strategic risks follows the company’s delegation scheme, from the Board of Directors to the President, and from the President to the Business Unit Presidents. A description of the most significant risks that impact Essity’s opportunities to achieve its established targets, and how these risks are managed, is presented in the chapter Risks and risk management.
External dialogue and materiality analysis
An active stakeholder dialogue is one way of ensuring that Essity’s priorities and ways of working are relevant in today’s society. Millions of people across the globe have an impact on, and an interest in, Essity’s business. Through dialogue with our various stakeholders, we understand the expectations on us as a company and how we can develop and improve. We also conduct materiality analyses to identify the issues that are significant to us at Essity and to our stakeholders. These also form the basis of Essity’s strategy and sustainability work. The latest analysis was conducted in 2017 of about 1,000 stakeholders including customers, consumers, suppliers, investors, analysts and employees.
UN’s 17 Sustainable Development Goals
At Essity, we believe that the work to fulfill the sustainability goals will make the world a better place while offering favorable business opportunities for companies around the world, not least in the areas of health, hygiene and sanitation, where we possess substantial expertise. We are working to overcome global challenges together with like-minded partners. Essity has chosen to prioritize goals 3, 5, 6, 12, 13 and 15, which are most relevant to our business. For a number of years, Essity has been the convening partner for the United Nations Foundation Global Dialogue concerning these goals.