Essity’s operations have an impact on air, water, land and biological processes. These effects could lead to costs for restoring the environment or other kinds of negative effects. The matter of the economic impact of climate change is also growing in significance.
Essity is affected by political decisions and administrative regulations in the approximately 100 countries in which the Group conducts operations. These relate to general regulations, such as taxation and financial reporting. Essity is also impacted by more specific regulations, such as the granting of permits in accordance with the Environmental Code and reimbursement of expenses in the healthcare system.
Other product solutions (substitutes) can replace products that are included in Essity’s offering and thereby reduce sales. By offering competitive products, Essity can also capture market shares from the substitute. The issue of substitutes is also linked to changes in the patterns and attitudes of customers and consumers that affect demand for certain products and thus profitability.
The retail trade is Essity’s single largest customer group and thus exercises considerable influence. Around 55% of Essity’s net sales are made to the retail trade, under both Essity’s brands and the retailer’s own brands. Essity also uses other distributors or retailers, which could impact the Group.
Essity works in some 100 countries and in environments where unethical business practices and violations of human rights may occur. If Essity becomes involved in these business practices, the company’s reputation in the market may be damaged.