Welcome to Kesko Sustainability Hour. We updated our sustainability strategy last spring. This virtual investor event, Kesko Sustainability Hour, gives you insight how we implement this new strategy across our divisions. Sustainability is not just reports and theory in Kesko. It is a crucial part of our business strategy and everyday work. Today's agenda is the following. First, Riikka Joukio, EVP of Sustainability and Public Affairs, will go through the sustainability strategy for group level. Thereafter, we go into divisions. Ari Akseli, Grocery Trade first, Jorma Rauhala, Building and Technical Trade, and then Matti Virtanen, Car Trade. We have also a Q&A, and our Chief Financial Officer, Jukka Erlund, will join the Q&A session in the end. You have a great opportunity to ask questions using the chat function in your iPad or your computer. My name is Hanna Jaakkola.
I am responsible for investor relations at Kesko. Now, without further ado, Riikka, the stage is yours.
Thank you, Hanna, and warm welcome to this Sustainability Hour also on my behalf. My name is Riikka Joukio, and I'm heading the Sustainability and Public Affairs at Kesko. As already mentioned, we just updated the strategy, and it was approved by the board of directors in March this year. I would like to start with the megatrends and current crisis, which of course also has an impact on our operations environment. Climate change, of course, the biggest risk for the global economy, and as we know, the past five years, 2017 to 2021, has been the warmest time period on record. We are already over one degree over the degrees Celsius over the pre-industrial time. It really is crucial that we decrease the CO2 emissions.
Now then, nature loss is a newer topic, and it is intertwined with the climate change, and nature loss means weakening of biodiversity, so diversity of species and also number of individuals in the species and their genetics. This also, the loss is happening also mainly due to human influence. Urbanization. Over half of the global population lives in urban areas at the moment, and about 1.5 million people move to cities every week. This long development, of course, is impacting our consumption patterns. Now, globalization, we were a little bit thinking that if we even might call this de-globalization, but nevertheless, globalization is a broad topic, and when it comes to lifestyles, markets, consumer habits, politics, communications. There's still globalization ongoing. When we talk about the supply chains, maybe that will be also de-globalization. We will see.
Next to the megatrends, there are the current crises. War in Ukraine, COVID pandemic, and they have led us to rising energy prices and also maybe even energy shortages. There are these issues with the supply chains, availability, and then of course the inflation and the prices, rising prices for consumers. Now, however, sustainability is good for business, and I'm often asked that how is that possible? Here, in this slide, it is divided under three topics. Sustainability can help you create revenues. It can also mitigate risks or then save costs. Creating revenues can happen via differentiation, for example, so the company has a different offering, or even like new market offerings. Maybe like electric cars could be thought to be one. Market access is clearly one revenue-creating thing.
For example, when it comes to public procurement, if the criteria are not met, you are not even in the game. Mitigating risk is, let's say, the kind of common thinking in sustainability, what we're talking about. These risks can be divided under different topics as well. Legal risks, of course, for example, there might be an environmental breach, or there can be social or reputational risks if the company is not doing what it is saying. These two can lead to financial risks. The third one is saving cost. Resource efficiency, doing more from less, using, for example, the raw materials more carefully. Waste as input can be, for example, like plastic waste that can be then remade to new plastics.
Labor productivity, one would not maybe think that so often, but it's been studied that a diverse and inclusive company culture actually improves also the labor productivity. There are many ways that sustainability does for the business. Now, this is our Kesko growth strategy in a nutshell. It shows that we are focusing on the three divisions that are listed here, and we hear a bit more later. We also work towards one unified K. Then we have these three cornerstones that we think that by developing them, we will actually have successful business. Those are customer experience, digitalization, and then sustainability. This is why we updated our strategy last year, and that was finalized early March this year. This is the sustainability strategy in a nutshell.
We created a vision, which is that we enable sustainable choices for our customers, and also drive change throughout the value chain. Not only that we're doing things ourselves, but also driving change in the value chain. Our sustainability work is focused on four areas, and those are climate and nature, value chain, our people, and then good governance. The strategy is implemented in all three divisions, and we measure our progress, for example, by these commonly known indices and ratings such as Dow Jones Sustainability Index. Here a little bit more about how we think about the sustainability and our role in that. You see these three bubbles, and this is an example of the climate emissions, so CO2 emissions.
The little bubble in the middle, that's the emission from Kesko's own operations, Scope one and two, which is 94,000 tons CO2 equivalent. The emissions from the productions of products sold. That is estimated to be about 5.6 million tons. On the other hand, going to the other direction in the value chain, the emissions from the use and end of life treatment of the product sold is about 1.9 million tons.
Our own emissions actually as a trade company are quite small, and they are about 1% of the emissions of the whole chain, which means and leads to the idea that if we want to have a significance on the work that we're doing in sustainability, we really need to not only do the things ourselves, which is, of course, important, take care of our own operations, but also drive change throughout the whole value chain. Now, how we are going to do this then in practice is shown in this picture. We divided our actions under four focus areas. The number one is minimizing impact on climate and nature. We really want to minimize negative impacts and maximize positive impacts. Number two is the value chain, so challenging suppliers to improve their operations.
On the other hand, encourage and help our customers to make sustainable choices. Number three, supporting the well-being and success of our people, so the current and future employees. Number four is the good governance, ensuring good and transparent governance in the operations. A little bit more about them you can see here. What kind of subtopics there will be under each focus area. Climate and nature. There's this intertwined triple topics, achieving Carbon Neutral K Group, climate change mitigation. Then, the second one, a new part, is promoting biodiversity. Number three, enhancing circular economy. In value chain, we want to ensure sustainability in the supply chains, particularly in the high-risk countries. Customer choices also under this topic.
Not to forget, creating the value for society through projects and value chains. Our people, we were thinking under three different issues. They increase the safety, and then also, of course, the well-being of our employees. The new topic, fostering diversity, inclusion, and equal opportunities also, was lifted here. Good governance covers, of course, the committing to the K Code of Conduct. Also, what we lifted here is the remuneration based on sustainability performance. We also published already the share-based commitment and incentive scheme for top management at the same time than this strategy was launched. We want to strengthen our personnel sustainability competencies.
Then also, we'll start working a bit more with the data and see how we can utilize that and use it in a responsible and ethical way, as done so far also, and create value for our customers. You will have the targets and metrics visible more thoroughly in the web version of this presentation. To be able to then follow the performance and the progress, we have a kind of huge set of different targets and metrics, but wanted to really find some key performance indicators. These five are the ones that we are currently working on and then would like to use in our communication and the strategy progress follow-up in the future. First, we have here the climate targets.
Achieve carbon neutrality by 2025, and then make our own operations and transportation emission-free by 2030. This is the Carbon Neutral K Group. The targets are based on the Science Based Targets initiative. We want to challenge our suppliers to join the CDP supply chain program, and we have a target to require 67% of the suppliers by spend to have them by 2026. Supply chain, the high risk country social responsibility of directly imported goods. We are aiming to have 100% of them appropriately audited. Sustainable products, which is an important part of the customer choices that we really have the products that are sustainable.
We have made our own classification by businesses, and we want to increase the share of these products on our net sales. Those are products which are, for example, certified products. They can be Fairtrade products. There are different metrics to this. Then the fifth indicator is about the people. Conduct actions to support the health, well-being, and success, and we are currently working on a well-being index that is not ready yet. Heading towards the end of the general part of the presentation, would like to have kind of a leading slide here that how we really take the three divisions into account because they all have different, slightly different focuses. There are common themes, but they also have their business-related specific teams, and they are briefly shown here.
Grocery trade, of course, has a central role as part of the Finnish food chain and also in ensuring security of supply. Also active role in promoting wellbeing and nutrition. We will hear a bit more later. Building and technical trade. Of course, there's a significant role in driving forward the green transition in living environment. There are differences between the operating countries and that we have to take into account when moving on with our plans. Car trade, of course, is self-evident that they have a big role in reducing traffic emissions. The strategy was approved in March, and we are already well on our way on this journey, which of course started already decades ago. This, as such, nothing completely new.
As sustainability is never really ready, so still, plenty remains to be done, and we really want to welcome everybody to join us on this journey. Thank you.
Good afternoon, everybody. My name is Ari Akseli, and I'm the President of the Kesko grocery trade division. I have been working for Kesko now almost 30 years, and year after year, we have been putting more and more effort for the sustainability as a whole in the company. This is the slides that explains the big picture about the grocery trade division. We have about 1,200 grocery stores, and of which more than 500 offer online grocery services. We have big opportunity when 1.2 million customers visit every day in our stores. Actually, if you do the math and calculate what actually means if we are able to increase the average shopping basket just by EUR 1, it actually means more sales, more than EUR 400 million. Stores offer both premium and bargains.
That's excellent in these times that customers which are looking the very good value, they are able to find the best bargains and very low price private labels under the same roof. We are offering the best premium assortment in the Finnish market. Our market share is 38% of the total food market, including grocery stores, online sales, and food service. Currently, the most rising business is this Kespro, which is the leading food service operator in Finnish market. We are the market leader. We have almost like a 50% market share in this market. If you look at the numbers, they are looking pretty good. Net sales has, for first time in the history of more than EUR 6 billion, and the operating margin is 7.6%, which is quite reasonable in the grocery market.
These are the focus areas for us. Sustainability is actually affecting into all areas currently. The key target for us and the vision of the company is that we are the most customer-driven and profitable Finnish grocery retailer. How we do it? We have the best store specific business ideas, which are really visible for every customers. We have the best multi-channel customer experience, which is seamless in online and offline. We have the leading assortment, image, and differentiation. We have very high share of the different brands of which are only sold in K stores. For example, Pirkka, the best of the Pirkka and K-Menu, which is our price fighter brand. At the same time, we have something very unique, things like, the best sushi offering in Finland and also the best pizza offering and so on.
We are putting very much effort for improving the price and the price image of our stores. We are putting also effort for the data-driven decision making with customer focus. We have several tools for using this data. Good example is like a K Assortment Tools, which is able to optimize assortment in the store level. Results has been very promising. Typical result is that when the assortment is based on the data, it's about 4x bigger sales for the individual SKUs than without using that. Helping customers make more sustainable choices and this is very important because the sustainability is like a big issue for every customers. But it depends a lot about customers which part of the sustainability is important for them. The best assortment and the service in the food service market.
Food service market is very big, and it's very much depending on the customers, what are the key things for them. If you are selling to the public sector, it's usually about the prices, but when you are operating with the high quality restaurants, it's all about services and assortments. We want to be the most wanted partner and business partner for all the suppliers and all the other partners. Our strategy responds to the changes in our operating environment. Here is like biggest things, like a polarization continues. It actually means that more and more Finns are living in the urban areas, population is aging, there is more and more single households, and we continue our rise in the hybrid consumption and individualism .
It actually means that we can see that same customers are visiting our stores in some categories, they are looking the lowest price and certain other categories at the same time, same customers are looking the best premium. We can also see that there is no clear lines anymore between grocery stores and restaurants. We have been offering more and more opportunities to customers visiting our stores to buy best restaurants meals with them. Competitor challenging our business model because we have been very successful. They are playing in both fields, also in price and quality. We have been investing a lot to our online sales, and we are the market leader in online sales in grocery in Finland, and we have lots of capabilities how to use data and AI to improve our business performance.
Customers expect seamless customer experience in all channels compared to the international operators like Amazon and so on. New operators bring in new concepts and services to online sales. Customers and also other stakeholders expect responsible operation from us. If you look about the three main things that inflation is driving in the market as a whole in the grocery trade sector, number one is that food prices is like a daily topic conversation, especially in the media, but also with some customers which are worried about the rising levels of inflation, especially with the energy prices and so on. Customers are a little bit worried about the buying power that they will have in the future. We already can see some changes in buying behavior.
Some customers are reaching for the lower price items, and we are very lucky in that position that we are able to provide that to the customers. At the same time, we can see also the rise of the premium assortment. For us, it's especially critical maintaining customer trust in these challenging times that we are currently living. Here you can see the six key sustainable targets for the grocery trade division. Climate, like Riikka mentioned earlier, is of course one of the most critical. We have deployed the carbon-neutral grocery store concept in 2023, and it actually means that we are able to save a lot of cost in the stores also. We are shifting to use renewable diesel by 2025. We are using more and more electricity for the transportation.
We are putting much effort for the biodiversity, and it's special to know that, buying things that you actually know where your products are coming from, and we have full transparency in that areas. We do a lot of effort in store sites and logistics center products also. Circular economy is more and more important for the customer, customers, and it's also save money if you are doing that. We are applying a lot of new packaging innovation. At same time we have clear targets how to reduce food waste by 25% to year 2026 and half the food waste by 2030. Actually this is something that customers are looking how we can help them to help, cut the home food waste too, and we have a lot of tools how to help them.
Supply chains, we have set in product category specific targets for the sustainable selection. We are the market leader in Fairtrade in Finland by the, also the assortment we are offering in the stores. This is very critical for the customers, that helping customers to make sustainable choices which are relevant for themselves. Because every customer, they have like their own views for the sustainable. Some customers are looking for the healthier choices. Some customers are looking how they can support Fairtrade. For some customers is most important that they can do their shopping from the stores which are nearby. There is a lot of important issues. Finnish food. In these strange times, the importance of the Finnish origin is more and more important for the customers because they like to support the Finnish production.
From the total offering in our stores, about 80% is Finnish origin. We are only retailer in Finnish market who are actually offering like a campaign that thank you to producer products. These products are for the customers who would like to give special extra for the farmers, and this is offering opportunity for that. Sustainability actions also help significantly improve cost efficient. In many cases, some people think that if you are more sustainable it actually means that you have higher cost. In many areas, it actually helps you save money. I first time noticed this in year 1995 when we started actual execution in the store levels in the city markets. For example, food waste, our objective is cut the food waste by 25% by end year 2025.
We will also bring savings of millions of EUR. When we are optimizing whole supply chains and assortments in every stores, and we are able to do that in the store and SKU level, it actually means big savings for us. Energy efficiency is more and more important for us. The whole electricity Kesko is using in Finland is renewable, and it has been that since 2017. Energy savings since 2017 is now 80 gigawatts. If you think about the prices of the electricity currently, it actually means big money for us. We have big innovation. In-store heat recycling system helps us save even something like 90%-95% of the heating cost of the stores. It was the first innovation in this area globally.
Circular economy. Recyclable packaging reduce recycling fees up to 75%. It actually means big money from point of view of Kesko in the packaging and also help us to execute plastic policy. Better sorting can cut the waste cost of an individual store by 20%. This is something that our store owners are very motivated to do. Transport cost, transport optimization reduce emission and at the same time it saves some money. Annual savings of EUR 25 million by combining and optimizing distribution is big money from point of view of the grocery trade division. One of the areas that we see that there is a lot of room for improvement is how we tell the customers in the stores about our sustainability choices.
We have been 7x the most highly ranked grocery store in Global 100 by the sustainability. How to sell this in the store level where we have this 1.2 million customer visit every day, it's important areas. How we can tell customers there is couple of examples that we have very convenient recycling system for beverage packaging in every store, and more than 90% of the packages are coming back. We also have offering how to cut the food waste, this last chance concept. These are just a couple of examples how we can tell to the customers in the stores how to make sustainable choices in our stores. Thank you very much.
Good afternoon. My name is Jorma Rauhala, and I'm the President of Building and Technical Trade division. Building and Technical Trade, in a nutshell, we are a leading operator in Building and Technical Trade in Northern Europe. We are serving three customer segments: technical professionals, professional builders, and consumers. Now, already some 80% of our sales comes from B2B sectors, and renovation is more than half of our business. If we are looking at those numbers, we can see that sales has increased quite nicely since 2020. Now, rolling twelve months, there is EUR 1 billion increase in sales, and also the profitability has improved from 5.2% to 7.4%, when we are looking at rolling twelve months figures.
Our strategy most important is that we have specific strategies for all our countries, seven operating countries, and businesses in countries. That's very crucial because we know that the markets are different, our market position is different, and also our operating models can be different. Of course there are also some common areas and topics also, for example, practice sales and sales management. This is B2B business. This is business to business with people, and it's crucial how many customers we contact, are those customers right customers who should be contacted, and also what is the quality when we are having those contacts. Or for example, synergies within and between our operating countries, we are seeking the synergies, for example, with private labels, eCom platform, ERP systems, and concept development.
Today, the main topic is sustainability. When we are looking our kind of mega trends in our business, we can say that this Building and Technical Trade is volume business. Our market has consolidated and it's still consolidating. I would say that even accelerates because it's volume business. Also, when we are looking this repair and investment debt, we know that some forecast companies has forecasted that next year total volume, construction volume would decrease couple of percentage in our operating countries. Same time, the same companies are forecasting that renovation will increase also next year. Of course, all of those green transition, which I will look little bit closer. When we are talking kind of green transition, what we mean?
For example, solar panels is quite big business for us, especially in Onninen side. All kind of pumps or water, air, water heating system and different kind of pumps. Of course, electric vehicle charging. When we are looking those, what I meant, those solar panels, different kind of pumps, EV charging, wind power, this is kind of those products groups, what we are meaning when we are talking about green transition. I can say that those product categories has had very high increase in sales.
I would say that something like 7x bigger sales increase compared to our average sale increase. Also consumers especially, they are now eager to save energy. When we are talking about saving energy, we can see, for example, insulation products for ceiling, windows, doors, also some water-saving products like faucets and showers, some energy efficient lighting, LED lighting, things like that. In summary, we can say that in fact, quite big part of our business is related to green transition and energy saving. Those concrete actions what we have decided to do when it comes to our sustainable strategy, I would like to highlight three of them. Of course, first one is that we achieve carbon neutrality by 2025.
Of course, it means something with our real estates and logistics and things like that. Of course, that's important. I would highlight this, our suppliers. Like Riikka told, when it comes to emissions, those products that we are selling are 50x more than our own emissions. It's crucial that our suppliers are committed to science-based targets when it comes to emission decrease of emission. Now we have dozens of big suppliers who have now joined this Carbon Disclosure Project. I'm very, very happy about that because we have to make it together. The third one, of course, customers. What are the products that we are offering to our customers?
Of course, customers is the one who make the decision with which kind of a product he or she wants to buy, but we have to make it easy to buy those sustainability products. I would so highlight those three elements in our sustainability strategy. All in all, since our board of directors approved our sustainability strategy this spring, since that, we have now listed 300 different kinds of concrete actions in seven countries, how we are implementing our strategy in coming months and coming years. I think, I'm very glad that we have so concrete action list and strategy, what we are doing. At the same time, as I mentioned, this green transition is quite a big business opportunity for us. Thank you, and I think Matti will be the next one.
Welcome on my behalf also to this presentation. My name is Matti Virtanen, and I'm leading the car trade division at Kesko. It's really my pleasure to present our part of the sustainability strategy as well. Just a few words about the division in itself. We have, first of all, made a huge transition in our internal operation over the last 18 months. We have been really focusing on many of the mega trends that we see in the car business in general happening, and that's of course bringing nice results. We are, as an operation, number one in Finland in market share. Our total market share in terms of the brands is around 17%, dependent of course now very much on how much the availability is allowing us to take the market share.
Still, a major transition is ongoing and has been ongoing in the division over the last 18 months. We operate with Volkswagen Group's business operation and represent Volkswagen and have a very deep relation with them. As we all know, in car business, digitalization has become a necessity, and we have been really driving that actively as well. We are in operation about EUR 1 billion. We more than doubled our profitability based on the renewal of the division last year. In spite of the very, very difficult supply situation, we have been able to improve our profitability still over the last 9 months. One very important thing is we have invested significantly in our charging network. We have today 200 stations across Finland by the end of this year.
Just a few words about the strategy focus areas. As I mentioned, we have been driving a huge transition inside the division with good results. We have been looking at the customer experience, making us the best in the industry. We have been digitalizing a lot of our internal processes, with close cooperation with Volkswagen Group and been looking very carefully at our cost structure and our margin structure as well in all of the businesses we operate. As you probably know, we are operating not only in the new cars, but we're also operating very efficiently in the used car business, in the services business, and the charging network as well. We have ambitious sustainability goals as part of the Kesko sustainability strategy and those are the few words I would like to talk about them.
One of the big transitions that's happening in the car industry currently is especially in Finland a fast transition from diesel and petrol cars towards electrified cars whether them being the hybrids or the plug-in hybrids or full electric cars. If you just only look at two years back more than 50% was diesel or petrol cars and now that transition has significantly changed. A little bit more than 30% for the first seven months this year has been only with diesel and petrol. That is of course a significant change. We are not only following this change we are also driving this change as part of our sustainability strategy very effectively. This is going to continue. We believe that 2030 a significant part of the cars are electric cars.
We are naturally well-positioned because we are number one in electric car sales in Finland for the moment. Also, in many areas, as in other divisions, we are operating in our sustainability strategy. Maintaining the leadership in electric vehicles is going to be a very important topic to keep the emissions down. We are putting a lot of effort to renew the car base in Finland. We have about 2.7 million cars in Finland, and that average age of that car base is almost 13 years. Renewing that car base quicker will have an impact on the emissions, but it also will have a very important topic, which is very often forgotten, and increase the traffic safety.
Because the car driving assistant systems today in the new cars are very much better level and much better than before. That will naturally have an impact on the traffic safety as well. Not forgetting the investment in the K Charge network, which is going to be a critical component of our sustainability strategy implementation. Just a few cases, customers really want electric cars currently, and we have been the most registered EV brand in Finland this year, and most registered EV brand in Finland 2021. That position we wanna keep. Electric vehicle sales already account for over 30% of the new car sales. This transition is really key, and we are driving that. Another very important thing is the K Charge network.
This year, we are doubling our investment in this area, and this is an example of our execution of our sustainability strategy to really help our customers to have a network to use across our big country to charge their cars. The network will double this year, and our plan is to keep on investing on the network in a very effective manner. What is very important is that the electricity is 100% Finnish wind power today, which is also very important for us. I hope this has been a good quick picture of car trade sustainability strategy and our implementation as part of it. Hopefully, I've been able to give you a little bit insight for our activities in this respect. Thank you very much for listening.
Thank you. Welcome, Jukka, joining us for Q&A, and thank you, ladies and gentlemen for the great presentations. Well, Kesko has a long history with the sustainability work, and now this is a new strategy. What has changed? What has really changed from the previous strategy?
Maybe I can start, and the gentleman here can then continue. I think that, of course, as you said, there's a long story before this. A lot of the content, of course, has been there. What I think is different compared to the earlier ones is that now we created a structure together so that all the businesses really fit in, and also put all the targets and metrics together. Then, also, as this is a good example that we have the businesses along the workflow, it's not only something that happens on a corporate level, but also inside the businesses. That I think is quite important.
When it comes to the content, so then biodiversity and our people, and maybe the good governance part also contains some new topics. Last but not the least, of course, also the vision that was broadened to really driving change throughout the value chain. Not only what we do ourselves, but try to get other companies along. This I think is.
Any more comments?
I would say that at least, Building and Technical Trade division, what was important, that we have now our strategy for each countries, because it's fact that those countries are different. For example, what are there now in discussion in Sweden are totally different compared to Poland. There is some 3 million refugees in Poland, and there are now maybe some different topics, what we have in Sweden, where is something like, gender equality is the most important things. That was the key in our division, that those country-specific actions also in the sustainability area.
Very good. Well, the talk of the day today is energy prices and inflation, and I get a question here. What has the energy bill for Kesko Group been before the energy crisis? How many percent of group sales, is the question maybe to Jukka.
Yeah, sure. The electricity cost has been only a fraction of our cost base. In that sense, only a couple of tens of millions EUR. Not too big proportion of that one. The good thing is that we have hedged clear majority of our electricity consumption altogether. In that sense, we are in a good position. However, of course, the prices are now rising and so on. We are also having our sort of latest initiatives in order to reduce our electricity consumption, which is obviously good for the environment as well. In that sense, it's a topic that we are focusing quite a bit during these days.
If we talk about inflation, I got a question here about the food inflation. Do you see, Ari, that from the sustainability perspective, do you see inflation and more expensive food affecting consumer behavior in grocery stores? You mentioned that a bit. How about food services?
Yeah, for sure, you know, price is more important for some of the customers. We are in very good position in that sense because we are able to offer for the customers both premium and also bargains under the same roof. That's good part for the B2C part. It's even more true with the business to business side with Kespro. Because in that market, customers don't really see the brand. We have the share of the private brand K-Menu about 50% in Kespro business. We are able to provide to our customers very good prices.
Mm-hmm. Very good. Very good. Everybody talks about green transition, and by definition, there is a massive amount of money steered in that way. Is this really happening or is this rather future plan or potential? Could you somehow quantify it for Kesko? How many percentages could it drive annual growth for Building and Technical Trade division?
Which are kind of green transition products. Like I mentioned, there are those solar panels or some air pumps and things like that. For example, there are also, if you have a car charger, there is also electric cables, what you need when you are installing those car chargers. It's very difficult to say exactly how big part that is. What I mentioned also, those installation, how you're sealing your windows and doors and things like that. Also what I mentioned, those concrete products, those sales increase is now 7x bigger than our average sales growth. It's as an. If you look the whole picture, all of those products, I would say that it's quite remarkable part of our business.
It is happening. It's not a vision.
It really, really is happening right now.
Exactly.
Definitely, yes.
Very good. This is actually. I think this is for everybody. What is the weak spot of sustainability? What do you need to improve the most?
I would like to say to that, how we communicate that to the customers.
Yes.
That's the most critical part, because we have done so many things during the decades already.
Mm.
We haven't been able to communicate that right way to the customers. That's the area we have to put more effort.
Any comments?
Yeah. I think, from our perspective, I've already mentioned that in a little bit of the presentation, is that it boils down to the communication as well. You know, people have the feeling that the only sustainable way of car trade is buying electric cars, which is not necessarily true. Because if you really look at the new diesel and petrol cars today.
Mm.
They are much less problematic for the environment than maybe five years, six years ago. This communication is critical so that we as a division need to do both to drive also petrol and diesel cars and at the same time the electric cars. That is not easy to communicate in the environment at this point of time.
Mm.
Maybe one of the main part would also be that sustainability is a really broad area of different topics. I mean, you need to understand climate change and then people's psychology and then being a lawyer to be on the governance area. Maybe that's part of the difficulty to communicate it, because I mean, where to concentrate? Also to understand that the bigger public just started to I mean, talk about climate and then there are dozens of other topics that we would need to cover. This is maybe the weak point of sustainability all in all. On the other hand, it's also the interest that you're never ready.
Exactly. Yeah. Well, about investments, how much of your investments are directly sustainability related and how has this developed and will develop in coming years? Maybe you can start.
Yeah. Maybe the last part. Yeah, obviously, we've been investing the majority of our investments to store sites and fairly big proportion of those ones goes to the sort of technologies in the store sites, including the energy efficiency sort of investments. It's a big part of our investment, tens of millions EUR altogether every year is put to this side. The return on capital on those ones is really good because even before the electricity price rises, they were profitable and now even more.
Very good. Into car trade. In car trade, Matti, you mentioned the transition from diesel and petrol cars to EV cars. When it comes to different fuel types, especially the penetration of electric cars, what is driving the transition? On the other hand, what is restricting it from your perspective?
Yeah. One of the big drivers in Finland definitely is the taxation of cars, which is dependent on the emissions. That has been very favorable for the electric cars. That's good thing. That's also the same when it boils down to the normal petrol and diesel cars. What is limiting is definitely the availability of cars. That's why we are really highlighting the fact that we need to also at the same time, when we are selling a lot of electric cars, we are investing on the charging network. Also, the renewing of the car base of this almost 3 million cars we have in Finland needs to renew.
Mentally, that's sometimes difficult to believe that you are not able to get enough electric cars. That's definitely a limitation which we try to correct. Also, I wanna still mention this car safety issue if the car park would be three years, for instance, younger, the car safety would improve significantly in Finland as well, which is in a way forgotten in all of the discussions when talking about moving and driving cars.
We also have used car business and services. How do you see sustainability in these areas?
Same thing. Sometimes there is a feeling that, when you are selling used cars, you are selling somewhat kind of older cars. But for instance, our used cars are typically three years, four years old. So the more we sell the used cars, we are also renewing the car park. We have just,
Made the decision to establish electric vehicles used car location, where we also have the full knowledge about selling the electric cars, and that's concrete actions from our side as well.
Good. To EU Taxonomy, is it of any relevance to Kesko?
Yeah, of course it is, yeah. It gives a framework for how we report things and so on. I think the strategy overall, sustainable strategy is even more important. It gives the fundamentals for what we do and where we invest our money and resource allocation and so on. It's a good way to compare companies and so on, but what the strategy is what matters.
Very good. If Kesko's ambitious sustainability targets were to conflict with financial targets or guidance, what would be the priority then?
Should I start or do you want to start?
Well, whatever. I mean, this is a question that one thinks every now and then that what would happen. I've been in at Kesko now for a year and a half, and quite honestly, I think that on those areas where we have kind of really strategic targets like climate, I would think that we will go to that direction anyway. We have a target that we've set to the whole world, so we better fulfill it, I think. This is what I believe in. I haven't really seen that much conflicts there. Maybe there could be something in a shorter term. Could be. In the long term, I'm sure we are heading there.
That's an important issue when it comes, for example, to investments, because you have to do them in a row to be able to achieve the target. I don't know if you want to elaborate.
Well, the company is based on the strategies that we are putting and executing, and it's a long-term strategy. In that sense, there's definitely no conflict between the sustainability and financial targets. It's, you know, same direction. The sustainability issues, when we focus on those ones and do those ones, usually it also means lower cost for us as well. In that sense, I don't see a conflict there.
It's almost opposite in that contract. You know, the electric cars are more expensive and, you know, people are using more money on buying cars just to be sustainable. I don't see any conflict at all in this respect.
Mm-hmm.
Yeah.
Reducing cost at the same time. Win-win, so to say.
Mm-hmm.
From the point of view of the control division is exactly that we are putting more and more money to save money.
Mm-hmm.
With the sustainable areas. Also our independent store owners, they are doing that. There is no key conflict of interest at all.
No. That's great to hear. One question about farmers, food production in Finland. Ari, what do you see? Any comments on this?
This is very important also for our customers, that we have a lot of Finnish origin products in our stores. About 80% of the total sales is already Finnish origin. We have been providing solution for this very difficult issue. The reason behind sort of the economic difficulties of the farmers is at the end of the day, rise in energy prices, oil prices, gasoline prices, and so on. We have been putting a lot of effort how to support farmers. For example, offering better prices. We was the first retailer in Finland who was opening negotiation with the farmers and opening new windows for the discussions. At the same time, we have to be sure that we are able to provide competitive prices for the customers.
We are in the middle of this, but we have been managing that.
Very good. Almost an hour has been about sustainability. One more question here. I was here. How would you assess the importance of sustainability for B2B customers in building and technical trade? Is that important for your customers, Jorma?
Yes, of course. Very big differences between customers, but I have done B2B business more than 30 years, and I really have seen the change. I would say that last one year-two years, what has happened. It has started from especially from institutional customers and also big construction companies, where they are requesting for tenders. They are asking those topics, what you are doing on those areas, especially when it comes to climate change. I know even the cases that we have won the deal when we have done our job when it comes to what kind of gasoline, biodiesel, or whatever we are using. It's increasing now. It's started and customer demand that we have to be very sustainable.
Very good. It's a wrap. It's an hour of sustainability. Thank you, ladies and gentlemen. That's it. Thank you.