Hostname: page-component-cd9895bd7-gxg78 Total loading time: 0 Render date: 2024-12-26T08:47:58.810Z Has data issue: false hasContentIssue false
  • English
  • Français

Sustainability and Shared Value in the Interwar Swedish Copper Industry

Published online by Cambridge University Press:  04 August 2016

Ann-Kristin Bergquist  and
Magnus Lindmark
Get access Rights & Permissions [Opens in a new window]

Abstract

This study of the Swedish-based mining company Boliden examines the proactive strategies it adopted to deal with the potential for severe environmental problems associated with the establishment of its large copper smelter in the 1920s. The article demonstrates how international networks, personal experience, and knowledge transfer from the U.S. copper industry help to explain the importance given to environmental issues by the Swedish industrialists. It is suggested that the main explanation for the proactive stance of the Swedish managers is that they perceived excessive pollution as working against creating a profitable and sustainable business. This case provides compelling evidence that firms pursuing an agenda focused on earning profits can still deliver environmental innovation and value to the local community, compatible with the concept of creating shared value.

Type
Research Article
Information
Business History Review , Volume 90 , Issue 2 , Summer 2016 , pp. 197 - 225
Copyright
Copyright © The President and Fellows of Harvard College 2016 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 The Cottrell precipitator was one of the most important new pollution-control technologies of the early twentieth century. It could clean an array of particulate pollutants from smoke produced by a wide variety of industrial processes. See LeCain, Timothy J., “The Limits of ‘Eco-Efficiency’: Arsenic Pollution and the Cottrell Electrical Precipitator in the U.S. Copper Smelting Industry,” Environmental History 5, no 3 (2000)CrossRefGoogle Scholar.

2 On defensive strategies, see, for example, Craig E. Colten and Peter N. Skinner, The Road to Love Canal: Managing Industrial Waste before EPA (Austin, Tex., 1996); Gerald Markowitz and David Rosner, Deceit and Denial: The Deadly Politics of Industrial Pollution (Berkeley, 2002); and Benjamin Ross and Steven Amter, The Polluters: The Making of Our Chemically Altered Environment (Oxford, 2010).

3 For a good summary of this argument, see Rosen, Christine Meisner and Sellers, Christopher C., “The Nature of the Firm: Towards an Ecocultural History of Business,” Business History Review 73, no. 4 (1999): 577–600 Google Scholar.

4 For a recent overview of business historical research in the field, see Jones, Geoffrey and Lubinski, Christina, “Making ‘Green Giants’: Environmental Sustainability in the German Chemical Industry, 1950s–1980s,” Business History 56, no. 4 (2014): 623–49CrossRefGoogle Scholar.

5 See, for example, Rosen, Christine Meisner, “Businessmen Against Pollution in Late Nineteenth Century Chicago,” Business History Review 69, no. 3 (1995): 351–97CrossRefGoogle Scholar; Rosen, Christine Meisner, “The Role of Pollution Regulation and Litigation in the Development of the U.S. Meat Packing Industry,” Enterprise & Society 8, no. 2 (2007): 297–347 CrossRefGoogle Scholar; Uekoetter, Frank, “Divergent Responses to Identical Problems: Businessmen and the Smoke Nuisance in Germany and the United States,” Business History Review 73, no. 4 (1999): 641–76CrossRefGoogle Scholar; and Hugh S. Gorman, Redefining Efficiency: Pollution Concerns, Regulatory Mechanisms, and Technological Change in the U.S. Petroleum Industry (Akron, Ohio, 2001).

6 Porter, Michael E. and Kramer, Mark R., “Creating Shared Value,” Harvard Business Review, Jan.–Feb. 2011, 1–17 Google Scholar.

7 Ibid., 9.

8 Strand, Robert and Freeman, R. Edward, “Scandinavian Cooperative Advantage: The Theory and Practice of Stakeholder Engagement in Scandinavia,” Journal of Business Ethics 127, no. 1 (2015): 65–85 CrossRefGoogle Scholar.

9 Susanna Fellman, Martin Jes Iversen, Hans Sjögren, and Lars Thue, Creating Nordic Capitalism: The Business History of a Competitive Periphery (New York, 2008).

10 See, for example, Archie B. Carroll, “A History of Social Corporate Responsibility: Concepts and Practices,” in The Oxford Handbook of Corporate Social Responsibility, ed. Andrew Crane, Abagail McWilliams, Dirk Matten, Jeremy Moon, and Donald S. Siegel (Oxford, 2009), 19–46; and Sluyterman, Keetie, “Corporate Social Responsibility of Dutch Entrepreneurs in the Twentieth Century,” Enterprise & Society 13, no. 2 (2013): 313–49CrossRefGoogle Scholar.

11 Archie B. Carroll, Kenneth J. Lipartito, James E. Post, and Patricia H. Werhane, Corporate Responsibility: The American Experience (New York, 2012).

12 Geoffrey Jones, “Debating the Responsibility of Capitalism in Historical and Global Perspective.” HBS Working Paper 14-004 (Harvard Business School, Boston, Mass., 2013).

13 Donald MacMillan, Smoke Wars: Anaconda Copper, Montana Air Pollution, and the Courts, 1890–1924 (Springfield, Ill., 2000); Duncan Maysilles, Ducktown Smoke: The Fight over One of the South's Greatest Environmental Disasters (Chapel Hill, N.C., 2011); Timothy J. LeCain, Mass Destruction: The Men and Giant Mines That Wired America and Scarred the Planet (New Brunswick, N.J., 2009); Fredric Lincoln Quivik, “Smoke and Tailings: An Environmental History of Copper Smelting Technologies in Montana, 1880–1930” (PhD diss., University of Pennsylvania, 1998).

14 MacMillan, Smoke Wars, chap. 8; LeCain, “Limits of ‘Eco-Efficiency,’” 341.

15 Maysilles, Ducktown Smoke.

16 LeCain, Mass Destruction, 75–76.

17 Frank Uekoetter, The Age of Smoke: Environmental Policy in Germany and the United States, 1880–1970 (Pittsburgh, 2009); Rosen, “Businessmen Against Pollution,” 351–97; Peter Brimblecombe, The Big Smoke: A History of Air Pollution in London since Medieval Times (London, 1987).

18 Lars J. Lundgren, Vattenförorening: Debatten i Sverige 1890–1921 (Lund, Sweden, 1974); Söderholm, Kristina and Bergquist, Ann-Kristin, “Firm Collaboration and Environmental Adaptation: The Case of the Swedish Pulp and Paper Industry, 1900–1990,” Scandinavian Economic History Review 60, no. 2 (2012): 183–211 CrossRefGoogle Scholar.

19 Söderholm and Bergquist, “Firm Collaboration,” 190–91.

20 Ibid. The law was a tool for the municipal boards, whose expertise on industrial issues was limited. Another central regulation was the Water Rights Ordinance of 1880, the first general regulation in Sweden specifically addressing water pollution.

21 Staffan Westerlund, Miljöskyddslagstiftning och Välfärd [Water pollution: The debate in Sweden, 1890–1921] (Stockholm, 1971), 23.

22 Copper ores can be divided into three major categories: primary (sulfide) ores, altered secondary (sulfide, carbonate, oxide, and silicate) ores, and native (pure metallic) copper. See Schmitz, Christopher J., “The World Copper Industry: Geology, Mining Techniques and Corporate Growth, 1870–1939,” Journal of European Economic History 29, no. 1 (2000): 77–78 Google Scholar.

23 Newell, Edmund, “Atmospheric Pollution and the British Copper Industry, 1690–1920,” Technology and Culture 38, no. 3 (1997): 655–98CrossRefGoogle Scholar; Mark Wilde, “Nuisance Law in Industrial Wales: Local and National Conflicts (Part One): Copper Smelting in a Pre-regulatory Era,” in Environmental Law and Policy in Wales: Responding to Local and Global Challenges, ed. Patrick Bishop and Mark Stallworthy (Cornwall, U.K., 2013), 25–42.

24 Bode J. Morin, The Legacy of Copper Smelting: Industrial Heritage vs. Environmental Policy (Knoxville, Tenn., 2013), 7.

25 Newell, “Atmospheric Pollution,” 687. See also Newell, Edmund and Watts, Simon, “The Environmental Impact of Industrialisation in South Wales in the Nineteenth Century: ‘Copper Smoke’ and the Llanelli Copper Company,” Environment and History 2, no. 3 (1996): 309–60CrossRefGoogle Scholar.

26 Ferdinand E. Banks, The World Copper Market: An Economic Analysis (Cambridge, Mass., 1974), 7.

27 Alfred D. Chandler, “The United States,” in Big Business and the Wealth of Nations, ed. Alfred D. Chandler, Franco Amatori, and Takashi Hikino (Cambridge, U.K. and New York, 1997), 68.

28 Schmitz, Christopher J., “The Rise of Big Business in the World Copper Industry, 1870–1930,” Economic History Review, 2nd ser., 39, no. 3 (1986): 395 CrossRefGoogle Scholar.

29 Ibid., 393. Together these corporations controlled 74 percent of the world's refining in 1921.

30 LeCain, Mass Destruction, 68. In Ducktown, the heaps could burn for up to three months, causing enormous discharges of sulfur dioxide. Maysilles, Ducktown Smoke, 41.

31 McMillan, Smoke Wars, chap. 8; LeCain, “Limits of ‘Eco-Efficiency,’” 340–341.

32 Maysilles, Ducktown Smoke, 153.

33 Newell and Watts, “Environmental Impact of Industrialization,” 315.

34 LeCain, Mass Destruction, 75–76.

35 Ibid., 76.

36 Ibid., 84–85.

37 Ibid., 98.

38 Per-Olof Grönberg, Learning and Returning: Return Migration of Swedish Engineers from the United States, 1880–1940 (Umeå, Sweden, 2003), 211.

39 Ibid., 212.

40 Per-Olof Grönberg, “Skorsten kallar vi det rör som mot Ryssland röken för. Om konstruktionen av Europas högsta skorsten vid Rönnskärsverken” [Smokestacks are the things that the smoke to Russia brings: On the construction of the tall smokestack at the Rönnskär Plant], Polhem, yearbook of the Technical Museum (Stockholm, 2005).

41 For an overview, see Jan Glete, Kreugerkoncernen och Boliden [The Kreuger Group and Boliden] (Stockholm, 1975).

42 Wesslau, Eric, “Sweden's New Gold-Copper Enterprise,” Engineering and Mining Journal 133, no. 7 (1932): 395 Google Scholar. To be exact, one ton of ore contained approximately 20 grams of gold, 2.5 kilograms of copper, 300 kilograms of sulfur, and 98 kilograms of arsenic.

43 Oscar Falkman, Så Började Boliden [How Boliden was started] (Stockholm, 1953), 26.

44 Palén, Paul, “Smelting at Rönnskär, Sweden,” Engineering and Mining Journal 133, no. 6 (1932): 339 Google Scholar.

45 Oscar Falkman, memorandum: “PM. A brief summary of results from a study trip to the United States,” 9 Oct. 1926, Oscar Falkman Arkiv, box FI:2, Swedish National Archive, Marieberg, Stockholm (hereafter OFA).

46 Notes by Oscar Falkman regarding his visit at Tacoma Smelting Company, 4 Sept. 1926, Rönnskär Museum, Skelleftehamn (hereafter RM). Falkman wrote that, with a sufficiently tall chimney, only highly diluted and harmless gases would eventually hit the ground. The Tacoma plant had initially emitted its flue gases through a ninety-meter chimney, which clearly had not been sufficient.

47 Oscar Falkman, memorandum: “PM. A brief summary of results from a study trip to the United States,” 9 Oct. 1926, OFA.

48 Falkman, Så Började Boliden, 88–89.

49 Oscar Falkman, memorandum: “PM. A brief summary of results from a study trip to the United States,” 9 Oct. 1926, OFA.

50 The principles of the manufacturing process were so basic that patent issues were not relevant. Nor did impurities in the ores—such as, in the Boliden case, arsenic—interfere with the process.

51 Falkman, Så Började Boliden, 27.

52 Board minutes, Skellefteå Gruvaktiebolag, 8 Aug. 1927, Boliden Archive, Boliden (hereafter BA). In fact, realgar was neither harmless nor completely useless. It was used in the leather industry and as a component in firecrackers, while burning the substance creates highly toxic fumes.

53 Ibid.

54 Board minutes, Skellefteå Gruvaktiebolag, 2 Feb. and 9 June, 1927, BA.

55 Falkman, Så Började Boliden, 27.

56 Board minutes, Skellefteå Gruvaktiebolag, 8 Apr. 1927, BA.

57 Board minutes, Skellefteå Gruvaktiebolag, 23–24 Sept. 1929, BA.

58 Board minutes, Skellefteå Gruvaktiebolag, 6 May 1929, BA.

59 Note that Anaconda was one of two smelters that could process the Boliden ores, and the company was subject to lawsuits at the time of Palén's first engagement there.

60 The process occurred in the following stages: (1) crushing and bedding of ore and fluxes; (2) roasting, to eliminate arsenic and part of the sulfur; (3) removal of the arsenious oxide from the cooled roasting gases in Cottrell precipitators; (4) smelting of the calcines in reverberatory furnaces; (5) blowing of molten matte to blister copper; (6) preliminary refining of the blister and casting of anodes; (7) electrolytic refining, with recovery of gold and silver; and (8) melting, refining, and casting of the electrolytic copper for the market. Palén, “Smelting at Rönnskär,” 340–41.

61 Falkman, Så Började Boliden, 30.

62 Protocol from the City Council of Skellefteå town, Appendix 1, 21 Feb. 1928, box AIa26, Municipal archive, Skellefteå (MAS).

63 Ibid., § 9.

64 In a review of all protocols of the local board of public health during the period, we found that the smelting activity was indeed never discussed—not even between 1930 and 1934, when damage started to appear.

65 Board minutes, Skellefteå Gruvaktiebolag, 6 May, 1929, BA. Orkla's managing directors were the Swedish engineers Erik Lenander and August Nachmanson.

66 Ibid.

67 Ibid. The instructions for the expert to conduct the investigation had been sent on April 20, 1929 and was signed by August Nachmanson for Orkla and Oscar Falkman for Skellefteå Gruvaktiebolag AB.

68 Ibid.

69 See, for example, Frank Partnoy, The Match King: Ivar Kreuger, the Financial Genius behind a Century of Wall Street Scandals (New York, 2009); and Jan Glete, Kreugerkoncernen och krisen på svensk aktiemarknad: studier om svenskt och internationellt riskkapital under mellankrigstiden [The Kreuger Group and the crisis on the Swedish Stock Market: Studies of Swedish and international venture capital during the interwar period] (Stockholm, 1981).

70 Lindgren, Håkan, “The Kreuger Crash of 1932: In Memory of a Financial Genius, or Was He a Simple Swindler?,” Scandinavian Economic History Review 30, no. 3 (1982): 189–206 CrossRefGoogle Scholar.

71 Glete, Kreugerkoncernen och Boliden, 48.

72 Ibid., 62.

73 Ibid., 328. Indeed, it was not clear at the time whether Kreuger & Toll or Kreuger as a private individual had bought Boliden. As it turned out, it was Kreuger himself who owned the company.

74 Ibid., 61.

75 Report written by Edwin G. Bloomfield, “Report on the Boliden mine, Sweden,” Nov. 1929, RM.

76 Glete, Kreugerkoncernen och Boliden, 61.

77 Sven Odén to Gunnar Magnuson, 9 Dec. 1929, RM.

78 The author of the report had been tasked with assessing the environmental impacts of emissions from the Rönnskär smelter, particularly sulfur dioxide (estimated levels of 25,000 tons annually).

79 Report delivered to Kreuger & Toll from Professor Sven Odén, 1 Mar. 1930, RM.

80 Glete, Kreugerkoncernen och Boliden, 97.

81 Fredrik Carlsson to Gunnar Magnuson, 8 Feb. 1930, RM. This was later confirmed by Falkman; see Oscar Falkman to Ivar Kreuger, 26 Nov. 1930, RM.

82 Falkman, Så Började Boliden, 94. This statement contrasts sharply with the supposedly psychopathic personality of Ivar Kreuger as suggested in Robert Shaplen, Kreuger: Genius and Swindler (New York, 1960).

83 Glete speculates that Kreuger may have wished to maintain close ties to the Wallenbergs for an upcoming stock release. One of Kreuger's last desperate moves, in the spring of 1932, was indeed to use Boliden shares as collateral for two loans, to save his match empire. Falkman speculates vaguely on some kind of complicated, behind-the-scenes financial arrangements. See Glete, Kreugerkoncernen och Boliden, 99; and Falkman, Så Började Boliden, 42.

84 Board minutes, Skellefteå Gruvaktiebolag, 31 Mar. 1930, BA; Gunnar Magnuson to Orkla Grube A/S, 1 Apr. 1930, RM.

85 Oscar Falkman to Ivar Kreuger, 26 Nov. 1930, RM.

86 Author unknown, memorandum: “PM. Orkla,” 10 Sept. 1930, RM.

87 Einar Flygt to Gunnar Magnuson, 9 Dec. 1929, RM.

88 Later, Orkla Grube A/S would also utilize the patents for the Orkla method in deals with the U.S. sulfur industry. See Trond Bergh, Harald Espeli, and Knut Sogner, Brytningstider: storselskapet Orkla 1654–2004 (Oslo, Norway, 2004).

89 Memorandum regarding a conversation with Ivar Kreuger: “PM. Samtal med Ivar Kreuger” (undated and unsigned but with the characteristics of Gunnar Magnuson's writing), RM.

90 Maysilles, Ducktown Smoke, 177–78.

91 Glete, Kreugerkoncernen och Boliden, 63.

92 Guggenheim Brothers to Ivar Kreuger, 10 June 1930, RM.

93 Ibid. Further, a Swedish company would be formed that was to hold the preference shares entitled to 7 percent of the dividends and common shares entitled to surplus profits.

94 Robert Marsh, memorandum, Apr. 1931, RM.

95 Oscar Falkman, memorandum regarding Cappelen Smith's letter written 8 Sept. 1930, (authors’ translation), 9 Sept. 1930, RM. Falkman's use of the phrase “in a strictly narrow sense” is a polite insult, suggesting amateurism.

96 Robert Marsh, memorandum, Apr. 1931, RM.

97 Elias Anton Cappelen Smith to Gunnar Magnuson, memorandum, 20 Apr. 1931, RM.

98 Gunnar Magnuson, memorandum regarding Cappelen Smith's letter sent on April 20, 1931 and his meeting with Smith in Paris (authors’ translation), 12 May, 1931, RM.

99 Oscar Falkman, memorandum regarding Cappelen Smith's memorandum written on April 19, 1931 and Cappelen Smith's letter on April 20, 1931 (authors’ translation), 18 May 1931, RM.

100 Ibid., 5.

101 Ibid.

102 Oscar Falkman, memorandum regarding the Guggenheim smelting process (authors’ translation), undated, RM. In this note, Falkman thoroughly described how the Rönnskär method would treat both the sulfur danger and the arsenic danger and how the arsenic disposal would be mechanized. He emphasized again that workers would have no contact with the arsenic disposal process, besides those materials that had to be processed for sale.

103 Paul Palén to Axel Lindblad, 21 Oct. 1931, box ERA/ca. Studieresor Ing P Palén USA, Boliden Archive, Rönnskärsverken, Skelleftehamn (hereafter BAR).

104 Paul Palén to Axel Lindblad, 3 Nov. 1931, box ERA/ca. Studieresor Ing P Palén USA, BAR.

105 Ibid.

106 Falkman, Så Började Boliden, 42–43.

107 Paul Palén to Axel Lindblad, 3 Nov. 1931, box. ERA/ca. Studieresor Ing P Palén USA, BAR.

108 Gunnar Magnuson to Ivar Kreuger, telegram, 12 Dec. 1931, RM.

109 Ibid.

110 G. Temple Bridgman (Guggenheim Brothers) to Gunnar Magnuson, 17 Mar. 1932, RM.

111 Palén, “Smelting at Rönnskär,” 340–41. According to Palén, the Boliden engineers had observed that the Cottrell precipitator worked more efficiently if the gases were cooled down to below 150 degrees Celsius, which is why the company had been struggling with improving the cooling chambers. About one-third of the arsenious oxide was recovered in the coolers, and the rest was being precipitated in the Cottrell precipitators.

112 Ibid., 340.

113 In 1936 the company asked the regional office of the Skogsvårdsstyrelsen (Swedish Forest Agency) for assistance. It is worth noting that the company had paid compensation for damaged crops and trees before 1932.

114 Falkman, Så Började Boliden, 88–89.

115 Ibid., 43.

116 Porter and Kramer, “Creating Shared Value,” 5.

117 Grönberg, Learning and Returning, 210–11.

118 Board minutes, Skellefteå Gruvaktiebolag, 8 Apr. 1927 and 21 Nov. 1929, BA.

119 Oscar Falkman, memorandum Dec. 1934, box F1:2, OFA.

120 Grönberg, Learning and Returning, 210–11.

121 Falkman, Så Började Boliden, 84 ff.

122 While the municipality of Skellefteå declined to finance such a service, the Swedish Medical Board (Medicinalstyrelsen) agreed to do so. Board minutes, § 5, 21 July 1931, BA.

123 Ann-Kristin Bergquist, “Dilemmas of Going Green: Company Strategies in the Swedish Mining Company Boliden, 1960–2000,” in Green Capitalism? Exploring the Crossroads of Environmental and Business History, ed. Hartmut Berghoff and Adam Rome (Pennsylvania University Press, forthcoming).

124 LeCain, “The Limits of ‘Eco-Efficiency’”; Gorman, Redefining Efficiency.