In this hypothetical competition, EBS would be on the podium today, when climate change mitigation and environmentally sustainable business practices are becoming increasingly topical worldwide, leading to a transformation of existing economic models.
Business schools have an important role to play in training current and future business leaders – they are involved in developing new economic models and testing them in practice. EBS, which has been working for the development of Estonia’s economy and business for 35 years, focuses on sustainability, circular economy and digitalisation both in the development of its research and teaching activities and in the everyday life of the organisation. It is a big and high-impact challenge, and as the Green and Circular Economy Strategy of EBS states: the biggest impact of EBS on the environment consists in its success or failure in preparing green professionals and raising awareness among executives on various green issues.
Andreas Veispak, head of development and innovation at EBS, and Aleksandra Kekkonen, senior researcher in the field of green economy and sustainability, tell what has been done in this field at EBS, what lies ahead and where Estonian companies stand in the implementation of green and circular economy principles.
The European Union has set the ambitious goal of being the first climate-neutral economy by 2030. The change of course towards a carbon-neutral and more sustainable economy, popularly known as the green transition, has been criticised, and Estonians tend to be sceptical about new things. What can be done to ensure that sustainability is seen as an opportunity, not an obstacle?
Andreas: I don’t think that Estonians are sceptical about green or environmental matters. We believe that nature needs to be protected and that people need to take care of their living environment. Rather, scepticism may arise from a sense that something is being imposed by political structures far from us. Resentment is more likely to occur due to someone telling to reduce something by 47.69%, not because Estonians are not green-minded. We are just wary of anything that looks like command economy. Estonia is also already tapping into the potential of the EU Green Deal: we have a number of promising green start-ups and, for example, in the tourism sector, Estonia is a destination largely associated with clean nature.
Aleksandra: Seeing green business as a competitive advantage is still a challenge, as we are all faced with high energy prices, supply chain disruptions and the like. However, I believe that being green is actually a competitive advantage, especially in the long term. Yes, in the short term, companies will need to make major investments and changes to their business model and structure, including changes in management. But it will pay off in the long term as companies become more energy efficient, generate less waste and reap the other benefits of the green transition.
We are used to considering profit as the main goal of business. Yet it is increasingly being said that profit is not the only goal and that the impact of a company’s activities on society and the environment is also important. How ready are companies to embrace and implement this way of thinking?
Aleksandra: I think that companies are moving in this direction because they see a change in the way people think, especially among the younger generation. Demand for new, greener and more sustainably produced goods is high and companies are trying to adapt to this trend as fast they can.
Andreas: Economic activity is and will always be linked to profits, because without profits, it would not be a business, but a charity (which undoubtedly also has its place). It is not a question of whether to choose profit or some other aspect, but how much these other aspects affect the framework conditions and profits of business. For example, let’s look at the social tax that companies pay on employees’ wages. What is social tax? It is a contribution of companies to society, as they support the social system of the state. From now on, the impact of companies on society will increasingly be reflected in “greening”.
In Estonia, the transition is difficult. We conducted a survey in 2022 to assess the readiness of Estonian companies to go green and asked, among other things, whether they had a plan to that end. Most of them did not. However, this is a relatively urgent matter. Compared to the development of the fossil fuel-based economic model, which has been going on for more than 150 years, the transition to a green economy should be completed in a couple of decades. The speed of the expected change is enormous; the green transition is one of the greatest economic experiments in world history.
The main competitive advantage of greening is, in my view, the potential for cost reduction. Using less energy and raw materials saves money and is also good for the environment. Reusing products makes it possible to cut costs and be environmentally friendly. To go green, one essentially just needs common sense.
More than 95% of Estonian companies are small, with fewer than ten employees. What advice can you give them in terms of adopting a green mindset and sustainable practices?
Aleksandra: When it comes to sustainability, we can distinguish between several levels. At the company level, we talk about sustainability in the context of supply chains, business models, carbon emissions and so on. But there is also personal sustainability, and this is where company leaders have an important role to play in bringing green and sustainable thinking into the way the companies do business and operate. For example, how green is your office? How sparingly do you use energy and how often do you change your appliances? Do you assess your digital footprint and change your behaviour according to the outcome of the assessment?
I believe that every small joint effort counts. If every small company starts sorting waste properly, is more energy efficient and tries to reduce its digital footprint, this will ultimately make the whole economy greener.
As an organisation, EBS focuses on digitalisation, sustainability and the circular economy. Andreas, what impact has this had on EBS?
There are very few universities in Europe that have not made sustainability and digitalisation a priority. EBS is investing in these areas for the same reason as others: they are the defining areas of our time and will continue to have a central impact on society and the economy over the next 5–15 years.
First, we need to ensure that our students get at EBS the knowledge and skills they need to succeed in the new economic model. Secondly, we work closely with green businesses and have invested in business accelerators, which in turn advise on and invest in the green sector. In this context, cooperation between Cleantech Estonia and the business accelerator Beamline Accelerator, which operate at EBS, will provide an opportunity to create a closer link between education and research and business. Thirdly, the working and learning environment of EBS have been designed with sustainability in mind. We pay great attention to saving energy and reducing or recycling our waste. Our staff, students and external partners communicate digitally and paperlessly. And, of course, we engage in outreach work to educate people about sustainability and make the changes better understood.
Aleksandra, EBS’ development plan 2025 states that the principles of circular and sustainable economy must be integrated into bachelor’s, master’s and doctoral programmes. What is the state of affairs with this?
It’s coming along quite well. For example, one of our three bachelor’s programmes is Impactful Entrepreneurship, where sustainability topics are covered in all three years of study. In Master’s studies there is a year-long programme on leveraging innovation in the green economy. A person who completes the programme will have a holistic and systemic understanding of sustainability at the macro level, including sustainable finance. We also have a number of doctoral students who are exploring circular economy business models and how to help companies make the necessary changes.
Are digital and green matters also addressed in continuing training?
Andreas: One of the most popular continuing education programmes is the ESG Executive Development Programme, the flagship of our programmes on green matters and sustainability. In fact, there is a strong demand for all programmes and courses in this field and the feedback has been very positive.
Finally, what are you doing in your daily life to live more (environmentally) sustainably?
Aleksandra: I hardly use disposable products – plastic bags, drinking cups, etc. Secondly, I mostly buy from reuse shops. I have two children, they are growing up fast and it would be environmentally and financially unsustainable to always buy them brand new clothes. Thirdly, I try to plan meals well to reduce food waste, which is one of the biggest contributors to carbon dioxide and methane emissions.
Andreas: I consciously do quite a few things. I hardly use my car to get around the city anymore. I sort my waste and have become a much more conscious energy and electricity user. I don’t go to the grocery store once or twice a week, because I know that a lot would end up being thrown away if I buy “in bulk”. I go to the grocery store when I really need to, to buy exactly as much as I consume. Smart and green management is not rocket science.
Sources: annual reports of the Estonian Business School Foundation