Reducing the ecological footprint, switching to green energy, and waste-free production. These are just a few of the challenges that companies in Latvia and all over the world face every day. Industry leaders often rely on innovation that provides solutions that ensure the sustainable development of the company. We asked industry experts, who also work side by side with startups within the Future Hub program, to share where innovation is needed the most when it comes to reaching sustainability goals in their industries.
Where to start?
According to Martins Berzins, Head of Digital Customer Experience at Citadele Bank, we can currently find sustainable innovation at every step. The finance industry can play the role of an educator, helping society think in the long-term perspective. "The solutions for reducing CO2 emissions for individuals and companies are clear - from the electrification of the car fleet and transition to green energy to the introduction of the circular economy and zero-waste production. However, it is impossible to achieve all these simultaneously; thus, it is necessary to start with the most difficult yet the most important step: understanding the impact of each person's or company's activities on the environment. Here, innovation in data analysis and artificial intelligence (AI) fields are useful to create the capacity and ways to process each company's and household's emissions data. It is possible to create completely climate-neutral and sustainable solutions only by knowing the CO2 footprint that all activities leave and correcting the weakest parts of the chain. These can be either sustainable investments, loans, or mobility solutions," shares Martins Berzins.
In the meantime, Kaspars Cikmacs, Board member and Director of technology and support at Latvenergo, admits that the energy sector is experiencing many changes currently: “The Baltic electrical grids will soon be synchronized with European electricity networks. It means that we will need to balance our power system by ourselves instead of relying on historical cooperation in a unified system with the North-West region of the former Soviet Union. At the same time, there is rapid growth in the development of energy production from changeable solar and wind energy sources, which also require new flexible balancing methods or smart control solutions. For example, owners of existing power plants are also modernizing their day-to-day operations by improving temporary engineering procedures to minimize repairing and staff costs in the increasingly competitive environment. In addition, many new digital technologies that could help to address these challenges are emerging.”
Zanda Sadre, Head of Corporate Communication at Rimi Baltic, shares the mindset that innovation is welcomed in every area of sustainability: “Usually we are focusing on the areas that are currently underdeveloped, or we are facing challenges to meet targets. It requires a new, innovative approach to solving the problem. To get better, it is essential to set targets. If you have targets, you need to measure them. The easier it is to find out your achievements, the better you can work with your targets.
The biggest challenges: changing habits and time
"From experience, our main observation about the adoption of technological innovation is that people will change their habits as adopting the innovation saves their time. However, it may not be as easy with sustainable innovations, since not all of them will be more convenient or save time. We can see this when looking at the example of an electric car purchase. It requires more substantial investment compared to a purchase of a car with an internal combustion engine, so the decision to buy an electric car requires more courage. It is similar with other innovations - we have to learn to overcome these barriers for a greener future," explains Martins Berzins.
At the same time, courage alone is not enough - it also takes time to develop new and widely available technologies. “Sustainability goals and solutions ideas are growing faster than relevant technological solutions that could address it with positive economic reasons. No matter how much faster we want to be climate-neutral, it will take time and work of many innovators to make these solutions economically viable”, Kaspars emphasizes.
Cooperation with startups - an opportunity to get quick results
When looking at work with startups, Citadele Bank's experience shows that the most valuable cooperation with startups in sustainability development is data interpretation, analysis, and visualization. It does not only help the company to move towards sustainability, but it also promotes sustainable operations for customers by helping to assess their sustainability.
"Cooperation with startups and financial technology companies allows us to be a driver of innovation in traditional banking services. Our goal is to provide our customers with tools that can be used to determine their climate neutrality and help to develop their businesses sustainably. We want to give our customers more opportunities by sustainably using our resources. It is not sustainable to develop each innovation internally by acquiring knowledge and competencies in broad segments directly related to the bank's core business. Cooperation partners are available in the local market, and they can offer the specific innovation faster and with fewer resources," explains Martins.
"Electrification or the shift towards wider usage of electricity offers the opportunity to reduce emissions and achieve sustainability goals in the transport sector, heating, manufacturing, and many other industries. It also proves that energy companies cannot operate alone and may need to change their business models. Therefore, collaboration with startups, besides cooperation with other state-owned companies, institutions, and universities, has become an important business pillar for Latvenergo. We see many opportunities for cross-industry collaboration, which can significantly increase the speed of development. Thus, startups which usually have a different experience from other industries or other environments allow us to develop our processes and products faster," says Kaspars.
Rimi Baltic also points out the benefits of attracting external experts: We have a lot of knowledge and experts in various fields, yet perfect can not be everywhere. So, we develop specific solutions together with external partners. We have noticed that start-ups are very suitable for developing innovative and new ideas. Working with them is fast, efficient, and communication is simple; the result is seen quickly. Our ambitions to tackle food waste and packaging consumption are such issues now at our table. Future Hub is an excellent opportunity to hear what kind of solutions are available elsewhere.