Kai Realo: Green turn is both inevitable and an opportunity for Estonia

Kai Realo.
Kai Realo. Source: Gunnar Laak

The Estonian government's green ambitions are to be applauded, but this is only the beginning of a long journey. It is not enough to simply talk about a beautiful future, society must be led toward it. Doing this wisely will boost businesses competitiveness and the well-being of society, writes Kai Realo, chair of the Estonian Employers' Confederation.

Implementing the green turn is the third highest priority in the coalition agreement. However, putting ambitions down on paper is easier than the actual changes, which lie ahead. There are no easy solutions when it comes to climate change. Achieving the desired targets will mean serious changes to the economy and affect the lives of the state, local authorities, individuals and businesses. Because there will be both winners and losers, agreements will be difficult to reach.

However, there is no getting away from agreements. On the one hand, the fact that, as a member of the European Union, we cannot delay any longer and will have to behave differently in order to achieve our objectives, will put pressure on us. This means that we have to do things in the space of a few years that other countries have been able to do in peace for ten years.

There is a risk of making a mistake when implementing changes by saying that we have to do so at Europe's insistence. That is not the truth. We have to pull ourselves together because a green turn is inevitable for Estonia. We simply don't have the natural resources or people to move forward with resource-intensive businesses here. The way forward has to be to be more productive, reuse-oriented and environmentally friendly.

This is a mindset that is more evident, for example, in export companies, where good governance, transparency in supply chains and sustainability are all required. The export industry, the engine of a country's economy, cannot compete unless concepts such as ESG (environmental, social and governance) or going green are taken into account. At the same time however, without a competitive economy, a country cannot turn green.

This is why increasing the competitiveness of the economy has to be at the heart of the turn, because then it will be possible not only to maintain the status quo, but to increase the welfare of society as a whole. In this way, it will not act as a punishment for entrepreneurs, even though some individual businesses may be hit by the changes.

A green turn needs a clear plan and a strong leader. We have a plethora of development plans regarding the climate and economic development, but these are not the right instruments to e investors with the certainty to make commitments. They instead create confusion and fragmentation. In business, decisions are made that will affect companies for the next 5-20 years. Successful entrepreneurship requires stability and predictability in the business environment, along with certainty that the rules will not change abruptly.

For example, a climate law could bring together key objectives and action plans, in a way that removes the potential l risk of some political parties wanting to change or soften the objectives. Even if the targets require effort, steady progress towards them is better than having to be constantly prepares for something that is promised once and then not again.

The best we can do is to come up with a plan for implementing the green turn that is right for our country. Nobody is going to prescribe it for us. To do that, we need to have a science-based debate, involving both stakeholders and the public. The public should be fully informed and able to voice their fears.

This also has to be accompanied by clear communication, explaining the causes, objectives and effects. At present, the lions' share of the responsibility falls on businesses. However, in reality society as a whole must be willing to make the effort to go green.

Businesses will only benefit from a climate law that creates legal clarity and certainty. What investments are worth making, which have to be made, which will soon no longer be allowed, what the specific milestones are, and what the state, along with citizens and businesses, is doing to meet these targets. As the transition to a more sustainable economy additionally impacts the fundamental rights of citizens and businesses, climate legislation is also necessary to set restrictions and offset these losses.

Fortunately, there is no need to reinvent the wheel. Having looked at climate laws and green plans in other countries, such as the Nordics, it is clear that they have not stopped prospering as a result of the changes, despite what some loud voices in Estonia would have us believe.

In order to both mitigate the risks and achieve the objectives, it is important to proceed through proper legislation and in a knowledge-based way. We need to set objectives and milestones as well as outline the responsibilities and consequences of not meeting these objectives.

In addition to the challenges ahead, there is also still the need to tackle old problems. For example, changing the economic model will also require the right skills, which the education system is [currently] unable to provide. Industry alone is short of 2/3 of [the required amount of] engineers, and this is compounded by a wider shortage of workers. Without the right skills [in society], the turn  will not happen.


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Editor: Michael Cole

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