A year ago, SEB banka organised the first Sustainability Forum to encourage Latvian companies to make sustainable changes and dispel the myth that sustainability is complicated, incomprehensible, and costly. At the time, it seemed that the understanding of sustainability in Latvia was still in its infancy, and that we all had a lot to learn in this field.
Today, when we look back at the past year, we cannot say that there has been a major breakthrough in the field of sustainability. The first important steps, however, have been made. Some of this progress has been aided by Russia’s war in Ukraine, which has led to a particularly sharp rethinking of our dependence on the neighbouring country's energy resources. The government has already announced plans to switch to more sustainable sources of energy, including building new wind farms and cutting off gas supplies to its eastern neighbour in the near future. New support tools are available for both individuals and businesses to switch to “green” energy sources, so all we have to do is look at what is on offer and make our choice.
I, however, believe that a truly sustainable change will only be possible if we manage to rethink our consumption habits and realise that a comfortable everyday life is also possible with much less stuff.
Our everyday choices must become more thoughtful
Last year at SEB banka, we developed the Mana Ekopēda (My Eco-Foot) app, which makes it easy to calculate one's impact on the environment and inspires us to live a greener lifestyle. While developing the app, we learned a lot of surprising facts about the daily habits of people around the world and in Latvia.
The situation in the fashion industry is very unfortunate for sustainability and climate. Between 2000 and 2014, clothing production doubled, and today everyone buys 60% more clothes than 15 years ago, but the clothes bought last twice as short.
The industry consumes 93 billion cubic meters of water every year in its production process, which is enough to meet the water needs of five million people. An incomprehensible luxury at a time when water is scarce in many parts of the world.
A staggering impact of a single global industry on the environment. And all in the name of consumers who buy a few T-shirts for occasional wear or jeans that work well for six months, if at all.
Another industry that has a huge impact on the environment, especially through its supply chains, is the food industry. Here in Latvia, we have long forgotten the time when bananas were a great rarity – various exotic fruits are part of our daily meals. Undoubtedly, the desire of buyers to taste the fruits used in the sun on a gloomy winter day is understandable and sometimes even desirable in our latitudes.
But can the transport of cod caught in Norway to China, where it is processed into fillets, and later back to Norway, where it is finally sold, be reasonably explained? Or the Spanish supermarkets overflowing with lemons grown in Argentina, while domestic lemons slowly rot on the ground?
In my opinion, we in Latvia should also be given many more opportunities to get on supermarket shelves, which would not only benefit the economy, but also the environment.
With the examples of these industries, I would like to say that wind farms and solar panels alone will not save us - we need to radically change our daily consumption habits and vote with our daily choices for brands that do not harm the environment and people.
Sustainability will also be required by our counterparties
Companies and manufacturers will also have to change, of course, because sustainable, low-carbon products will be increasingly demanded not only by consumers but also by pressure from regulators and business partners. Banks, too, will increasingly evaluate their investments and loans based on their contribution to sustainability goals.
As an example, I can cite the careful evaluation of ESG aspects in the construction market in Scandinavian countries. If a Latvian company wants to operate in one of the Scandinavian countries, it must be able to demonstrate its company's ESG calculations, including its attitude toward tax payments, employee working conditions, and a number of other aspects related to sustainability.
Such practices are likely to become more widespread in the coming years, affecting an increasing number of companies. Increasingly, the catalyst for change will be cooperation between companies that demand sustainability-related credentials from their business partners and suppliers. As a result, the entire supply chain will need to work toward positive change.
We also see that the geopolitical situation has created additional incentives for entrepreneurs to seek more sustainable and greener energy sources. Whereas in the “pre-war” era, sustainability decisions had to be postponed precisely because of concerns about rising product prices, now, against a backdrop of general inflation, the economic benefits are increasingly being outweighed by “green” and sustainable energy solutions.
If we look into the future and assume that humanity will not be hit by major catastrophes, the population will probably grow from 8 billion today to 10 billion in 2050. Our purchasing power will also increase, and consumption will naturally rise. Therefore, one of the biggest challenges for companies will be to increase productivity while ensuring a balanced consumption of energy and resources.
A national vision is necessary
Achieving major goals at the national level requires individual action. Action at the level of each individual, each household, and each company. However, motivating and initiating such action requires a comprehensive discussion to better understand the needs and opportunities at all levels. With the Sustainability Forum organised by SEB, we are trying to create such a comprehensive discussion.
The country should also come to a strategic vision and more decisive decisions in the field of energy. This is one of the most troubling issues for society and businesses today. If, as a result of major changes, part of society falls into energy poverty or freedom of movement is severely restricted, then the “green deal” will have more opponents than implementers.
In a broader sense, “green deal” means agreement. Today, there should also be a common agreement on energy. In the short term, wood bioresources are probably the best substitute for fossil fuels. But is this a long-term global solution, and does the global solution fit our local needs? This requires a comprehensive national assessment and agreement.
We are undoubtedly in a time of great uncertainty and rapid change that will and as a matter of fact is already impacting everyone. But despite the great uncertainty, it is important now to be brave and seize this moment to make focused and thoughtful investments for a better and more secure future.
The fruitful change will only be possible if we can ensure economic, emotional, and physical security, i.e., well-being for everyone here in Latvia.
Chairwoman of the management board of SEB banka