A more sustainable business is the opportunity to choose the regional advantages of Lithuania

Swedbank Business Customer Service Manager.

Until now, business sustainability was often considered a part of the image, which could help win the sympathy of partners, customers and the public. However, new EU legislation coming into force in the next few years will make sustainability in business a necessity. Europe’s aspiration to distance itself from Russian fossil fuel and increase energy independence in a short time will only accelerate the transformation of sustainability even more. This will be an opportunity to strengthen your business and the economy of the region.

Impact on funding

At the beginning of the year, the EU Taxonomy was in force, which defines environmentally friendly economic activities by setting 6 goals for them. Among them are goals such as climate change change and adaptation, sustainable use of ocean resources, moving towards a sustainable economy, pollution control and prevention, and ecosystem protection.

Although at first glance the goals sound abstract, they will gain more scope if specific criteria for evaluating economic activity are established and they will be transposed into other EU legal acts. For example, the new corporate sustainability reporting directive, which should come into force in 2024.

ie requirements will primarily apply to the financial sector, in the office listed companies and other large companies. However, this is necessary because in the long run, a large part of businesses will have to directly and indirectly contribute to the goal of sustainability, even if they secure financing on more favorable terms or provide products and services to market leaders.

Financial institutions are also preparing for this, for example, Swedbank has already started to calculate the emissions of the financing portfolio and is preparing to set specific target indicators that will meet the objectives of the EU Taxonomy. The so-called client ESG risk assessment arm is also being developed, in which greater emphasis is planned for climate change-related risks. All this will ultimately have an impact on how bank-financed projects are evaluated and what risk premium is applied in a specific case.

Tariffs for said products

However, several EU-wide measures will encourage people to choose more sustainable activities in the near future. It is expected that the so-called border tax will be approved this year, which will be applied to goods that leave a very large carbon footprint.

Among them are such goods as cement, gel and steel, aluminum, wire and electricity. It is planned that the tariffs may come into force from 2026, which will significantly increase the price of oil imports into the EU and affect the value chain of various EU business sectors.

In addition, the National Climate Change Management Agenda adopted in Lithuania last year sets ambitious goals until 2030. significantly, that is, at least 20-40 percent. reduce carbon dioxide emissions, largely abandon the use of fossil fuels and switch to renewable energy sources, stimulate the processes of the global economy. Many oil companies will have to contribute to this goal.

future changes due to climate change may be seen as another limitation for business. On the other hand, after Russia’s military aggression in Ukraine, it became obvious that Europe needs alternatives to the energy products and oils supplied to the autocratic treasury. Therefore, today, the aspect of security also becomes an important argument for choosing the path of sustainability both at the state level and in individual countries.

Possibility of increasing energy independence

One such example is the field of energy. During the last six months, a large part of the oil market was able to feel the impact of the increase in the price of electricity and the increase in the price of other energy sources. It is true that in recent months in Europe, the talk is not about high prices, but about the fact that the supply of energy resources to Russia may stop at any time.

As for gas and oil, Lithuania can now be proud of previous investments in the liquefaction of gas and oil terminals and the possibility of purchasing these oils in other foreign markets. However, the situation in the electricity market is not so favorable, we still import part of the consumed electricity to Russia.

currently, some of the most favorable conditions for remote energy production have been established in Lithuania. Almost every month today has an opportunity to invest remote solar power (soon wind power plants will also appear on the market) and in this way ensure a practically fixed electricity price for a long period of time, contribute to changing emissions and local energy production.

This is necessary due to the increase in business resistance to energy prices, the impact of regulatory measures, and the sudden scenario of interruption of electricity supply to Russia.

today we use security dividends for investments in gas and oil terminals. Direct investments in the field of renewable energy, we can also strengthen the electricity market. In a few years, the mere fact that Lithuanian producers will use oil for energy will make them competitive with other companies in the region, which will import electricity to the country or produce it locally, using fossil fuels.

Sustainability covers many areas

renewable energy is just one example. This is not the only way to make your business more sustainable and increase its competitiveness. Business sustainability is a broad term that includes environmental, social and governance measures.

In addition to the renewable energy example, for other companies, for example, operating in the field of services, it may be more relevant to pay attention to the welfare of employees, which is attributed to the social field. At that time, it may be relevant for companies in the domestic trade or utility service sector to strengthen their data protection and resistance to cyber threats, which is already an area of ​​management.

The policy of sustainability is formed not only as a requirement, but also as an opportunity to strengthen your business, prepare it for future tests and choose the regional advantage of the whole of Lithuania.

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