On the meaning and impacts of green transition on Estonian enterprises

The EU is committed to reducing greenhouse gas emissions, material use and pollution, and preserving biodiversity: all through the implementation of its Green Deal (GD). The aim is also to be economically competitive and to ensure human well-being at the same time. Implementing the GD will bring about changes for Estonian enterprises and the structure of the country's economy. New environmental requirements are being added at a rapid pace, but their content is often incomprehensible to businesses. The challenges arising from the green transition are linked to the wider issue of the competitiveness of Estonian businesses. On the one hand, the globalisation of enterprises, the open economy, integration into global value chains, FDI inflows and technology transfer, and a relatively favourable regulatory business environment have supported productivity growth in Estonian enterprises in recent decades. At the same time, recent crises have also highlighted the vulnerability of past developments and business models, such as dependence on neighbouring markets, suppliers, limited possibilities to pass on increased costs to consumers/consumers’ price sensitivity, rapid increases in production costs and bureaucracy. The aim of the proposed research is to clarify what green transition and responsible business mean in general and also more specifically for companies in different sectors, how it affects their sustainability in the short and long term, and how to ensure the competitiveness of Estonian companies in a changing environment. The study will help to understand which companies in which sectors will be winners and which will be losers, and what should be done to make the process as bearable as possible for the losers and, if possible, a win-win situation. The study will be designed with the involvement of the funder, enterprises and external experts, and will use both qualitative and quantitative research methods (so called mixed methodology).