Conclusion 1
Two motivations have clearly emerged as to why companies have begun to focus on implementing sustainability or ESG principles.
Commercial motivation
Implementing sustainability (ESG) principles means maintaining supplier relationships with their customers, especially in other EU countries, and therefore profits in the long term. Many Latvian companies export their products and know from their customers that various sustainability certificates are necessary.
Legislative impact
In Latvia, as in the entire European Union, clearer legislation on sustainability aspects, on information openness and other European Union regulations are beginning to emerge. This is a motivation to focus on the topic of sustainability. In addition, one can also mention the possible, yet not yet adopted regulation on mandatory supplier evaluation.
Conclusion 2
In the European Union and Latvia, regulations regarding emission reduction are increasingly emerging. Accordingly, this strengthens the interest of companies in implementing ESG principles. It can be said that these are two sides of the same coin. Emissions must be reduced, which creates a certain side effect – companies understand that they need to focus on implementing sustainability (ESG).
Conclusion 3
The requirements and expectations of foreign – for example Scandinavian – customers regarding suppliers from Latvia have not yet been harmonized. However, it can be understood that harmonization will take place. Customers abroad – the strongest motivation for implementing sustainability principles in business. Companies in the European Union, especially in Scandinavian countries, are increasingly demonstrating and defining what, why and how they expect from their suppliers in terms of sustainability or ESG. Accordingly, Latvian manufacturers exporting to the European Union, including Scandinavia, face a real risk of falling out of the supply chain. If a company in Scandinavia compares different suppliers and, due to its own motivation, chooses a supplier with appropriate sustainability indicators and reduced emissions, then the risk of falling out of the supply chain is indeed real. In everyday communication with representatives of Latvian companies, we often hear this statement. For now, the requirements for suppliers in the European Union countries are not harmonized, but the overall picture and expectations are clear, and we also know that the requirements will be harmonized in the near future, so Latvian exporting companies will have to take action – introduce sustainability (ESG) principles if they want to retain their customers and remain in the supply chain.
Conclusion 4
Latvian companies have started to take action by implementing ESG requirements. And one of the first, most popular and to some extent the simplest solutions is to conclude supply contracts for green electricity. Green electricity is produced in Latvia, and Estonia and Lithuania also ensure the supply of green electricity in Latvia, so it is quite easy to take the first steps.
Conclusion 5
The Latvian government – it must be said finally – has begun to clearly and clearly signal that Latvia will have to buy quotas from other European Union countries for the need to reduce CO2. Although there was hesitation on this topic before, we can now say that the government is demonstrating an understanding that CO2 quotas will have to be bought unless miracles happen. The situation is such that we cannot achieve these goals that the state has undertaken on our own. The question remains open – who will pay for the purchase of CO2 quotas – will it be the state budget or will certain groups of society take responsibility. We hope to get an answer to this in the near future.
Conclusion 6
The final conclusion – there is no clear answer to the question of how we will finance decarbonization, where the goals until 2030 are clearly defined. Decarbonization means billions of investments, while European Union funds offer a small part of the investments. Companies, municipalities and private individuals will have to look for opportunities to finance most of the investments privately, from commercial banks, investors. This is not clearly answered, but it is very important – how will we finance decarbonization?