Jane Oblikas on Promoting the Circular Economy
Two recent news items caught my attention regarding the green transition of companies. First, the Estonian government established new ownership expectations for the Estonian Business and Innovation Agency (EIS), which do not explicitly mention the green transition. Second, the Environmental Investment Centre (KIK) introduced a circular economy support measure at the end of the year. But how do these developments contribute to advancing the circular economy?
Let's talk about the green transition and create role models
The government has stated that “EIS must be brought to the level of the world’s best similar institutions in promoting business competitiveness and supporting innovation.” However, what’s overshadowed by this statement is the fact that adopting circular business models is essential for maintaining international competitiveness. This shift is critical for accessing key markets and addressing the challenges of declining and increasingly expensive resources.
The term “green transformation” (or rohepööre in Estonian) may be avoided because it has sparked a strong backlash. As an alternative, I propose using the term “green transition.” This reframing suggests that businesses don’t need to turn back or upside down but must instead adapt to a changing world.
The sooner Estonian companies view the green transition as an opportunity rather than an obligation, the more likely their competitiveness will grow. For this shift in perspective to happen, we need to establish a social norm: transitioning to circular business models is more sustainable and viable than the traditional linear "take-make-waste" economic model.
In Scandinavia, the circular economy is already becoming a social norm, accelerating the adoption of sustainable solutions. As a result, companies in those countries are setting similar expectations for their foreign partners. Estonian entrepreneurs are already feeling this pressure.
To strengthen the competitiveness of Estonian companies, it’s crucial to raise awareness on the topic of circular economy and promote the creation and implementation of sustainable business models. It may be included in the owner's expectations set for EIS in terms of increasing competition and innovation. Still, without direct acknowledgement, we risk undermining the momentum needed for the green transition.
Today we are sawing off the branch we’re sitting on. Globally, we’ve exceeded six of nine planetary boundaries, pushing the planet and ourselves beyond sustainable limits. In 2023, Estonia’s circular material use rate was just 18.1%. This means 81.9% of input materials in the economy came from newly extracted raw materials. Soon, we will once again “celebrate” Earth Overshoot Day, where Estonia ranks sixth globally in overconsumption. Without adopting circular practices, material shortages – particularly in Europe – are inevitable.
The green transition must start now
The green transition does not happen overnight. Circular solutions require rethinking existing business models and processes, including changing the behaviour of employees, customers, and partners. For companies, this often means significant investments and increased risks. Currently, no substantial measures are in place to mitigate the risks of developing circular business models for entrepreneurs.
At the end of the year, KIK introduced a circular economy support measure aimed at implementing circular economy production and consumption models and industrial symbiosis solutions in companies. At first glance, this initiative seemed promising.
However, the terms of the subsidy are less encouraging. The grant covers only up to 47.93% of eligible costs, and it is paid out only after the project results have been achieved and proven. This contradicts the essence of the circular economy, where measurable results often take time. With such expectations, many entrepreneurs are unlikely to even start applying for support.
What companies truly need are measures to mitigate risks and provide opportunities to experiment with and test circular solutions safely. EIS and KIK could play critical roles by encouraging businesses to step out of their comfort zone, take bold steps, and develop a risk appetite. Having accompanied 20 companies during the EIS Circular Design Masterclass, I’ve seen firsthand how such programs can ignite momentum and create valuable role models. Today, we don’t have enough success stories to learn from. Unfortunately, there are currently no similar programs on the horizon.
To drive the green transition, we must talk about it frequently and visibly – especially through the voices of opinion leaders. We need targeted support schemes to mitigate risks and create platforms to develop skills and test solutions safely. These efforts will inspire entrepreneurs to act. After all, we aspire to be a role model for the rest of the world.
