BBQ Summer 2021 Komplett by German-Baltic Chamber of Commerce

B A LT I C B U S I N E S S Q U A R T E R LY | S U M M E R 2021

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S U M M E R 2021

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Green Economy 24 | COV E R S TO RY

THE NEXT BIG THING AFTER THE INTERNET 12 | Interview MAKING SECOND - HAND THE FIRST CHOICE MILDA MITKUTĖ CO- FOUNDER OF VINTED

28 | Renewables GROWTH SHOULD BE FASTER

60 | Investments COMPETITION AMONG THE BALTIC STATES TIGHTENS

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EDITORIAL | 1

The value of an idea lies in the using of it. (Thomas Edison)

ometimes, it takes a while to come up with an idea to solve a problem. The greenhouse effect, for example, was discovered in early 1824, but it wasn’t until the 1990s that man-made emissions were identified as the main cause of ongoing global warming. Ideas for solutions were quickly ready, in order to bring about the reduction of greenhouse gases. However, it took many years for the idea to take root in people’s minds, and probably just as many years for people to decide to implement the idea. The idea of the Green Economy is an old one too – the policy program emerged in the late 1980s. The fact that implementation has been so long in coming is due to the fact that it is an idea which could cause a disruptive development effecting all areas of economic life. Although the Green Economy in its original form does not focus on GDP growth as the ultimate goal, using the idea of a Green Economy holds great potential for new business ideas and thus also for the economic exchange between Germany and the Baltic states. There is still plenty of room for increasing the efficiency of production processes, adopting innovative solutions, offering more sustainable products and services, and thus expanding markets and creating new jobs,

Baltic Business Quarterly is a publication of the German-Baltic Chamber of Commerce (AHK) and is released four times a year. For questions or subscriptions, please contact info@ahk-balt.org

while transforming existing ones. Some interesting ideas and examples can be found in this edition. With the “European Green Deal”, the EU Commission provides an action plan to boost the efficient use of resources by moving to a clean & circular economy, restoring biodiversity and cutting pollution. While the Baltic states, together with Romania, emit the fewest greenhouse gases in the EU, there is still plenty of room for improvement in other fields. These include the recycling rate of municipal waste, with values of 30.8% (Estonia), 41% (Latvia) and 49.4% (Lithuania) compared to Germany with 66.7% (Eurostat, 2019). The European Commission is willing to turn the “idea” into reality and a number of legislative initiatives will be taken this year. My impression is that many companies are not yet aware of what they will have to face in the near future. That is why we plan to hold several events about the topic, starting with an update from the Brussels office of the Association of German Chambers of Industry and Commerce (DIHK) on 20 May. Details can be found soon in our AHK app. So stay tuned! Yours, Florian Schröder – CEO

Deutsch-Baltische Handelskammer in Estland, Lettland, Litauen German-Baltic Chamber of Commerce in Estonia, Latvia, Lithuania

2 | CONTENT

MY OFFICE

Džiuginta Balčiūnė Partner at ILAW LEXTAL

4 Business in Picture 10 Guest Commentary: There

is a lot more to be done 12 Interview: Making secondhand the first choice, Milda Mitkutė, Co-founder of Vinted 16 What’s hot? Upcoming cultural events 18 Business Agenda: Where you need to be 20 Baltic Business News 24 Cover Story: The European climate revolution 28 Renewables: Growth should be faster 32 Zero Waste: Latvia is a zerowaste store superpower 40 Green Fashion vs. Fast Fashion 42 Green Transport: Carsharing is set to grow 44 Railway: Rail Baltica approaches construction phase 46 Power your plants: Baltic peat helps achieve climate goals 60 Investments: Competition among the Baltic States tightens 64 Law & Tax: Seven lessons from data breaches for businesses in the Baltics 70 Insider: Ideas to sustain you 75 Skilled- up: Helping to think bigger 78 Trade Fairs: How to recreate a physical trade fair experience online 84 AHK Special: Interview with Achim Naumann, the first President of the LithuanianGerman Business Association 85 AHK Event reports 86 AHK Members: Who’s new in AHK’s Baltic network? 88 Shooting star: The Future of Agriculture Seen in Microbiology

NATURAL COSMETICS:

Approved by Mother Nature

BEST IN BUSINESS:

Green companies to watch

BUSINESS LOCATION

Jelgava: a city with an automotive past and a metalworking present

IMPRINT Magazine “Baltic Business Quarterly” Founder: German-Baltic Chamber of Commerce in Estonia, Latvia, Lithuania (AHK), Breite Straße 29, D-10178 Berlin, Germany Executive Board Member: Florian Schröder Editorial office: Strēlnieku iela 1-4, LV1010, Riga, Latvia, +371-67320718, www.ahk-balt.org Publisher: SIA “Žurnālu izdevniecība Lilita”, Brīvības iela 85 - 4, Rīga, LV-1001 20004547, lilita@lilita.lv, www.lilita.lv Reprint allowed only with a written agreement with the Founder. ©2018.AHK

Printed in printing house “Lietuvos Rytas Print”, Lithuania

CULTURE:

Litres of the past, Erki Kasemets

Cover photo: shutterstock.com Editor in chief: Līva Melbārzde, +371 6 732 0724 Reporters: Luka Anlauff, Anda Asere, Mindaugas Civilka, Māris Ķirsons, Florian Leonhardt, Egons Mudulis, Teresa Münzberg, Mari-Liis Orav, Mari Peegel, Arina Stivriņa, Vineta Šķērīte, Monta Šķupele, Domantas Tracevičius, Armanda Vilciņa, Alexander Welscher, Jānis Zelmenis Photographers: Matīss Markovskis, Ritvars Skuja, Audrius Solominas, Rytis Šeškaitis Art Director: Vitalijs Suseklis Advertising Director: Līva Melbārzde Tech Director: Gints Mucenieks Advertising Editor: Jānis Rožkalns, reklama@lilita.lv Digital editions: App Store and Google Play ISSN 2592-2570

Publisher is a member of Association of Press Publishers of Latvia. lpia.lv

OUR PREMIUM MEMBER S

LET’S DO IT:

Cleaning up the world

BAVARIA - PARTNER S TATE 2021

4 | BUSINESS IN PICTURE

Photo: Matīss Markovskis

BUSINESS IN PICTURE | 5

ALTMAIER: BRING IN THE TEAM FROM ESTONIA Germany and Europe need to make up for lost time in the digitisation process. In a live stream at the Hannover Messe, the Federal Minister for Economic Affairs Peter Altmaier said that the pandemic must not only be overcome as quickly as possible, but also used to catch up with America and China, according to faz.net. Digitisation is a matter of absolute priority, he argues. “If it doesn’t work here, I would also be prepared to fly in the best digital team from Estonia to make faster progress.” Estonia is considered a pioneer of digitisation in Europe. The Baltic country moved all public services and many business services to the internet years ago. In addition, both other Baltic states, Latvia and Lithuania, have also digitised much of their public administration services. Almost all administrative procedures can be completed in a few clicks from home. From that point of view, Estonia, Latvia and Lithuania are many years ahead of Germany. LM

6 | BUSINESS IN PICTURE

lmārs Znotiņš, Chancery of the President of Latvia

ENCOURAGING WOMEN’S PARTICIPATION IN TECHNOLOGY On 8 March 2021, the First Lady of Latvia, Andra Levite, opened the Riga TechGirls and Latvian Investment and Development Agency international hackathon ‘Women. Technology. Sustainability’. “Starting the ‘Women in Tech’ hackathon, we appreciate and celebrate the digital advances and innovations achieved by women through technology”, she said. The technology sector has experienced significant growth. “During the last decade in Latvia, the number of people employed in the ICT sector has doubled and the number of ICT companies has tripled. Computing jobs offer some of the highest salaries, but a majority of employers in the technology sector are facing a serious shortage of available talent, and sadly, only one in five ICT specialist is a woman,” Levite highlighted. “We honour the scientists, entrepreneurs, and inventors, both in Latvia and across the world. And with the same respect, we honour the many mothers, teachers, healthcare workers, caregivers and community organizers who make a difference every day”, said the First Lady of Latvia. LM

8 | BUSINESS IN PICTURE

Photo: Bank of Lithuania

ŠIMKUS TAKES HELM AT BANK OF LITHUANIA The Bank of Lithuania has a new governor: Gediminas Šimkus has taken the helm at the central bank of the biggest Baltic country. The 43-year-old economist has replaced Vitas Vasiliauskas who headed Lietuvos Banka for two five-year terms until 7 April. Šimkus will also represent Lithuania, which was the 19th and so far the last EU country to introduce the euro in 2015, in the governing council of the European Central Bank (ECB). Šimkus was put forward by President Gitanas Nausėda as a candidate for the post of governor and confirmed unanimously with two abstentions by Parliament. He has been with Lietuvos Banka for nearly two decades since 2002, interrupted only by a two-year stint at the ECB’s financial stability directorate from 2010 to 2012. Šimkus more recently oversaw banking stability in Lithuania and was appointed to the management board in September 2020. AW

10 | C O M M E N T

founder of NGO Žiedinė ekonomika

There is a lot more to be done

small and inclusive country with an open, agile, innovative, and prosperous economy? Sounds like a pretty nice place to live! That’s what Lithuania might be one day if it seizes the opportunities of today. The change in the Lithuanian economy over the past 30 years is stark when comparing crumbling Soviet-style high-rise communal houses to gleaming skyscrapers along the river Neris. The changes have helped many Lithuanians to enter the middle class and start caring about more than mere survival. The quality of living and state of the environment are becoming more and more important. This means that tolerance for pollution will only decrease. If we take virtually any pollution to air, soil, and water, we will have them reduced (still not enough in my humble opinion) or in some cases even eliminated. And that is a reason to celebrate. So, what has created this change? The majority of the decisions that helped to make a change came from a wish to join the European Union and being part of it. This will be the main greening factor of the Lithuanian economy in the foreseeable future. And it does not take much driving from Vilnius to a neighbouring country

to see how economic evolution could have happened if Lithuania had never strived for European values. Another significant element for change was market forces. For example, the energy sector: Russia’s gas pricing policy towards Lithuania, combined with cheap and abundant biomass, was a blessing. Now, most of the district heating comes from renewable sources, albeit not always sustainable. The use of gas has plummeted and will continue to diminish. There is still love for it in some Lithuanian corridors of power, especially due to owning a floating terminal, but the market is not in its favour and, hopefully, sensible politics will prevail, as it did while embracing the conversion to biomass. And in general, large shares of waste and pollution came from various parts of inefficient manufacturing processes that have been changed using very modern and sometimes even state-ofthe-art equipment and technologies across a variety of sectors in Lithuania. Unfortunately, some people are not interested in adjusting to the new reality. While the majority of industry has cleaned up its act, we find examples of utter disregard towards the law and just plain disrespect to unique nature locations. I am talking about the Grigeo case, which presented itself as a sustainable

business, but – judging from the preliminary court documents – pollution could have been taking place there for years. Smaller companies are not immune to this either and we still see many cases of small-scale pollution. Politicians’ lack of belief in the circular economy has not allowed Lithuania to take part in it. There is now an understanding that good taxation combined with targeted regulations can transform almost any sector very rapidly. However, Lithuania has built too many incinerators which destroy rather than create value. The change in the public mindset that we have no planet B and that nature has more to offer than just raw resources will be the tipping point for the future of the Lithuanian economy. Together with changing attitudes in society, politicians are adapting and in some cases are ready to make unpopular, yet much needed changes to reduce the Lithuanian economy’s negative impact on the environment. And even ardent business and industry lobbyists are starting to switch their behaviour, because they understand that without innovating today to become greener and more sustainable, there will be no future in tomorrow’s world. What does the future hold for Lithuania? Lithuania’s only unicorn is in essence helping people to extend the life cycle of their clothes and reduce demand for new ones. Another notable start-up is helping to improve mobility – a form of mobility that is not owned, but shared. Continued greening of Lithuania’s economy is inevitable, and the only question is if the country will embrace it to become a leader in green transitioning by supporting innovation and taxing externalities as pollution and a negative influence on the climate, or will it follow behind and remain a laggard.

Publicity photo

by DOMANTAS TRACEVIČIUS

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12 | I N T E RV I E W

The Lithuanian unicorn Vinted has a very big ambition to make secondhand the first choice. In the last 13 years, the company has achieved a great deal and the start-up is the biggest player in many countries. Recently Vinted raised € 250 million in a Series F funding round.

by ANDA A SERE E XCLUSIV ELY FOR BA LTIC BUSINESS QUA RTERLY

2008, Milda Mitkutė was moving from Kaunas to Vilnius and realised she had too many clothes to take with her. Justas Janauskas offered to help and built a website to give away her clothes to friends. Now, not only their friends are using the Vinted platform, but so too are 38 million people around the world. Milda Mitkutė tells BBQ readers more about working for the start-up, the concept of second-hand as a greener choice in fashion consumption, and her own dilemma of choosing between ethical, lower-quality clothes and long-lasting leather boots. It is hard to imagine another big Baltic start-up that is so deeply rooted in Germany as Vinted. How did that happen? Actually, by accident. Me and another co-founder Justas Janauskas were huge fans of CouchSurfing. Once, two German women, Sophie and Suzanne, came to his apartment to stay for a longer period, like one or two weeks. One night at 2 a.m. they came home after a party and Justas was coding. They asked what he was doing. He explained and they said: we need to have that in Germany! We didn’t have the money for that but they didn’t care because they

believed it was an absolute must for Germany. So they volunteered to help. This was how we agreed. There are many projects that want to be on the market somewhere but only a few of them succeed. What were the reasons that helped Vinted to be so successful in Germany?

Photo: Audrius Solominas

Making second-hand the first choice

I N T E RV I E W | 13

I honestly believe that a combination of luck and hard work was the key recipe for our success. The birth of the Lithuanian and German projects was very spontaneous – we expected it to be a hobby project. We never imagined it would grow into something global and SO big. It was a really lucky coincidence that we managed to meet Sophie and Suzanne and they

Speaking about the first, I think it’s always worth checking if your idea looks attractive to other people – maybe others don’t share the same views as you and it will not get enough support. In business terms, make sure you see a product-market match. Secondly, we found that Germany was a role model for how to do business. It seems Germany is always ahead in

It’s always worth checking if your idea looks attractive to other people – maybe others don’t share the same views as you and it will not get enough support were a perfect match. They were super passionate about this idea, just like us. Sophie and Suzanne didn’t care how many hours they spent on the project. They were so devoted and it was the same story in Lithuania – we were hungry to make an impact and create something big. But without hard work, Vinted wouldn’t exist anymore. I’m very happy to see how many people work at Vinted, how much effort and energy they put into this. How successful is Vinted now in Germany? I believe we are really successful in Germany. It’s growing, and the community is getting bigger and more involved there. 8 million people have already joined. Germany is the second biggest market for us after France. What would be your advice to other start-ups who are thinking about Germany? How should they prepare for this market? There are a few things. One is common for any country. The second might be more specific for Germany.

terms of how to deal with privacy issues and legal matters. There are many things to learn. The country has very high standards and it encourages you to do your best. How did the Covid-19 pandemic impact Vinted’s business and daily operations? I think the majority of online businesses haven’t suffered from the lockdown as much as the offline ones. People still want to look good and many of them have a guilty pleasure about buying something for themselves. If physical shops are closed, people will go online. So for us, it was an obvious benefit. However, at the very beginning we were also affected because nobody understood what was happening. It took us a couple of weeks to work out what was actually going on, especially last March. The beginning was so sudden and strange. There were no predictions on when life would be back to normal, but all in all online business is not suffering as much as bricks-and-mortar businesses.

What are the biggest changes since Covid-19? Everything is booming, but all our offices are closed. We are in the transition period of becoming a hybrid company. We are thinking about offering our team the possibility to work a couple of days in the office and the rest of the time from anywhere they wish. You have been in the business already for more than 10 years. How has this industry changed? What is the change in people’s mindset about consumption, sustainability, shopping and buying second-hand? In total, we already have 38 million members. I see a new generation entering the market and they do their shopping differently. Some time ago, people used to buy second-hand because they wanted to save money, but now I would say the cautious choice is equally important. It is true in Germany, France and even in Lithuania. The younger generation cares about their form of consumption. For them, secondhand is a very cautious decision. There are more and more people like this. When Vinted was launched in 2008, my idea was to have clothes like in a carousel – buy new items and sell the rest you no longer like. Now it is the opposite. The key thinking is not to have a greater variety of clothes, but to consume in a more environmentally-friendly manner. Sure, I’m biased because I think everyone thinks like me and it is difficult to see other opinions. But from the surveys that we have conducted, we see people are buying second-hand because it is their choice and purpose. This is the main thing that has changed in the last five or six years. Can you see a trend of people taking care of materials or more sustainable brands as well? There are different expectations, limitations and reasons why people

14 | I N T E RV I E W

buy particular things. One of my best friends says she buys fastfashion brands second-hand so that she needn’t feel guilty about it. The items have already been produced and used, so she is not contributing to increasing the original demand. Also, some people only buy Patagonia as it is a superconscious and highly ethical brand. When I started to look for more friendly brands, I found that it was a really difficult job. I know a few brands, but that’s it. If I need to find some more, it is time-consuming to find them. I have a mixed feelings about this. For example, when I buy some very ethical vegan shoes, they are shipped from the US. How eco-friendly is that? And sometimes they don’t last long and after one season I need to throw them away. I can’t even sell them secondhand because they are worn out. So maybe sometimes it is OK to buy a less ethical thing that will last longer instead of purchasing a super ethical item that will last only for one season. It is a new market that is evolving at the moment. I see plenty of ethical brands trying to enter the market. It is just a beginning and maybe after 5 years there will be a totally different situation. There are various levels of consciousness. I think secondhand serves the desire of many members to consume in a more friendly manner. They can decide how conscious they want to be and how much time they have for it.

It is a pretty boring story, as I mostly buy things for my kids. I have three children so my clothing mostly consists of comfortable gear and sneakers. I’m not really into fashion or style at the moment. It is more about how to feel comfortable when running around with kids. I buy particular brands I love. For example, I know that Campers sneakers at size 39 work well for me. But for Zara, I need to look at size M not S. Knowing how it works in real life, I try to buy certain brands I know. Then it is easier for me to judge if it will fit me or not. Next, the most important thing is I follow the brands I love. It takes 5 minutes to choose. A more advanced level is to find people you like and follow their style. Sometimes it might take longer to find a “style match” but it’s worth the wait.

How do you use Vinted? I assume you are a pro-level member, so that’s why it would be nice to hear some tips and tricks on how to shop at the platform.

During the pandemic, many countries were in a strict lockdown, so both new and second-hand shops were closed. How did that affect Vinted? Did

What is happening with the competition? In most markets, we are the biggest player, but the market is booming overall. There is diversification too, as some of the players try to focus on premium brands and don’t allow medium-price brands on the platform. Also, some platforms are for everything. Others have all the clothes brought to their offices and they take the photos and sell the stuff by themselves. There are different options and combinations of business models and products. And that’s good because everyone can choose what they want.

When I buy some very ethical vegan shoes, they are shipped from the US. How eco- friendly is that?

you see rapid growth because of it? For sure, we saw an increase in business. It is a mixture of everything: people started to work remotely and they didn’t go to physical shops, but still had a feeling and desire to update themselves. Physical activities were suspended, so everyone went online. It was the only legal way to shop. In March last year, a lot of new listings were uploaded and we saw a big increase. Vinted has around 38 million members. Any business would wish for such a big number. How are you dealing with it and making sure every member is happy and that each purchase works well? I guess it is not so important how many members we have – 20 million or 40 million. It’s the approach and perception that matters. We are trying to master all the procedures on how we do business. We invest a great deal of time and effort in trying to understand our members’ problems and we do our best to solve them. As a regular start-up, we use technology so that members do

I N T E RV I E W | 15

Photo: Audrius Solominas

I honestly believe that a combination of luck and hard work was the key recipe for our success not feel frustrated that something is not working. There is a team of 700 people who think about how to make members’ lives easier every day. We are planning to hire 500 or 600 more this year. We are aiming for a huge expansion. Can you share more about the company’s plans? Well, we are still on a mission to make second-hand the first choice worldwide. And we haven’t even reached half of the destination. How many of these 700 people are based in Lithuania? The majority of people are based in Vilnius, where around 70% of people work. Our second-biggest hub is in Berlin where 20% work, but we plan to expand this hub a little bit more. These are two of our biggest hubs. We also have offices in Warsaw and Prague. Vinted was the first and still is Lithuania’s only unicorn – a company with a valuation of over one billion dollars. How much pressure

does that put on you and how important was it for the company to decide to enter the next level? The media attention was so big and that showed how important it is for Lithuania. At that moment, I was even joking I could start a full-time job just by giving interviews and attending all the events and conferences. But personally, I felt more pressure at the very beginning of Vinted when the first venture capital firm, Accel Partners, joined our team. This venture capital firm has invested in Facebook, Spotify and others, so at that time I felt much more stress because everyone was talking and piling the pressure on us. So when we hit unicorn status, it felt like a natural thing. It wasn’t something we tried to achieve, as our goal was not to become the first Lithuanian unicorn. Our goal is to make second-hand the first choice. To be a unicorn is nice but it is not the main goal for us. We got plenty of compliments but talking about pressure – we sometimes put much more pressure on ourselves than anyone else.

Your slogan is to make secondhand first choice. Why is it so important to do it? For the new generation of business, to earn more money is a boring goal. Of course, money is like oxygen – you need finances to survive. It is very important. But at the same time, the aim is something bigger. Around eight years ago, it seemed we had different views about the future of Vinted. We sat down together and found one thing that connects all of us. Answering what is the most important thing and why we are here doing what we are doing, we came to this mission. It showed where we are going. We had this ambition already from day one, but it hadn’t been verbalised. I guess nowadays it is not even worth explaining why sustainability is important because it is so obvious. For some, Vinted may look like a very innovative company and maybe even philanthropic, but I think it’s the future of all businesses – like hygiene. The more I read books about climate change, the more I’m convinced that certain regulations will be introduced in the future: businesses that create more pollution should take responsibility for that. Maybe it can be higher taxes or being penalised in other ways. We can’t continue to live as we do now. I truly believe that changes are necessary, otherwise our planet is in great danger. You are on maternity leave now. When are you coming back? I’m on a “family project” at the moment. I left 4 years ago with an initial plan to have 4 kids. So maybe one or two years are left for “family project”. I do not have plans to return to the active business at Vinted. However, Vinted is my child and will never be forgotten. On the other hand, I feel I have new passions and issues I want to work on. I’m particularly interested in education and climate change. But I don’t have specific plans yet.

16 | W H AT‘S H OT Events and their dates applied when the Baltic Business Quarterly went to print. However, some dates may change due to the spread of the coronavirus and the protective measures to stop it

What‘s hot Trakai Triathlon

JULY 4 TRAKAI ( LITHUANIA )

Pažaislis Music Festival

JUNE – AUGUST KAUNAS ( LITHUANIA )

Culture Night in Vilnius JUNE 18 VILNIUS ( LITHUANIA )

During Culture Night, the squares, streets, parks, and the most unexpected spaces in Vilnius are filled with various artistic projects: music, dance, theatre, cinema, photography, state-of-the-art installations, and so on. A one-night festival was first organized in Lithuania in 2007, preparing for the events of Vilnius – European Capital of Culture 2009.

Just like every year, the Pažaislis Music Festival is returning to Kaunas city and the Kaunas region, as well as other concert spaces all over Lithuania. This year, the festival will be held in the centennial of the restored state of Lithuania. The twenty third Pažaislis Music Festival will start at the beginning of June and last until the beginning of September. The summer music fiesta will be filled with 43 different programmes, from classical music to folk and jazz.

Festival “Rīgas ritmi”

01. – 03.07. 2021 RIGA ( LATVIA )

The Rīgas Ritmi Music Festival is one of the world’s leading music and jazz festivals in the Baltics, widely known in Europe and the world. Every year, world-renowned and award-winning artists as well as new and unheard-of musical talents gather on the festival stages in Riga. In two decades, the “Rīgas Ritmi” festival has become an integral part of Latvian cultural life and has written the name of Riga in the tourist guides of world and jazz music culture.

Valmiera City Festival

23. – 25.07.2021 VALMIERA ( LATVIA )

From 23 to 25 July, Valmiera celebrates its 738th birthday. There are holiday concerts for all tastes, sporting, creative and discovery activities for visitors young and old, and a traditional fair of craftsmen and home producers.

Publicity photos, adobeStock

The Trakai triathlon will be held for the 9th time this summer. Every year there are more than 400 participants in “BTT Cloud Trakai Triathlon” – including professionals and sports enthusiasts. Everyone can test their individual abilities in all three disciplines: swimming, cycling and running. The athletes, teams and their supporters are invited to enjoy the beautiful scenery of Trakai and the summer sun on the bank of Lake Galvė while watching the competition.

W H AT‘S H OT | 17

Narva Energy Run

12.06.2021 NARVA ( ESTONIA )

The Narva Energy Run (Narva Energiajooks) includes a 7 km run, walking/Nordic walking and a 21.1 km run. The running trail goes along the streets of Narva, passing historic bastions, fortifications, the Alexander’s Cathedral and many other exciting buildings. The Narva Energy Run is an unique possibility to run on the most eastward track of the European Union, on the beautiful shore of River Narva.

Ethnofestival “Sviests”

28.08.2021 VALMIERMUIŽA ( LATVIA )

The most anticipated event of the year in Valmiermuiža is celebrated the ethno festival “Sviests” (butter). During the event you can participate in and learn about the annual festivities, creative workshops and the home producers’ fair “Gardu muti”, as well as enjoy performances by folk dance groups and a folk music concert.

Rimi Riga Marathon

28.-29.08.2021 RIGA ( LATVIA )

The 2021 running season will be extended throughout the year with new virtual, hybrid and live running events. The highlight of the season or the 31st Rimi Riga Marathon with the usual children’s, five and ten kilometre, half marathon and marathon distances will take place at the end of the summer - on 28 and 29 August!

Saaremaa Peony Festival

04.06. – 11.07.2021 SAAREMAA ( ESTONIA )

The Saaremaa Peony Festival is the best place for a family to spend some lovely time together in fresh air. Thousands of peonies bloom from mid-May to late July. The festival area is over 4 hectares and can accommodate thousands of visitors and it offers discoveries throughout the day. Several kilometres of walks are full of excitement and picturesque views.

The Tall Ships Races

15.-18.07.2021 TALLINN ( ESTONIA )

The Tall Ships Races fleet, in which more than a hundred sailing vessels of different sizes from all over the world participate, will make a stop in the summer of 2021 in the ports of Tallinn. During the visit of The Tall Ships Races, a maritime-themed family festival will take place in Tallinn, where you can visit majestic ships, participate in various events and concerts, and enjoy the exciting harbour life for three days. Those interested can visit the vessels participating in the regatta free of charge in the Old City Harbour, Port Noblessner, and Seaplane Harbour.

18 | B U S I N E S S A G E N D A Events and their dates applied when the Baltic Business Quarterly went to print. However, some dates may change due to the spread of the coronavirus and the protective measures to stop it

DevDays Europe 2021 8.–10.06.2021, Vilnius (Lithuania) DevDays Europe – a software development conference bringing together internationally recognized speakers and developers to encourage excellence and innovation. It covers the emerging technologies and best practices in the software development community. This year, DevDays Europe will take place as a hybrid conference: you will be able to attend workshops and listen to talks on-site or online – your choice.

Life Sciences Baltics 2021 22. – 23.09.2021, Lithuania Life Sciences Baltics is the biggest international forum in the Baltics for world-class biotechnology, pharmaceutical and medical devices experts from all around the world. In 2021, the forum will be held in a digital format. A novelty this year is the variety of opportunities to meet and participate throughout the week, 20-24 September 2021, via a modern, dynamic and friendly platform.

The conference aims to bring together leading academic scientists, researchers and research scholars to exchange and share their experiences and research results on all aspects of Green Energy, Environment and Sustainability. It also provides a premier interdisciplinary platform for researchers, practitioners and educators to present and discuss the most recent innovations, trends, and concerns as well as practical challenges encountered and solutions adopted in the fields of Green Energy, Environment and Sustainability.

Riga Food 2021 09.– 11.09.2021, Riga (Latvia) International Baltic Jewellery Show Amber Trip 2021 18.–21.08. 2021, Vilnius (Lithuania) Amber Trip 2021 is the largest specialized international jewellery show in the Baltic states. It showcases products from jewellery manufacturers, designers, loose gemstone suppliers, raw materials,

raw amber and amber jewellery. The international exhibition is in its second decade and brings together hundreds of jewellery companies and designers from around the world to the capital of Lithuania. That is why Vilnius is rightfully called the jewellery capital of the Baltic region.

The biggest in the Baltics food industry fair “Riga Food” yearly outlines the trends of the food industry development, highlights novelties and presents a number of serious and trustable enterprises. Everybody is welcome to Ķīpsala

Publicity photos, adobeStock

15. International Conference on Green Energy, Environment and Sustainability 17.– 18.06.2021, Riga Latvia

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International Exhibition Centre to draw inspiration from diversity of menu ideas, to taste new products, to watch and enjoy professional chef, pastry cook and bartender competitions. Moreover, we invite professionals to “Riga Food” to derive ideas, knowledge and information allowing further professional and business development.

COMFORTHOME 2021 01. – 10.19.2021, Riga (Latvia) The exhibition offers the latest product presentations, heating, heat supply, energy efficiency, insulation and finishing solutions, smart home and comfort technologies, as well as advice from construction professionals on construction and repair solutions, materials, technology and innovation, smart home systems. Compare, choose and do!

sTARTUp Day 2021 25.27.08.2021, Tartu (Estonia) sTARTUp Day is the biggest festival in the Baltics, bringing together

startups, traditional entrepreneurs, investors, innovators, and students. The aim of the event is to connect startup-minded people and celebrate entrepreneurship in the smart city of Tartu.

consultations with interior designers and other specialists. The extensive and varied exposition offers everything you need to refresh and refurbish your home!

RIGA COMM 2021 14. – 15.10.2021, Riga (Latvia) RIGA COMM is an annual IT and business event for entrepreneurs of service and manufacturing fields, multi-level executives of state institutions and organizations and professionals representing multiple fields of operation, where they can learn about the latest offers of digital service providers and product manufacturers from the Baltics and other countries, consult with knowledgeable specialists and together select the solutions that are most suitable for one’s business or organization, all in the same place.

BALTIC FURNITURE & DESIGN ISLE 2021 22.– 24.10.2021, Riga (Latvia) The latest collections of furniture, design and luminaires from different countries. Original interior decorating items you won’t find anywhere else! Industry insights and workshops,

PELENĖ 2021 16.-18.09.2021, Vilnius (Lithuania) For the 28th time, PELENĖ, the largest international beauty industry exhibition in the Baltics States, will bring together famous Lithuanian and foreign beauty experts and professionals and offer opportunities to discover the latest global beauty trends. PELENĖ 2021 states that BEAUTY HAS NO AGE. During the event, visitors will have the opportunity to discover tools, services, procedures that help emphasize exclusivity and individual beauty.

20 | B A LT I C B U S I N E S S

Jungheinrich will supply warehouse equipment worth €15 million Amber Beverage Group, a company producing and distributing alcoholic beverages, has signed a contract with warehouse equipment manufacturer Jungheinrich for the purchase of equipment worth €15.5 million for the construction of an automated high-bay warehouse. After the acquisition of 8.9 hectares of the port area in Riga, the preparation of the warehouse site started in April this year. “It is important for us to ensure the most efficient freight or pallet

management for our partners in more than 185 countries. That is why we continue the typical pace of our company in developing investment projects”, commented Jekaterina Stuģe, CEO of Amber Beverage Group. The project is being carried out in cooperation with the planning office AI ENGENEERING and is expected to cost more

than €33 million in total. The first construction phase will cover more than 24,000 square metres, including the automated warehouse areas for order storage, order picking and delivery, as well as the administration area.

A new environmentally friendly area is being built in Riga

Bär Cargolift begins factory construction

Construction company UPB has started the first stage of construction works at “Preses Nama Kvartāls”. According to the project, it is planned to develop both a modern business center and a multifunctional center with a unique football field on the roof of the building on the left bank of the Daugava, by the summer of 2023. The project developer is Lords LB Special Fund V. In the first construction phase of “Preses Nama Kvartāls”, it is planned to establish one of the most modern business centers in the Baltics. The complex will also develop a multifunctional center with large shopping and dining areas, a fitness club, medical services, a bicycle shed and a repair shop, as well as a three-level car park above the ground. On the roof of the building there is a green terrace, a football field, an adjustable sports area, a café and a children’s playground. The unique football field on the roof terrace of the fifth floor of the multifunctional center will be the only one in the Baltics. “Preses Nama Kvartāls” pays special attention to energy efficiency, the choice of environmentally friendly materials, the availability of the environment, the creation of a healthy work environment and sustainable management.

The automotive tail-lift manufacturer Bär Cargolift has begun building a factory at the Šiauliai Free Economic Zone. Construction works are scheduled to be completed in the 1st quarter, 2021. It is forecast that more than 80 new employees will be hired at the factory over the next three years. Bär Cargolift’s objective is to establish the most efficient factory in the automotive tail-lift sector. Factory construction will occur in several stages. During the first stage, production and administrative facilities will be built. In the second stage, the administrative facilities will be expanded. The planned total floor area is nearly 9,500 sq.m. in the 3.8-hectare site. A 185-kW solar power system will be installed on the factory roof. It is planned to install a 400-kW boiler, and a gas-supply facility will be designed for the outdoor storage zone. The factory will operate round the clock in three shifts, using 2D lasers and robot welding.In later stages, the company plans to perform research and development, with a focus on software engineering and mechatronics.

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Photo: AdobeStock, publicity materials of Jungheinrich and Preses Nama Kvartāls

Estonia and Denmark sign largest renewable energy agreement in the Baltics

EU Unicorns’ Group includes two Estonian companies The Unicorns’ Group of 30 founders and CEOs of European tech companies, launched by the EU, aims to accelerate green and digital transformation and secure Europe’s leadership in the next wave of innovation. Estonian unicorn Bolt and budding unicorn Skeleton Technologies are among those involved to drive innovation. Co-founder and CEO of Skeleton Technologies, Taavi Madiberk, identifies Europe’s deep technology leadership as the most important priority highlighted by the 30 leaders. According to him, Europe is strong in R&D and deep tech in academia, the public sector can have a strong role as the early, supportive customer for frontier technology, mobilizing procurement to eliminate market risk before a new technology is commercially ready. The entrepreneur also proposed launching a European flagship fund to act as a cornerstone for highvalue IPOs of deep-tech startups. Finally, the EU Unicorns Group will be a thought leader and help create a new generation of global champions from Europe with Estonian participation.

Eesti Energia and European Energy signed a contract for 3.8 TWh of renewable energy over 10 years starting in 2023. Power purchase agreements allow customers to fix the price of electricity at favourable conditions for a long-term period. The electricity will come from three wind farms that European Energy is building in Lithuania. In 2021, more than 100 contracts have already been signed with large companies across the Baltics. The total amount sold

by Eesti Energia to customers exceeds 2 TWh. “We are very happy to be able to deliver more renewable energy in the Baltics through our wind farms. This is the largest PPA signed in the region so far and we believe that the Baltic market is very interested in a green transformation of its energy sector,” says Jonas Lau Forsberg Nihøj, Director of Energy Trading and PPA at European Energy. Eesti Energia aims to reach 1 million customers in the Baltic Sea region by 2024.

Ignitis Group invests EUR 430,000 in Israel’s H2Pro Ignitis Innovation Fund has invested an additional 430,000 euros in the Israel-based hydrogen production technology startup H2Pro. “We can confidently say that hydrogen is the future energy source and, currently, a special focus is directed towards developing and improving its green production technologies. The team at H2Pro is working on exactly that,” Darius Maikstenas, CEO of Lithuania’s state-controlled energy group Ignitis Group, said in a press release. This marks the third round of investment by Contrarian Ventures’ fund into the startup that is developing a more environment-friendly hydrogen technology. Over 250,000 euros was invested in the first round in the fall of 2019 and another 231,000 euros in the second round in the spring of 2020, the group said. H2Pro has attracted a total of 18.5 million euros in investments, including 5.3 million euros from Breakthrough Energy Ventures, a fund set up by Bill Gates, and 1.65 million euros from Horizons Ventures funds, according to the press release.

22 | MY OFFICE

DŽIUGINTA BALČIŪNĖ Photo: Rytis Šeškaitis

PARTNER AT ILAW LEXTAL, LEADING CORPORATE AND M&A GROUP MEMBER OF THE REGIONAL MANAGEMENT BOARD IN LITHUANIA AT THE GERMAN BALTIC CHAMBER OF COMMERCE

uring the pandemic, Džiuginta Balčiūne mostly worked from home. “This home office is an extension of my flat in the Vilnius old town. I had it for years, but never used it so much as during the lockdown. Though contact in legal services has never been banned in Lithuania, attorneys took advantage of remote court hearings,

online marketing activities and Zoom meetings with clients, thereby saving time, energy and costs for travelling. The paradox is that we have never been as busy as during the pandemic.” She was always a fan of remote work, even before the pandemic – some difficult assignments and the drafting of agreements require silence and focus which

ATTORNEY AT LAW, M.LL.P. BERLIN is difficult to find in the main office overcrowded with colleagues. “What has changed is that I rarely used my suits and high heeled shoes during the pandemic, have not drunk coffee with my colleagues in the kitchen, and have never had so much screen time in my life”, she adds. “I strongly believe that the lockdown has brought some good new experiences which will take root even after the pandemic: people will combine remote work with the office, have worlidays (work+holidays)

in some exotic destinations, take advantage of remote conferences and spend more time with their families! Office space does not motivate people to work better, we do that by ourselves. Lost relationships between people is one of the biggest problems caused by the pandemic”, she claims. Adrenalin and speed are the constant companions of an attorney’s daily life. Success and satisfaction with the results are the best motivators for Džiuginta to move forward.

The football signed by all the members of the German national football team is a special prize won in the lottery during the annual Christmas party organised by the German-Baltic Chamber of Commerce in Lithuania. It has a special place on my bookshelf in the home office.

All the main codes of law (civil, civil procedure, administrative and penal) are always at hand. Though we are already used to electronic cases in courts, a paper code is still a necessity in the courtroom, whether physical or remote – just in case you need to cite a quote precisely from the book you know almost by heart already!

Despite digitisation and at least three smart devices constantly lying on the table, a piece of paper, a pen and a desk calendar is a must on my table. Sometimes I find myself drawing pictures during calls with clients while taking important notes. Although handwriting has become almost illegible due to rare usage, pictures serve as perfect reflection of the momentum!

MY OFFICE | 23

ILAW LEXTAL is part of the LEXTAL Legal Group – one of the ten largest law firms in the Baltics operating with a team of over 60 lawyers. The ILAW LEXTAL Lithuanian team consists of more than 30 lawyers offering client-orientated corporate law, tax law, real estate law services, consulting on complex mergers and acquisitions (M&A), personal data protection, intellectual property issues, and it has been recognised as a tier-1 law firm for several years in Lithuanian labour law.

Foto: Matīss Markovskis

Court dress (Lith. mantija) – often used in remote court hearings during lockdown. Though the court hearing is held remotely, all the formalities should be kept. Attorneys wear a formal black suit – mantija – with an official brooch of the Lithuanian Bar; the judge must also be officially dressed and have a national flag and a state emblem visible in the background.

А Lithuanian doll dressed in a national dress – a special gift from my beloved colleagues from ILAW LEXTAL for my 41st birthday, which was unfortunately celebrated remotely, i.e. was not celebrated at all. This means a lot to me as I am a folk dancer and a great fan of Lithuanian folk music and especially dances, and still belong to a dance club, called “Vilniaus Pynimėlis”.

24 | C O V E R S TO RY

The European climate revolution Europe is planning a climate-neutral future – with help of the European Green Deal. The ambitious strategy is to make the EU a frontrunner in climate action and provide green growth with zero emissions. But is this possible?

rsula von der Leyen has not shied away from big words. “We give our best when we are bold and aim high. With the European Green Deal, we are aiming high”, the European Commission President said when unveiling her highly anticipated flagship environmental plan for the first time in December 2019 that will made climate action a key priority for the EU. The main goal is to make Europe climate-neutral by 2050. But what does this actually mean? Baltic Business Quarterly has compiled the most important facts about the EU’s headline project.

What is the European Green Deal all about? The Green Deal is the EU’s new strategy for sustainable growth and aims to create the framework for transitioning to a modern, resource-efficient and competitive economy. It covers every aspect of society and the economy, and

includes goals for biodiversity and agriculture. The measures accompanied with the initial roadmap of key policies range from ambitiously reducing emissions to investing in green technologies and protecting the natural environment. “On the one hand, the European Green Deal is about cutting emissions, while, on the other hand, it also means creating jobs and boosting innovation”, von der Leyen said. “Our goal is to reconcile the economy with our planet, to reconcile the way we produce and consume with our planet, and to make it work for our people.” Ultimately, the European Green Deal demands a new economic model, a completely different Europe and a new generation project for a climate-friendly transformation of the whole continent. Unsurprisingly, this has received both support and criticism from all sides. During the coronavirus pandemic, the Green Deal has taken a back seat, but the EU commission stresses that it should form a cornerstone of recovery measures.

How does the EU plan to achieve climate neutrality? To pave the way, the EU plans to implement a legally binding European climate protection law this year to enshrine into law the goal for Europe to become climateneutral by 2050. This means achieving net zero carbon emissions for EU countries as a whole. As an intermediate target, the EU is to cut its carbon emissions by 2030 by at least 55% below the 1990 levels. The entire EU legislation is to be aligned with these goals and implemented by a combination of incentives, support measures and regulations. It will include strategies for biodiversity, agriculture, hydrogen, building renovation, offshore wind energy, methane pollution, sustainable investment, the circular economy and many more parts of the world’s second-largest economy. Once these new rules come into effect, pressure will be on the 27 EU member states to actually bring them to life. The political wrangling over them will start when the EU commission presents its legislation in summer 2021 on

Photo: EC - Audiovisual Service / Jennifer Jacquemart

by ALE X ANDER WEL SCHER

C O V E R S TO RY | 25

how to meet the newly agreed 2030 emission reduction target of 55%. Previously, the EU target had called for a 40% cut of carbon emissions. “If we can get the legislation in place in the next five years, we will have 25 years as a generation left to get it all implemented”, said EU Commission Vice President Frans Timmermans, who is responsible for the European Green Deal. No action is not an option.

What does this mean for the European economy? To achieve climate-neutrality, radical changes will be required. The entire European economy has to be turned inside out. Action will need to be taken in all sectors to reduce, offset or capture emissions from carbon-intensive activities. ENERGY: The production and use of energy across economic sectors account for more than 75% of the EU’s carbon emissions. BUILDINGS: Commercial and residential buildings account for 40% of the energy consumed in the EU. MOBILITY: A growing 25% of the EU’s carbon emissions are generated by transportation. INDUSTRY: Industry accounts for 20% of the EU’s carbon emission and only 12% of the materials it uses are recycled. All of these emissions have to flatline in only three decades by switching to clean technologies, and also a climate-friendly transformation of agriculture is on the to-do list. Other elements include greener, cleaner cities, better home insulation and massive reforestation.

Von der Leyen compared the required efforts with the US program for the moon landing in the 1960s and spoke of “Europe’s ‘man on the moon’ moment”. “We will help our economy to be a global leader by moving first and moving fast, “ the EU executive emphasized. “The European Green Deal is our new growth strategy – it is a strategy for growth that gives more back than it takes away.”

How much will it cost and who will pay for it? Meeting the ambitious goal of the European Green Deal will require huge investment. The current 2030 carbon emissions target is estimated to require an additional €260 billion in spending every year. That is about 1.5 percentage points of the EU’s GDP in 2018. Achieving the now agreed 2030 stepping stone on the way to 2050 – a 55% cut in emissions compared to 1990 levels – will involve even

higher investment needs. Beyond 2030, the annual investment needs also run into the billions, but the presented figures are vague. To implement its climate goals, the EU commission plans to channel upfront investments into projects that will see the EU emissions fall drastically in the next decades. It aims to mobilize and leverage at least €1 trillion over ten years for a ‘green investment wave’ in clean technologies, sustainable solutions and new businesses. Around half of the projected sum is to come from EU funds, which should encourage national governments and the private sector to stump up the remainder. One of the main EU investment components is the so-called Just Transition Mechanism. It will support those regions in Europe that rely heavily on very carbon intensive activities. The funding worth €100 billion will be available for all EU member states.

“FANTASTIC OPPORTUNITY” FOR MORE GREEN GROWTH

through increased investment in all those kinds of activities that will bring us more returns in the future. It is generally referred to as green growth.”

The Latvian Prime Minister Krišjānis Kariņš considers the European Green Deal to be a real opportunity to kickstart the economy and overcome the downturn caused by Covid-19. “It is a great challenge, but also a fantastic opportunity, as any crisis turns out to be. The question is, how do we come out of this crisis in a stronger and better position than before?”, Kariņš said when addressing the Nordic-Baltic business forum in March. “I think the answer is already in our pockets. It is

Being united by a common history, similar values and a way of thinking, the Baltic and Nordic countries should work together to implement the European Green Deal and benefit from the new EU priorities. “Certainty is what industry needs. The European green environmental policy is a framework of certainty for our business”, Kariņš said. “If business knows that there is a market of 450 million people in the EU waiting for solutions in green technologies, business will invest in that.”

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Circular economy: If there is waste, there is something wrong Madis Tilga, environment advisor to the Nordic Council of Ministers’ Office in Estonia, says that strong leadership at state level is needed in order to steer the economy in the green direction.

by MARI PEEGEL FREEL A NCE JOURN A LIS T, E S TONIA

What does a typical circular economy company look like? Circular economy is not just about materials being recycled, but also about business models. There is hope that people will be willing to buy the service instead of owning it. Simply put: do you need to buy

Are there any good examples of Estonian companies using the circular economy model? Yes, companies are doing cool things in Estonia too. At present, a competition for green ideas organized by the Environmental Investment Center, called Negavatt, has started and 20 teams are competing in it. This year, there is the enthusiastic young gang from Myceen, which uses fungal

filaments and leftover organics from agriculture and forestry, such as straw. In this way, biomaterial of any shape can be grown. They have now started making furniture from this material. The furniture is fully functional and the fungal origin can be hidden or exhibited. When this piece of furniture reaches the end of its life, it can be dug into the ground to become soil in a year’s time. Another Estonian company has started using sheep wool, tons of which are left over in Estonia. With their start-up called Woola, the team is trying to use wool as a substitute for packaging film. You mentioned small, rather experimental start-up firms, but what about larger companies? One good example is Lindström, which provides workwear and clean textiles for rent. They wash, repair, and reuse textiles so that they stay in circulation for as long as possible. The Estonian company Bepco offers returnable cargo boxes throughout the

Photo: Jana Laigo, Barefoot Studios

Why is the term “green economy” sometimes used and “circular economy” at other times? What is the difference? In fact, there are even more of these similar-sounding concepts. If one does not work, it will be replaced by a new one. It seems like people cannot motivate themselves for a long time to act under one label. Of course, there are nuances too. The concept of the green economy dates back to the late 1980s. Now, for the last five years, there has been more talk about the circular economy. If in the case of the green economy it was said that we should make some processes more efficient and cause less damage, then it is now understood that this is no longer enough. Today, we need to really make the processes circular and restorative. The aim of the circular economy is to design a basic economic activity free of waste and pollution. If there is waste, there is something wrong.

a car when all you need is what the car offers – the freedom to move from point A to point B. To offer an alternative to a private car in Helsinki, the MaaS (Mobility-as-aService) project is being developed. It is a well-integrated, app-based transport solution. According to the ordered package, a person has the right to use certain means of transport. For €400 a month, for example, there are some hours of car use, unlimited use of the metro and buses, plus some time on an electric or regular bicycle. Users are given freedom of choice. If the need to own things individually decreases, it is possible to prolong the service life of things. On the one hand, companies that provide services will then be subjected to high demands on what products and materials they can use, and, on the other hand, they will be motivated to keep their products usable for as long as possible.

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Today, we need to really make the processes circular and restorative. The aim of the circular economy is to design a basic economic activity free of waste and pollution. Baltics. They work on a large scale and serve major retail chains, cleaning and repairing boxes to help standardize the transport of goods. In addition, there is the Estonian company Advanced Sports Installation, which recycles and replaces obsolete football pitches. Their market is worldwide. They recycle old coatings too, but they still reuse it as plastic. For me, this is only a partial solution. Here we might wonder whether artificial turf could be produced from renewable biomaterials, such as cellulose-based residues? Elsewhere in the world, Philips also has great solutions. They no longer simply sell light bulbs, but they also

sell luxes. Their job is to arrange for the light intensity to be effective, replace the lighting at the right time, and recycle the components. What motivates companies to look for sustainable solutions? It varies from country to country. In some countries, such as Finland and the Netherlands, the circular economy has been set as a strategic direction for the country. On the other hand, there are also many support measures in these countries that allow for a green revolution. Just as renewable energy has gained momentum with subsidies, support is needed at the start of the circular economy

too because the market cannot regulate it. As we can see in the case of renewable energy, subsidies can already be reduced now that the circular economy is gradually becoming a standard model. The third aspect is that certain companies in certain sectors feel that they are having difficulties in obtaining raw materials in their supply chain or they receive feedback from their customers who have expectations other than low costs. They are preparing to stay competitive for five to ten years. Financing will also become costly if the company does not make its production more sustainable. Green loans and green bonds are gaining momentum, and the EU has developed a taxonomy of green investments, while the United Nation’s new economic accounting values ecosystems. And take nature banking – monetising biodiversity or climate benefits. These policies are exciting and valuable, but there is certainly also a degree of unclarity. Does the provision of public subsidies and value frameworks mean that the circular economy requires greater public intervention in the economy than we have been used to? In resolving the major key issues that we have been talking about here today, market fundamentalism remains toothless. We need to control economic activity if we want to see a change in a certain direction. We would probably all soon be drowning in rubbish and pollution if we left this to the free market to take care of. For example, the European Union banned the use of disposable plastics. When would the market have reached that? Now there is a stronger focus: the whole of the European Union’s support system is geared towards a green turn if you want funding and if you want to stay competitive. The rules are getting tougher and companies have to catch up.

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Growth should be faster The installed electric capacity of renewable energy resources (RES) in the Baltics in 2019 reached almost 4000 MW

by ARMANDA VILCIŅA

ccording to the Central Statistical Bureau (CSB), the largest RES capacity volume in the Baltics was installed in 2019 in Latvia at 1764 MW, in Lithuania at 1577 MW, and in Estonia at 623 MW. Over the last nine years, Lithuania has experienced the largest increase in RES capacity, boosting its installed capacity by 552 MW (or 35%) compared to 2010. In Estonia, the increase reached 371 MW, while in Latvia it only amounted to 153 MW.

Growth is expected

None of the Baltic states has exhausted the growth potential of renewable electricity generation. As national electricity markets are very small, however, the rapid growth of the share of negative market prices will limit the addition of new renewable energy production capacities soon, according to Aavo Kärmas, CEO of Enefit Green. “By as early as the summer of 2021, the wind and solar electricity generation capacity in Estonia will exceed the local daily electricity consumption. As a producer, we see that to eliminate the problem it is necessary to merge the Estonian, Latvian and Lithuanian electricity market price areas into a single Baltic price area as soon as possible. This could be the most effective way of reducing risks related to new investments, thereby benefiting both consumers and producers”, says Kärmas.

The Director of the Estonian Renewable Energy Association Rene Tammist considers that conditions for developing renewable energies in the Baltics, especially in Estonia, are good enough, although there are a number of things that can be done for further improvement. “It is related to the overall regulatory framework, adding clarity in terms of environmental conditions, cooperation between different public entities, speeding up planning and allowance, demonstrating that development of renewable energy is a political priority, and finding ways to increase the public acceptance of these projects”, comments Tammist. He points out that all Baltic states see the biggest potential in wind energy – a significant increase is foreseen in the next 10 years, according to National Climate and Energy Plans. “Estonia expects wind power to increase by 1.9 TWh, Latvia by more than 900 MW and Lithuania by 2.1 TWh. Considering that the European Commission plans to revise 2030 targets upward, these targets are about to increase even further”, adds Tammist.

Lack of support

Armands Plate, Director of the CSB Agricultural and Environmental Statistics Department, believes that the installed RES capacity in Latvia should have grown faster, particularly because the country has the greatest potential

among the Baltic states. “Large electric capacities in Latvia have been installed in hydroelectric power plants, but the installed capacities of the other RES should be higher. At present, the increase in capacity, especially in wind and solar stations, is negligible. We should be more ambitious in this area because the prospect of a complete transition from the use of fossil energy sources to RES is inevitable and will take place at an ever-increasing pace”, argues Plate. In 2019, the installed electric capacity of RES in Latvia reached 1764 MW, which is only 153 MW more than in 2010. Kristaps Stepanovs, a Member of The Board Union of Producers of Wind Electrical Power, says that RES capacities in Latvia have developed in a chaotic and illogical way. “The lack of state support, discreditation of developed projects and constant efforts to review the legal framework of the existing stations previously led to the situation that in 2020 no additional capacity for electricity generation was installed in Latvia. In order to see the development of this sector in the future, a detailed and calculation-based assessment is needed as well as a national strategy, which is currently lacking”, Stepanovs concludes.

The goal is achievable

Janis Irbe, Chairman of the Board of the Latvian Renewable Energy Federation, also agrees that the increase of the installed electric capacity over the last ten years has been insignificant. “Unfortunately,

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30 | G R E E N E N E RG Y

I have to say that during the last year, RES capacities not only did not increase but even decreased. This downturn will certainly be even sharper this year, as the information at my disposal shows that several biomass plants and hydropower plants have ceased to operate this year. If the new amendments to the regulations of the Cabinet of Ministers come into force, other RES stations would also be forced to cease operations”, says Irbe, pointing out that the decisions taken in the country have significantly damaged the development of the RES sector. “Amendments to the regulations of the Cabinet of Ministers led to the cessation of production and closure of stations in recent years. If other plans to exclude stations from mandatory procurement and other repressions are implemented, the drop in capacity will be huge”, he adds. Andris Siksnis, Communication Director of Latvenergo, emphasises that Latvia stands out among the Baltic states with a significantly higher level of renewable energy production plants in the production portfolio. The 2020 RES plan at the national level has been fulfilled and the goal of this decade is also achievable.

A balance is needed

Siksnis holds that Latvia is the only Baltic state with a self-sufficient generation portfolio. “Lithuania has been in a deep electricity deficit for many years, so the introduction of any new capacity there is an existential issue. At the same time, it should be understood that this relatively small development of wind farms does not compensate for the fact that Lithuania became completely dependent on electricity imports in recent years. In 2019, the country imported more than 70% of all electricity consumed.

All Baltic states see the biggest potential in wind energy – a significant increase is foreseen in the next 10 years. Estonia expects wind power to increase by 1.9 TWh, Latvia by more than 900 MW and Lithuania by 2.1 TWh. The situation improved slightly last year, with imports accounting for 60% of final consumption, but the change was mainly due to more electricity being generated at existing natural gas plants. The generation of all RES power plants increased by 5% only. Estonia has also been in a deficit situation over the last year, as traditional oil shale plants are unable to enter the market due to high CO2 emission allowance prices. The most balanced situation is in Latvia, where the energy system produces approximately as much as the state consumes”, concludes Siksnis. He points out that the whole world is aware of the importance

of the tasks of the Green Course, and that solar and wind energy is being developed in such an advanced energy system. “These industries are also the most promising in Latvia, and Latvenergo is also aware of this. We have just put a solar energy park into operation in Lithuania, but we will not stop there because there are plans to develop more similar projects in Lithuania and Estonia”, says Siksnis.

Great potential

The Baltic states, Finland and Poland offer significant opportunities for RES, argues Aleksandr Spiridonov, CEO at

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shutterstock.com

Ignitis Renewables. “In Lithuania, for example, an average of only about 31% of electricity consumption was covered by national generation over 20182020, which increases the necessity to develop new domestic energy generation assets in Lithuania. Around 57% of Estonia’s electricity production in 2019 was from oil shale with increasing necessity to develop new capacities to cover the phase-out of oil shale. Besides, the Baltic states and Poland have adopted energy policies supporting the extensive buildout of renewable generation capacities. It is worth nothing that the Latvian RES market currently seems underdeveloped too, but we are interested in being present here and expect more RES projects to appear in the foreseeable future”, says Spiridonov. In 2019, the increase of RES capacity in Lithuania since 2010 reached 552 MW. Currently, the largest RES capacities in Lithuania are installed in wind (534 MW) and solar (103 MW) power plants. Spiridonov reports that, after a certain break, the Lithuanian market now shows recovery signs. “Several wind projects have now entered the construction phase. One of these projects is a wind farm in the Mažeikiai region developed by the Ignitis Group. The infrastructure of this park is estimated to be completed before the end of 2021 and the turbines

Many are not yet fully aware that the use of fossil fuels will have to be phased out in the very near future. by the end of 2022. According to the Lithuanian energy strategy, there is still a significant gap to fill in local green generation capacities. In general, we notice an increasing number of many types of restrictions across the Baltics, contradicting the high targets for the development of renewable energy,” says Spiridonov.

Wind and sun

Due to their geographical proximity, the Baltic states do not have many differences in the suitability of renewable energy production technologies – and they certainly have the greatest potential for wind and solar energy, according to Kärmas. “The implementation of projects depends on the investment climate and supporting regulations. Considering the large share of sparsely populated areas, small solar parks and solar rooftop solutions have great potential in the Baltic states. Estonia has very good wind conditions, as we are located in a wind corridor. There is enough free space for the development of wind energy, especially at the sea. In future, the development of renewable energy will become increasingly

In Latvia the renewables are the least developed compared to Lithuania and Estonia. The reason for this is the cheapest cost and the need to compete with the electricity available on the market

dependent on the development of power storage opportunities, be this hydrogen production from wind energy or hydro accumulation plants”, says Kärmas. Stepanovs agrees that the Baltic states have the greatest potential for wind and solar energy. “Especially Latvia, because these resources in our country are the least developed compared to Lithuania and Estonia. The reason for this is the cheapest cost and the need to compete with the electricity available on the market”, explains Stepanovs. However, the Chairman of the Board of the Latvian Renewable Energy Federation says that there is definitely potential for all types of RES. “Undoubtedly, the greatest potential of the future capacity is for wind energy, the deployment of which is difficult to predict because we see that society and politicians do not have a clear view on this issue. Recently, we have seen that Latvenergo, the flagship of Latvian energy, has started activities to develop wind energy production in Lithuania and Estonia, but is doing almost nothing in its home country. It shows that the situation in Latvia is very unstable and hinders the development of RES”, says Irbe. Plate believes that in order to ensure a faster growth of RES capacity, the public and energy sectors have to be aware that RES is the only promising and potential source of energy. “Accordingly, state and sectoral policies have to be subordinated, including investment, taxation, technological development, science and other structural development measures. Many are not yet fully aware that the use of fossil fuels will have to be phased out in the very near future”, he says.

32 | Z E RO W A S T E by MONTA ŠĶUPELE

Latvia is a zero-waste store superpower There is a growing interest in the zero-waste lifestyle in Latvia. Not only citizens, but also companies are involved in promoting it.

eople who now are forced to spend more time at home inevitably face the fact that the rubbish bin has to be taken out a little more often now than before the pandemic. It also makes one wonder what the alternatives are and whether the only real choice is to drown in a sea of garbage. For example, the number of discussion members in the Facebook group Zero Waste Latvija has already reached 14 thousand and it continues to grow every year. “We are a group of environmental activists who advocate a waste-free lifestyle and its normalization in society. Our goals are to move towards a circular economy and a sustainable lifestyle, without producing waste, without polluting nature, without consuming unnecessary things and without throwing away what still works”, says chairperson of the board of Zero Waste Latvija Anna Doskina. Zero Waste Latvija members work in various fields. They cooperate with state and local governments, waste managers and producers in the development of draft bills. Furthermore, they work on implementation of various projects of their own. “The zero-waste movement has become much more popular and understandable to the majority of society. However, we still face beliefs that the supporters of the waste-free lifestyle movement are extremists who condemn every small violation. That

The owners of zero- waste cafe Cafe M Ulla Milbreta and Yohann Saffray decided to promote the zero-waste lifestyle in Riga in order to raise awareness in people’s minds.

Z E RO W A S T E | 33

Zero Waste Latvija has counted 11 specialized zero waste stores. Currently, there is also a trend of large chain stores starting to think about the availability of bulk products.

is certainly not the case, and we are ordinary people who, in their daily choices, are simply trying to make as many informed choices as possible – to buy less and to throw out less. At the moment, the most important thing for people is to understand that even a small change in habits is significant. It is important to choose products that are sustainably packaged, without unnecessary plastic or, best of all, without any packaging at all”, comments Doskina.

Large stores are involved

Publicity photos

The chairperson of the board of Zero Waste Latvija says that Zero Waste Europe conducted a study about Latvia’s bulk stores two years ago. It revealed that Latvia per capita is a zero waste store superpower. Zero Waste Latvija has counted 11 specialized stores of this type, where people can buy goods without packaging. Initially, bulk stores were opened in the capital of Latvia, Riga, but now zero-waste stores are also opening in the regions and their largest cities. Currently, there is also a trend of large chain stores starting to think about the availability of bulk products. At the beginning of this year, for example, Rimi started selling Latvian-made household and hygiene products without packaging. So it is now possible to buy such goods as shampoos, soaps, toothpastes and toothbrushes, deodorants, toilet paper, dishwashing detergents, hygiene products and so on at some Rimi stores. The first partners in this project

were the largest manufacturer of household chemicals and cosmetics in Latvia, Spodrība, and the Latvian manufacturer of cosmetics, STENDERS. Consumers can buy products from these companies in specialized stands using the packaging they bring. The department store Stockmann also offers its customers similar solutions. These include a free drinking water filling point, fully compostable bags in addition to the usual ones, and a place to buy unpackaged nuts. The store does not sell disposable plastic containers and packaging which cannot be recycled.

Consumer economy must be reduced

“Sustainability is one of the most important values that companies are trying to implement. Therefore, we hope that we will see many innovations in the field of ecodesign in the future”, says Doskina. Currently Zero Waste Latvija is on the way to increasing its capacity. It is working to make it more efficient and is also looking for opportunities to reward its members for their work. So far, Zero Waste Latvija has worked on

a voluntary basis. “Bio-waste will be a very important topic for us in the coming years. People will have to learn to sort this kind of waste as well. Brown containers for this waste are already available in several municipalities. We also hope to develop the movement away from goods to services, which would mean reusing, repairing and renting things. It is difficult to change public opinion, of course, but that needs to happen soon so that we can reduce the amount of goods we still discard. Unfortunately, modern society operates on the principles of the consumer economy – buy, use, throw away. So, in order for us to become more sustainable and not to do even more damage to the environment, we need to change the principles of consumption and the production conditions of the goods we consume. Our association plans to operate on both sides – to change public opinion and the conditions under which goods are produced”, argues the chairperson of the board of Zero Waste Latvija. Small businesses are also thinking about reusing goods. For example, plastic bottles are given a second life by being recycling

34 | Z E RO W A S T E

into earrings, brooches, bracelets and other PETit brand accessories. Only used bottles are used to create PETit brand accessories.

The first zero-waste cafe in the Baltics

There are not only bulk shops in Latvia. At the beginning of 2019, the zero-waste cafe Cafe M also opened its doors. The cafe was founded by Latvian Ulla Milbreta and Frenchman Yohann Saffray. “The idea came in 2016 when I was living in Singapore and faced a natural

WE DO NOT BELIEVE IN WASTE HENRIK ANDERSSON, GLOBAL CREATIVE DIRECTOR AT FJÄLLRÄVEN At Fjällräven sustainability is not treated as – separate project – it is at the core of everything we do. That means that we consider the environment when we design; when we choose one material over another; and when we decide where to produce all our clothing and equipment. We design all our garments and hardware to last for – lifetime, perhaps even longer. We create them to be easy to repair; we use materials that are tough and durable; and we design styles that do not go out of fashion. When considering – material, we evaluate its efficiency, functional qualities, chemical composition, quality, and the amount we will need before making – choice. To help us make – decision, we use – “Preferred Materials and Fibers List” that grades materials in terms of their impact on the environment. And this list is

disaster due to reckless human waste. We decided to promote the zero-waste lifestyle in order to raise awareness in people’s minds. We decided to show it through the operation of the cafe”, says Saffray. Cafe M operates on the principle of zero waste, which means that no waste is generated as a result of its operation. All bio-waste that occurs after making coffee and food is composted in an industrial composting machine. After 24 hours, it has already processed food residues into compost, which can later be offered to people

constantly updated, reflecting new research and new materials. For example, Samlaren is – project under our Zero Waste initiative. The collection features limited Fjällräven products made from left-over materials from our production. We realized that perfectly functional and durable materials were left on the shelves, as we could not use 100% of it in our regular production. Material that was eventually in – slightly different colour shade or old colourways that are not used anymore but also certain amounts that just ended up as cut-offs. You can compare this – bit with installing wallpaper, there is always – bit of leftovers in the end. We simply refused to throw these fabrics away because we do not believe in waste especially considering that the production of fabric uses significant amounts of water, energy, chemicals, and raw materials. With Samlaren we found – great way of giving leftover fabrics – new life as limited-edition pieces. Using our “trash” to create treasurable products.

or used in cafe flowerpots. For example, the cafe owner buys 5l buckets for milk coffees, which are later returned to the producers, and they can use them again. The same goes for drinks in glass bottles – the bottles are returned to the manufacturers. “In the café, we sell freshly roasted coffee which people can buy by weight and packaged. In order to avoid unnecessary waste and operate on the principle of zero waste, we buy raw materials here in the nearby shops which offer organic products from local farmers. For the same reason, we serve only vegan food in the cafe because, as we know, by reducing the consumption of meat and dairy products, we will reduce the impact on the planet. As we are a social business, we also offer educational talks on zero waste and environmental protection. At the moment, this is not possible due to the situation, but we are very much waiting for everything to return to normal so that we can continue working in this context as well”, says Saffray. Asked what the competition in this business is, he says that from the cafe’s perspective the competition in this niche is strong. But when looking at the business from the zero-waste point of view, the competition is very small or indirect. “We are the first zero-waste cafe in the Baltic states. For this reason, we attract slightly different customers than other cafes. Ulla and I originally started the business as a couple. Ulla’s main goal was to promote the zerowaste lifestyle, and mine was to offer freshly roasted, quality coffee. Over time, however, we decided to separate our paths and now the cafe has also changed its goals a bit. Maintaining the principle of zero waste, we want to turn this place more towards a restaurant in the future”, concludes Saffray, the owner of the cafe.

The founder Lotte TisenkopfaIltnere and Uldis Iltners at the AS MADARA Cosmetics factory

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Approved by Mother Nature by MONTA ŠĶUPELE

Eco-friendly cosmetics are a growing trend in the beauty industry. In Estonia, Latvia and Lithuania, there are many producers of eco-cosmetics because the nature here is clean and rich in many valuable substances. We have chosen three eco-friendly cosmetics brands from the Baltic states to present to you.

fifteen years, the cosmetics manufacturer AS MADARA Cosmetics has managed to grow from a small Latvian business into an international company. This has allowed the introduction of ever new, sustainable and innovative natural cosmetics products. The inspiration to create the MÁDARA brand came from the company’s co-owner and founder Lotte Tisenkopfa-Iltnere. “While studying in Japan, Lotte discovered a new world of facial care textures – emulsions, essences and lotions – which were not common in the Baltic states at that time. Lotte was attracted to the high efficiency and lightness of Asian products. Unfortunately, this was followed by a disappointment when Lotte faced problematic skin reactions to such popular products. This helped her to go deeper into product labels and ingredient lists, and inspired the creation of the MÁDARA brand”, says Uldis Iltners, board member of

AS MADARA Cosmetics. This year, MADARA Cosmetics celebrates its 15th anniversary. The company’s products are based on active natural ingredients harvested in the meadows, lakes and forests of the Baltics and northern regions. Currently, MADARA Cosmetics is home to two brands – MÁDARA and MOSSA. With the MÁDARA brand, the company offers a wide range of skin care products as well as a range of body, hair and childcare products. In the autumn of 2019, a line of natural make-up was also introduced. In 2014, MADARA Cosmetics launched the MOSSA brand for the mass market, based on northern berry ingredients. Both brands are ECOCERT/Cosmos certified. MADARA Cosmetics also offers contract manufacturing, product development and private label services. “Herbs have been used for thousands of years, but it is still often unclear how exactly they work on the skin. MADARA Cosmetics has been wanting to change this since its foundation. Fifteen years ago, the natural cosmetics market was not as developed as

it is today. MADARA Cosmetics managed to create high-quality natural cosmetics with a modern look and natural ingredients. This combination has allowed the company to become one of the leading cosmetics manufacturers in Northern Europe”, says Iltners. The MÁDARA brand represents upper-middle class consumers in various age groups. The proportion of mature buyers is growing, and with the introduction of make-up, MADARA Cosmetics has also managed to attract a younger audience. Despite the circumstances caused by the pandemic, the turnover of AS MADARA Cosmetics in 2020. continued to grow and reached €16 million. Exports accounted for more than 70% of MADARA Cosmetics’ turnover. The main export markets are Germany, Finland, France, Italy, Spain, Great Britain, the Netherlands and the Scandinavian countries, but the demand for AS MADARA Cosmetics products is also growing outside Europe. AS MADARA Cosmetics plans to achieve a turnover of €27 million in the next 3 years.

Publicity photo

Big plans for MADARA Cosmetics

36 | N AT U R A L C O S M E T I C S

From berries to natural cosmetics by MONTA ŠĶUPELE

he Lithuanian cosmetics brand Uoga Uoga was founded in 2010. Everything started with the idea to make fresh masks using berries. Hence the name Uoga Uoga, which means “Berry Berry” in Lithuanian. “We started from making masks for us and our families, and then offered them to our friends. Afterwards, we developed 20 natural products and created our first “not-sogood-looking” e-store”, says Lena Sokolovska, one of the company’s creators. Uoga Uoga has a wide natural cosmetics product range and offers a 100% natural mineral make-up line. The company’s top-selling products include mineral powders, BB creams and illuminating primer. The Uoga Uoga brand has a range of products for lips, including natural lip & cheek colours, natural lip sticks and natural lip glosses. They have developed a palette of 23 shades of mineral eyeshadows with amber, vegan and Cosmos Natural certified eyebrow pomades, mascara with blackberry extract, and the company’s real hit in 2020 – eyebrow serum. Besides that, Uoga Uoga offers a hydrating skin care line with quince extract, and a beta-glucan and intensive skin care line with cranberry extract and hyaluronic acid, which is the brand’s top-selling product. Besides make-up and special skin care lines, they have over 70 products in categories such as face care, body care, hair care, products for men and baby care. “When we started, there were not many

“This year, we are focused on making more of the vegan creamy products”, says Lena Sokolovska, one of the Uoga Uoga’s creators

natural cosmetics in Lithuania, and it was considered expensive. Our idea was to manufacture fully natural and safe cosmetics that would be more affordable. We believed that natural cosmetics should not be a luxurious item and that everyone should be able to afford these products. And we still believe this”, adds Sokolovska. She also says that 10 years ago, there wasn’t much competition on this market. Now, though, there is strong competition on the natural cosmetics market with new brands launching every year. “These days, there are around 10 to 20 natural cosmetics manufacturers in Lithuania. However, all brands find their own niches and customers. There is also great competition in this industry in Europe, where the history of organic cosmetics runs much deeper than in Lithuania. The demand in this market is increasing due to the growing consumer

awareness of natural and organic cosmetics and competitiveness is growing too. That is why it is important to be flexible and to quickly adapt to the changes in the market”, argues Sokolovska. Uoga Uoga’s target customers are 25 to 40 year-old women who are interested in natural cosmetics, ecology, organic food, healthy living as well as vegan and non-animal cruelty products. The brand exports 50% of the manufactured cosmetics to Germany, Finland, Ukraine, Poland, Czech Republic, the UK and Benelux countries, while 50% of Uoga Uoga products remain in the Lithuanian market. “This year, we are focused on making more of the vegan creamy products and will move to more sustainable glass and metal packaging for mineral foundation powder. We will also start offering re-fills. Besides that, we have many skin care products in development”, Sokolovska summarises.

N AT U R A L C O S M E T I C S | 37

Natural before the “Age of Eco” D’DIFFERENCE is the science of skincare. Invented by an MD, developed by chemists and produced with cold-mixing technology. If we can make our skin’s protective barrier function well, then we will look great at any age.

by MONTA ŠĶUPELE

Publicity photos

ore than a decade ago, a group of biochemists and scientists led by Ruth Oltjer, M.D., an Estonian doctor of Internal Medicine, began to search for skincare and personal care products that respect the skin’s natural defence system and are based on natural ingredients. At first, creams and lotions for hospital use were developed and, after good results were received on reviving damaged skin (extreme dryness, bedsores, scaling), a full line of sophisticated, quickly absorbing and easy-to-use products for all skin types was born. The first products came on counter in 2013, but the research and development started many years before that, when “natural” was not the most important word associated with

skincare. “At work as a physician, my challenge was to create safer skin lotions for both the doctors and the patients. We treated many patients who suffered from bed sores and scaling, and I wanted a product that could prevent these acute problems without damaging the skin. Those products were so successful that I wondered if I might create something for home use. I reasoned that if I could help sick skin so much, then what could I do for a healthy skin?”, says Oltjer, owner of Chemi-Pharm. After several years of testing, D’DIFFERENCE was born. “We had created something completely natural with only active ingredients to leave the skin with a healthy glow. I have always believed that skin can act perfectly on its own if we simply allow it to. Therefore, D’DIFFERENCE products are formulated with minimum The building of Chemi-Pharm. At first, D’DIFFERENCE creams and lotions were developed for hospital use.

Photo: Ritvars Skuja

ingredients for maximum impact. It is particularly difficult to get glowing skin in Nordic conditions. The climate constantly changes and our skin changes accordingly. Smart molecules are the solution here, enabling the delivery of ingredients to the level of the skin that each ingredient was designed to treat. If we can make our skin’s protective barrier function well, then we will look great at any age”, argues Oltjer. The competition is tough in all fields, and the skincare business is no different in this regard. “We are the only brand in the niche luxury category in the Baltic states. We can compete with all well-known luxury brands in the natural cosmetics brand category. D’DIFFERENCE is the science of skincare. Invented by an MD, developed by chemists in our own labs and produced with cold-mixing technology – our active ingredients are 100% natural. In this “Age of Eco”, it seems that everyone with a kitchen is creating skincare products. But we take pride in the fact that our products are backed by science, meet ISO 9001 standards and leave the skin healthy both inside and out”, adds Oltjer. The domestic market (Estonia) is D’DIFFERENCE’s no. 1 market with 80% of sales. The company’s export strategy is helped by its own e-store, making it possible to sell products in the EU and Ukraine. What’s more, D’DIFFERENCE is looking forward to opening markets in Southeast Asia, South Korea, Japan and Singapore.

38 | A D V E RTO R I A L

How to inspire the world to walk with nature? Answered by Henrik Andersson, Global Creative Director at Fjällräven

“Our sustainability requirements are high, and it is only natural that we focus on acting responsibly in everything that we do.”

love to say that each year, coming or passing, brings a certain change to our world, but 2020 was a year that nobody will soon forget. If you could take away three key points or shall we call them lessons, what would they be?

our business with most of our teams working on a distance, without the ability to travel and with lockdowns in different markets affecting stores and personnel. But we all learned to work more efficiently from a distance, and this is something that we will take with us into the future when planning meetings.

We have all been affected by challenges none of us could foresee this past year. It has of course been challenging to figure out how to run

There is an enormous potential to lower our carbon footprint by further developing digital solutions, holding more virtual meetings

and avoid travelling. Covid has also affected our events like Fjällräven Classic and Fjällräven Polar which are an important piece of the puzzle on our journey to inspire more people to discover the outdoors. At the same time, a lot of people have been introduced to spending time in the outdoors. Perhaps forced by lack of alternatives, but what we see is that once out there, there is a whole new wave of people who have discovered the joy of spending time in nature. As an inclusive brand whose mission is to inspire people to walk with nature, we see this as a great chance to grow our community, educate about the outdoors and share our knowledge. I think we all learned how important nature and time outdoors is for every single one of us – especially when you have been in a country with hard lockdowns. I hope this is also a bit of a wakeup call to all of us that we need to act to ensure that nature will also be there for all future generations to come. Fjällräven is a brand that needs no introduction. But can you take us a bit through its key mission and vision as a sustainable brand and how it evolved over the years?

A D V E RTO R I A L | 39

“At Fjällräven we love nature. We want it to be there for all generations to come.”

To put it simply – at Fjällräven we love nature. We want it to be there for all generations to come. Our mission is to get people out to walk with nature. With that as our main driver we develop functional, durable, timeless, and sustainable outdoor garments and equipment for people to feel safe and at home in nature. Our sustainability requirements are high, and it is only natural that we focus on acting responsibly in everything that we do to ensure we minimize negative impact and, where possible can be a force for positive impact. Or to put in the words of us outdoor people: We want to leave basecamp in an even better shape than we found it. One of the most popular items of Fjällräven is of course the Kånken backpack that has been world famous for its iconic and uncompromising design since 1968, but then there is a Kånken Art limitededition collection of backpacks and accessories designed in collaboration with a different Swedish artist each year. What can we expect this year? After two successful annual releases, the third Kånken Art edition aims to draw attention to the problem of ocean plastics.

Launching on June 8, 2021 – World Ocean Day – this year’s Kånken Art products will feature a design in two colour palettes: Ocean Surface and Ocean Deep. The unique twist was developed by Swedish illustrator and animator Linn Fritz, who seized the opportunity to help raise awareness about plastic waste and the health of our oceans. People ask, what can a single backpack achieve, but anything is possible. About 71% of the earth ́s surface is covered by oceans. They produce over half of the oxygen on our planet and are home to over one million species of animals and even more plants. Furthermore, the oceans are the key regulators of the climate. It is safe to say that every living thing on Earth is dependent on the health of our seas. Tragically, estimates indicate that by the year 2050, there will be more plastic in the oceans than there are fish, unless we seriously change our habits and the way we handle our waste. The 2021 edition of Kånken Art aims to increase awareness around these problems, but also hopes to inspire change: Since 80% of ocean plastics come from land, our immediate surroundings are a good place to start. Let’s do it together, one piece of plastic at a time.

The Kånken Art ‘21 is a small step in the right direction. Its fabric consists of Fjällräven’s G-1000 HeavyDuty Eco, which is made from recycled polyester and organic cotton. Fur- thermore, all Kånken Art products contribute to the Arctic Fox Initiative. One percent of every purchase goes directly to the Arctic Fox Initiative’s support for organizations working to keep plastics out of the oceans. Fjällräven is all about hiking, nature and being outdoors. Can you reveal some of your favourite places where you enjoy nature and hiking in Sweden and even in the whole world? I like the everyday time spent in my local piece of nature, hiking, biking, running, swimming. I live close to Stockholm and enjoy the nearby archipelago, with pine tree forests, small hills, and the Baltic sea always close. In Sweden I also enjoy the mountainous parts in the north, especially wintertime, and the coastal areas in the south, where I grew up. Norway is fantastic as well, but if I would choose a place to come back to again and again it would be south of France, and north of Spain. I love the Basque country, again the pines meeting the ocean, but also the food and the climate and the overall atmosphere. Living in a tent, by the Basque Atlantic, is the simplest life for me. The list could go on, but those are some places that come quick to mind. Explore: www.fjallraven.com

40 | U P CYC L I N G Estonian startup Gelatex Technologies has developed an ecofriendly alternative to conventional leather which is made from gelatine nanofibres

by ALE X ANDER WEL SCHER

Overcoming fast fashion Our world moves fast – and so does fashion. Fast fashion has fundamentally changed the textile industry and has provided us with an abundance of clothes at very low prices. The consequences for the environment are catastrophic. Some Baltic companies are trying to change this by helping the industry to go circular. Nothing to wear? Not possible:

Clothing production doubled from the early 2000s to 2014, reaching up to 100 billion items per year – or nearly 14 items of clothing for every person on earth, according to a report by McKinsey. Globally, around 56 million tonnes of clothing are bought every year, and the gigantic expansion is set to continue. Aiming for higher profits and market shares, fast fashion corporations are in a constant race for new looks and trends that move so fast that some of them are over before they even begin. At Zara, which was hailed in 2005 by the Economist as the

pioneer of fast fashion and produces around 65,000 new designs every year, the journey from the drawing board to the shop floor is typically around three weeks. Some ultra-fast fashion retailers achieve an everfaster speed to markets – and turn samples around in a matter of days.

Today’s trends are tomorrow’s garbage

Research shows that the average consumer today buys 60% more items of clothing than 15 years ago, but keeps them for only half as long as they used to. The shift in buying habits and consumers’ attitudes has been encouraged by neuromarketing and fuelled by influencers, since

purchasing decisions are nowadays almost as much based on how an outfit will look on social media as in the real world. Quickly worn, quickly forgotten; many of the fast fashion items end up as landfill – 4 million tonnes of textiles are thrown away every year in Europe. Only a small percentage of them are recycled due to their low resale value. The biggest “fashion sins” are committed even before fast fashion reaches the stores, since cheap clothing comes at a high cost. Making garments typically requires using large quantities of water and chemicals, and emitting significant amounts of greenhouse gases.

In Latvia, Elēna Dmitrijeva and Laura Žukovska-Supe have teamed up to create custom-made swimwear from environmentally-friendly fabric

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Photos: Gelatex Technologies, Swimbe, Reet Aus

Using one person’s waste as another’s raw material

The huge environmental impact has put the industry under public scrutiny. A new generation of consumers now demands more environmental accountability. A rethink of the fundamentals of how the industry operates is gaining traction. The shift is driven not only by some fashion giants, but also by some Baltic companies that have been looking at ways to make the fashion industry more sustainable, while generating great business opportunities. Pioneering the concept of turning trash into trendy fashion was the Estonian designer Reet Aus, who was followed by many like-minded people in her homeland and abroad. Dedicated to slow fashion, Aus has produced her collections out of post-industrial leftovers for many years now, using on average 70% less water and 88% less energy than regular products. The pioneering entrepreneur also developed the first upcycling certification in the textile industry, named Upmade, to help manufacturers effectively integrate upcycling production and circular economic principles into their business. Taking up the concept and extending it to the next level, Reverse Resources offers an online marketplace for the industrial upcycling of textile leftovers. The platform enables each factory to track their leftovers in real time as well as access information from other parties in the industry. “It’s like an Uber of textile waste”, the Estonian company founded by Ann Runnel states on its website. Reverse Resources is one of the main partners alongside 30 fashion brands, manufacturers and recyclers in a cross-sectoral project aimed at capturing and reusing textile waste in Bangladesh.

Another similar approach is the creation of fabric out of other industries’ leftovers. In Latvia, the apparel designer Elēna Dmitrijeva and entrepreneur Laura Žukovska-Supe have teamed up to create custommade swimwear in all shapes, colours and sizes from environmentallyfriendly fabric with their social enterprise Mans Peldkostīms (My Swimsuit). 90% of the fabrics used by the Valmiera-based company for their Swimbe-branded products consists of recycled plastic waste, such as old fishing nets, PET bottles and carpets. The award-winning Estonian startup Gelatex Technologies uses the research capacitities of a laboratory and successfully engineers meat industry waste into a new material. The Tallinn-based company has developed an eco-friendly alternative to conventional leather which is made from gelatine nanofibres, a natural collagen taken from animal body part leftovers. “We are open to licensing out the technology to manufacturers and brands who would like to launch it on the market”, Gelatex Co-Founder & COO Mari-Ann Meigo Fonseca told Baltic Business Quartely. One of the companies already using the leatherlike textile is Estonia’s most wellknown fully circular leather bags and accessories brand Stella Soomlais.

Don’t wear it? Sell it!

The alternative for clothes that are still in good condition is to be sold on or exchanged. While there have long been flea markets and outlets for second-hand clothing, the internet has simplified matters. Online marketplaces dedicted to second-hand trade now make it possible for everyone to sell their used apparel – and this is about to turn into a mass phenomenon. One of the main players in the booming peer-to-peer exchange market is the second-hand clothing marketplace

Estonian designer Reet Aus produces her collections out of post-industrial leftovers pioneering the concept of turning trash into trendy fashion

Vinted – please read the interview with the founder of Vinted Milda Mitkutė on page 12. In Latvia, the locally successful brand Andele Mandele offers both an online platform and offline events at regular intervals to swap, sell and buy used wardrobe items. Experts predict a bright future for the digital resale market. Buying second-hand clothing could provide consumers with a way to push back against the fast-fashion system, while some critics argue that the secondhand marketplace encourages excess consumption even more by expanding access to cheap clothing. In any case, second-hand clothing can only mitigate the industry’s detrimental environmental impact on the planet, but not solve the sustainability crisis in fashion. Looking beyond production techniques and sales channels, it ultimately starts with consumers who have to end their current throw-away culture, avoid impulse purchases and limit their consumption. Or as the legendary fashion designer Vivienne Westwood once said, “Buy less. Choose well. Make it last.” Because we do not need so much.

42 | G R E E N T R A S N P O RT

Car-sharing is set to grow The increasing popularity of car-sharing services causes a shift in people’s mindset – it is starting to seem normal not to own a car in the city. This realisation goes hand in hand with Europe’s aim to dramatically reduce CO2 emissions. by ANDA A SERE L A BS OF L AT VIA, E XCLUSIV ELY FOR BA LTIC BUSINESS QUA RTERLY

“C

ar-sharing is definitely going to grow. That’s the global trend prediction and it’s no different in the Baltics”, says Pija Ona Indriūnaitė, Chief Marketing Officer of CityBee. People realize they don’t need to own something to have the service, and in not owning they don’t need to take care of many things such as parking, insurance, maintenance, repairs, and so on. Cities also promote car-sharing as it solves the issue of no parking space and too many vehicles. She says one car-sharing vehicle replaces up to 12 personal cars in the streets. Fiqsy founder Māris Avotiņš is also confident that the car-sharing economy will continue to grow. Some experts estimate that by 2030, 33% of urban car journeys in European cities will be made by car-sharing. Outside cities, the pace will be slower. The European Green Deal, which aims to reduce the amount of greenhouse gases entering the Earth’s atmosphere, is a major contributor to this change. The average car in the Baltics is about 16 years old. Fiqsy’s founder expects private car maintenance in the city to become increasingly expensive.

Much newer cars

Indriūnaitė also emphasises the fact that car-sharing vehicles are usually brand new in comparison

to private cars. Many car-sharing providers attempt to provide ecofriendly models, such as hybrids or electric vehicles. Most of the CityBee fleet is hybrids and the company has just announced that 700 electric vehicles will be added to its fleet in the next 3 years. “The choice for sharing is driven by a change in the mindset and the relevance of green thinking. People no longer want to commit to and overpay for things that are not used most of the time. In addition, government policies to reduce CO2 emissions are becoming more ambitious”, says Vladimirs Reskājs, founder of Carguru. He predicts that as ride-sharing services become more popular, people will increasingly abandon private transport. “The main thing that holds back car-sharing, in general, is the ownership culture which is still pretty strong in Baltics. In Western Europe, for example, in Switzerland, there is not so important to own things rather than to just have the possibility to use them. Researches in Switzerland has shown that only 34% of Swiss people own their homes”, says Tauri Kärson, founder of Autolevi. Autolevi isn’t a traditional car-sharing where one central operator operates own cars to run the service. This company is peer-to-peer car sharing which operates by matching private car owners and renters. Statistics vary on how many private cars have been replaced by a shared car. This is influenced by country-specific characteristics, the

existing popularity of the service, government support, and so on. “People will start to move away from private transport en masse when they know they can rely on shared services. Then cars will be used more efficiently”, says Reskājs. In the early days of CityBee, some thought that people would not take proper care of a car that doesn’t belong to them, that the fleet would be left untidy, and that drivers wouldn’t be careful when driving. This has changed a lot. The car-sharing community is growing and clients actually call and notify if they see the car untidy or someone driving really badly.

Also used by companies

Initially, and still today, car-sharing solutions are more actively used by private individuals. But businesses are also increasingly interested. “Generally, a private individual uses a car for their own needs 2% to 3% of the time. By switching to car-sharing, costs are guaranteed to fall by 30% to 40%. Of course, the costs and savings are different

G R E E N T R A S N P O RT | 43

Publicity photos

Already in 2019, it was calculated that Vilnius had the most car-sharing vehicles per capita in Europe. For a rather small country, the amount of car-sharing is impressive.

“The choice for sharing is driven by a change in the mindset and the relevance of green thinking. People no longer want to commit to and overpay for things that are not used most of the time,” Vladimirs Reskājs, founder of Carguru

for companies”, says Avotiņš. He argues that work needs to be done on the availability of shared cars. In Riga, 450 to 500 cars are currently available, in Lithuania several thousand, and in Estonia a few hundred. This number needs to be increased to reach the ideal situation that it is available quickly and nearby when needed. CityBee in Lithuania was one of the pioneers in car-sharing services in Central and Eastern Europe. Currently, CityBee has close to 2,000 vehicles across all three markets. The most common trips are short trips in the city – the absolute majority of them are under 15 minutes. More than 60% of the users are 21 to 35 years old. In 2017, Carguru had its first fleet of 12 cars, and a year later, 90. In 2019, Carguru expanded to a fleet of 160 cars. “We have ordered 100 new cars, which we expect by the beginning of summer. Depending on the results, we expect to add another 100

to 150 cars to the fleet by the end of the year”, adds Reskājs. Fiqsy initially provided shared electric scooters and cargo vans. The next step was an alternative to private cars. “We chose electric cars because there was a moment when, thanks to technological advances, their price and performance matched what customers expected”, says Avotņš.

Becoming mainstream

Indriūnaitė says car-sharing services are quite well developed in the Baltics and are even going mainstream, which is something that other countries cannot claim. “In 2019, it was calculated that Vilnius had the most car-sharing vehicles per capita in Europe. For a rather small country, the amount of car-sharing is impressive. And it is still growing, with new players or new mobility sharing alternatives being introduced. It’s not just car-sharing, but mobility sharing which involves cars, cargo vehicles, electric kick scooters and others”, she adds. Car-sharing is more developed in Lithuania than in Latvia and Estonia. It is not only in the capital, but also in other major cities. This is due to having the largest population in the Baltics and the agglomeration, which is different from the situation in Estonia and Latvia. In Estonia, the market is developing. The first player was Elmo Rent, which initially started operating electric cars, but is now adding hybrid cars. At the beginning of May, the leading European mobility platform Bolt announced about launching its car-sharing service Bolt Drive. The new service allows customers to rent a car for short periods of time using the Bolt app. Bolt will invest €20 million in launching Bolt Drive in Europe this year, starting with a pilot in its home market – Estonia.

44 | G R E E N T R A S N P O RT

Rail Baltica approaches construction phase Although different phases in the Rail Baltica (RB) project overlap, it is currently in the advanced phase of the design of the line and facilities, according to Kaspars Briškens, Head of Strategy and Development at RB Rail AS, a joint venture of the three Baltic states which oversees the implementation of RB.

by EGONS MUDULIS

etailed technical design is being finalized for about three quarters of the main line or 650 km of 870 km of the new European gauge (1,435 mm) infrastructure. In some facilities, construction has already started. At the same time, various planning, commercial development, and promotion activities are being carried out. RB Rail is moving towards planning and strategy development for two critical subsystems – command/control and signalling as well as ERTMS and electrification. As large-scale construction works are planned to start in 2021, RB Rail is preparing for the procurement of different construction components before negotiating agreements with suppliers and manufacturers. Those will be procured in a consolidated fashion for the entire project. RB Rail is also going to update the cost-benefit analysis, including traffic demand forecasts, where the various investments and the corresponding benefits from RB will be reassessed.

Estonia

The project is in the stage of detailed technical design on the whole RB line in Estonia. This also involves conducting

environmental impact assessments throughout the 213 km railway line, according to Priit Pruul, Head of Communications at Rail Baltic Estonia. At the same time, the local implementing body is starting construction work on different crossings, such as road viaducts. The first foundations will be laid for three objects in Rapla county this summer. The main designs of two international terminals in Tallinn and Pärnu are soon to be completed. The plan is to organize construction procurements for the terminals at the end of this year so that construction may be started at the beginning of 2022. Work also continues on a freight terminal at Muuga port, a rollingstock depot near the Tallinn international terminal, and regional stations. The next steps are mainly focused on the construction of railway crossings and preparation for the construction procurements of terminals.

Latvia

Construction work on Riga Central Railway Station started last autumn, while the construction work on the RB station and related infrastructure at Riga International Airport was set to commence in May 2021. The second round of a closed competition for the development of RB infrastructure maintenance point construction

projects (in Skulte and Iecava) is on the way. As to the next steps in the project, Rita Voronkova, Head of PR at European Railway, has drawn up the following list: development of regional RB stations in close connection with local municipalities, development of RB infrastructure management models in cooperation with Estonian and Lithuanian colleagues, as well as buying land for the line from Riga Airport to the Lithuanian border.

Lithuania

RB has four sections in Lithuania, according to Domas Jurevičius, Project Manager at Lithuanian Railways. The design work in the section Kaunas – LithuanianLatvian border is expected to be completed by the end of 2021. A special plan determining the railway line Kaunas – Vilnius will be drawn up and land expropriation procedures will begin in 2021. The existing railway at the Kaunas railway junction will be reconstructed and a new European standard-gauge railway built alongside it. The Kaunas railway node engineering infrastructure development plan is expected to be ready by the autumn of 2022. Following the study of upgrading the existing railway, a special plan will be drawn up, the environmental impact will be assessed, land expropriation procedures will be implemented, and design and contract works will be undertaken in the section Kaunas – Lithuanian-Polish border. Last March, an international architectural tender was launched for Vilnius Railway Station.

Funding

As far as funding for RB is concerned, the total RB investment in the Baltic states is set to reach €5.8 billion by 2026, of which

G R E E N E N E RG Y | 45

The starting point for Rail Baltica will be the new station in Tallinn’s Ülemiste district. Designed by Londonbased architect Zaha Hadid

Challenges

Briškens also points out that huge projects invariably involve delays and that the epidemiological situation is an additional challenge. There are several politically complex and sensitive issues. Currently, spatial planning is taking place regarding the line from Kaunas to the Polish

border that will determine the ultimate RB alignment in that section and to what extent the existing infrastructure may be used or upgraded to qualify for RB technical parameters. The decision by the three countries on another topic – infrastructure management – will strongly impact on the long-term business case of RB. The unequivocal view of future users, both on the passenger and freight side, is that they want a highly streamlined, transparent and professional model – a single infrastructure manager instead of three separate entities. A shortage of specialist workers is one of the risks for the RB construction project, which may converge with increased activity in other areas – not only in the Baltics but also in neighbouring regions. Highly qualified engineers and railway specialists are scarce in the Baltics, especially those with experience of the European gauge.

Business case

As far as the future benefits for businesses and transport companies are concerned, Briškens’ message is not to wait for more than five years until the line is operational but to start engaging with RB Rail right away. The joint venture is developing a new transport demand model. RB Rail will engage with many stakeholders in the freight and logistics business ecosystem. It will identify and create an interactive virtual map of different freight ecosystem participants – from industrial clients to logistics providers, and through to future railway undertakings. And not just for the railway part, as RB is only one of the elements in a multimodal logistics system that will connect seaports, dry ports and the hinterland. At the same time, the joint venture is encouraging business to cooperate in innovation, digitisation and sustainability.

Render by negativ.com

up to 85% will be co-funded by the EU. According to RB Rail, contracts have been signed for €675 million. To receive EU funds in future, Briškens believes that the project implementers must demonstrate their ability to cooperate, deliver and consistently reassure both the European and Baltic public that the project will bring huge socioeconomic benefits. The Multiannual Financial Framework (2021–2027) opens new possibilities for significant additional funding.

46 | P O W E R YO U R P LA N T S

Baltic peat helps achieve climate goals by MĀRIS ĶIR SONS

Latvia generates the highest income from exporting peat products of the Baltic states, with an increase of more than 35% over the last four years.

used in professional horticulture in the EU comes from Latvia,’ I. Krīgere emphasised. One cubic metre of peat can be used to grow 6000 young trees: enough to cover 3 ha of land with a forest, and every hectare of forest binds 370 tonnes of CO2 in 50 years. One cubic metre of peat can also be used to grow 7000 plant seedlings: this mean producing 16 tonnes or cucumbers, or 32 tonnes of tomatoes.

eat is a natural resource that actually regenerates, albeit slowly. The extraction of peat is a traditional industry for the Baltics, which has been around since the 1700s. Thanks to Latvia’s favourable climate, the natural annual growth of peat significantly exceeds its extraction. Board chairwoman of the Latvian Peat Association, Ingrīda Krīgere, noted that in the Baltics, peat is extracted for horticultural use: growing food and decorative plants, as well as tree saplings. ‘31% of the peat

The global demand for peat moss is rising, which is a good

foundation for the industry to grow on, not only in Latvia, but also in Estonia and Lithuania. The most significant issue for those working in the industry is associated with the policies of the EU Green Deal. I. Krīgere pointed out that the successful growth of the industry, and even its existence, are jeopardised by the lack of understanding of the distinction between the use of peat in the power industry and in horticulture, by the inaccurate accounting of GHG emissions, and the fact that this slowly renewable resource is classified as a fossil resource on a European level. ‘At the same time, peat moss is a component of circular economy: it does not go to waste after use, and is instead incorporated into the soil; and using peat to grow forests, decorative plants and healthy foods actually helps achieve climate goals,’ Ingrīda Krīgere emphasised.

Peat extraction in Estonia, Latvia and Lithuania Latvia

Estonia

Lithuania

Revenues from peat exports (€ million) 250 200 150 100

2016

2017

2018

2019

205

185

176

164

147

2020

Peat extraction in 2020 (million tonnes)

Exports of peat products (million tonnes) 2.0

1.5

0,675

1.0

1,407 0,615

2016

2017

2018

2019

2020

0.89

1.32

1.95

0.87

1.08

1.70

0.84

1.04

1.83

0.79

1.03

1.72

0.74

0.98

1.48

0.5

P O W E R YO U R P LA N T S | 47

Peat moss demand creates room for growth by MĀRIS ĶIR SONS

SIA Laflora plans to turn Kaigu bog into a green industrial zone with a wind and solar park, a renewable hydrogen plant, as well as greenhouses and energy-intensive factories.

There is currently a project for a peat moss production facility that would eliminate the need to transport the peat between two different regions of Latvia (Latgale and Zemgale), and instead make it possible to manufacture the finished high-added-value product on-site in Nīcgale (Latgale). ‘The new factory will create 25 jobs, and setting it up will cost about 5 million euros,’

Founded in: 1995 Industry: peat extraction, production of peat moss Output in 2020: 120,000 t Investments in 2020: 2 million euros Tax paid: for 11 months of 2020: 3.2 million euros Net turnover: 22.40 million euros (2020) Exports: 85% (2020 season) Number of employees: 290 (average) (during the peat extraction season: 400)

The Visualization of Kaigu bog megaproject

U. Ameriks said. The operation of the Nīcgale facility could begin as early as in late 2022, although this depends on the requirements of the EU’s European Green Deal: ‘If the peat industry manages to plan its long-term work, and if we can obtain EU funding for modernising the industry, as promised early last year by EC Executive VicePresident Valdis Dombrovskis, then we will be happy to expand our activities in the Latgale region,’ U. Ameriks noted. This will not only result in more peat moss output and sales for Laflora, but also in work done developing new innovative peat products, such as paints, heat insulation and other finishing materials for construction. The company plans to set up something yet unseen in Latvia at the Kaigu bog that it owns (total

area: 764 ha): a green industrial park. ‘Our vision is aimed at the future development of the bog we’re extracting peat from, and at transforming this land, and the best solution we’ve opted for is setting up a wind park with a total capacity of 90 MW, taking an estimated 171 million euros in investments; the first steps in making this a reality have already been taken,’ U. Ameriks said. He expressed hope that the active implementation of the project would begin as early as in 2022. ‘Potentially, this industrial zone could include a hydrogen factory, energy-intensive factories, as well as greenhouses and other production facilities as part of the bioeconomy industry,’ U. Ameriks explained. He pointed out that if the project is to be completed, there would be savings of some 112,000 tonnes in CO2 emissions every year.

Visualization: publicity material of Laflora

his enables the sustainability of the company in the context of climate neutrality. The company’s goal is to compensate all the emissions associated with the production of peat down to zero by 2050. ‘We make peat moss products used in professional horticulture, and because people still need food to eat, pandemic or not, the income we earned from selling our products in 2020 saw a 22% yearon-year rise, reaching 22.4 million euros,’ SIA Laflora board chairman Uldis Ameriks said. He noted that the extraction of peat directly depends on climatic conditions. ‘We mainly export our peat products to EU countries, such as Germany and Italy, and to fast-growing markets in Asia: China, Korea and Japan,’ U. Ameriks noted. He also mentioned the rise in global demand for peat moss as proof of the significance of this product during the crisis. U. Ameriks also pointed out that Laflora placed milled peat as a central design element in Latvia’s national presence at the Expo fair in Dubai.

SIA Laflora

48 | P O W E R YO U R P LA N T S

Industry not affected by the pandemic Weather to determine the amount of peat extraction and net turnover of SIA Klasmann-Deilmann Latvia this year

SIA Klasmann-Deilmann

Industry: peat extraction Net turnover: EUR 8.5 million (2020) Exports: 100% (2020) Number of employees: 85 (during the peat extraction season) Location: Zilaiskalns, Kocēni Municipality Founded in: 2011

by MĀRIS ĶIR SONS

‘N

either the pandemic, nor the restrictions put in place by various countries have affected the demand for peat products,’ SIA KlasmannDeilmann board member Andis Gredzens. He pointed out that weather had a much greater impact on the extraction of peat, its prices, and the net turnover and profits of the companies operating in this industry. ‘With a late and rainy summer, the harvest of peat is lower than when summer weather begins in late April or early May, and is relatively hot and dry,’ A. Gredzens explained.

Last year, SIA Klasmann-Deilmann Latvia extracted slightly over 700,000 m3 of peat, of which 500,000 m3 was milled peat. This amounted to 83% of the quantity the company had planned for the year. ‘The amount of peat we extract directly correlates with how much it rains, and 2020 was rainier that previous years, resulting in the lower extraction of peat,’ A. Gredzens explained. He also pointed out that the extraction amount planned for 2021 is exactly the same as it was in 2020, or 2019.

Holding ground

In 2020, the company’s net turnover was EUR 8.5 million, which according to A. Gredzens is only

slightly lower than in 2019, when it was 8.7 million. ‘If we extract less peat, then even the global inflation of its products cannot compensate for the loss of income,’ A. Gredzens said. For 2021, the company plans to operate with a net turnover of about 8.8 million euros. ‘It could definitely be higher, but this would require the Latvian government allowing the peat industry to work and grow instead of creating obstacles. Achieving the goals of climate neutrality and reduction of CO2 emissions has raised doubts as to the sustainability of the peat

industry, even though the peat extracted in Latvia is processed to make growing medium, which is used in agriculture all over the world,’ A. Gredzens noted.

100% exports

SIA Klasmann-Deilmann Latvia exports all of the peat products it makes. ‘Our biggest buyers are in Lithuania, Germany, the Netherlands and Belgium,’ A. Gredzens pointed out. He emphasised that the demand for peat products outstrips supply in Europe and globally, resulting in rising prices. When asked about looking for potential new markets, A. Gredzens said: ‘We do not focus on this, because we have long-term clients whose demand we can’t even fully satisfy’.

Photo: Ritvars Skuja, publicity photo

Some 0.7 million m3 extracted

SIA Klasmann-Deilmann board member Andis Gredzens: ‘Agricultural peat enjoys a lot of global demand, because in “old” EU member states such as Germany and Denmark, for example, very many peat bogs have been exhausted. Latvia has huge reserves of it, which can be extracted without harming nature. The industry also creates many jobs.’

P O W E R YO U R P LA N T S | 49

The future depends on Brussels “In the amateur soil sector there will certainly be possibilities to replace peat to a large extent, but not in the professional sector, which also accounts for by far the largest share of exports,” says Bernhard Steingroever, CEO at HAWITA baltic to Baltic Business Quarterly. by LĪVA MELBĀR ZDE

“So

far, we have come through the pandemic relatively unscathed as far as our staff is concerned, and that is the most important thing. There have been and still are outages due to Covid19 infections at all sites, were could be quickly contained”, Bernhard Steingroever said. All peat harvested by HAWITA baltic in Latvia is refined in the own factory. This means that peat are crushed into the desired structures then enriched with natural fertilisers and additives as required by the respective plant culture. These products are sold worldwide, and today the company has an overseas export share of about 30 %, with an upward trend. “Our first and also the oldest location in Akniste (Latvia) requires continuous modification, which is also being carried out. Our second location in Cesvaine (Latvia) was put into operation in 2012 and has also expanded. A new, fully automatic packaging line was installed. In addition, investments were made in the processing of special substrates for vegetable cultivation. These substrates will play an increasingly important role in the coming years. Supplying the world’s population with vegetables is the central issue. We in Cesvaine produce the perfect soil for this”, B. Steingroever emphasized.

A new product from HAWITA baltic. Ideal for growing vegetables.

The number of employees at HAWITA baltic has hardly changed in the last few years. Greater automation creates higher output in the factories. “More machine operators with technical training in electrical and mechanical engineering are now needed. There is a shortage here in Latvia”, Mr Steingroever noted. “Peat extraction is criticised in the EU. Further extraction areas will not be authorised. The existing licensed areas, which account for about 4 % of the total peatland area in Latvia, should/can continue to be extracted. In Ireland, 90% of peat extraction has been stopped from the beginning of 2021. Peat for energy purposes has been completely phased out, affecting peat extraction in Finland in particular. The peat used today is mostly used as substrates for ornamental plant cultivation, vegetable cultivation and soft

berry cultivation (blueberries/ strawberries, etc.). Peat substitutes can be used in some substrates. Wood fibres, coconut flour and perlite can be mentioned here. In Western Europe, other additives are used, but these do not have any positive properties in the growth process and are not suitable or desired for export,” B. Steingroever explained. For that reason in the amateur soil sector there will certainly be possibilities to replace peat to a large extent, but not in the professional sector, which also accounts for by far the largest share of exports. “This year, corresponding decisions on how to proceed in the EU are to be formed in Brussels. This is particularly important in the light of CO2 emissions. Whether a practicable solution will be found for the use of peat and the purchase and use of peat substitutes remains to be seen,” B. Steingroever said.

50 | B E S T I N B U S I N E S S

Unboxing sustainability While smart ideas and brave new concepts definitely help to ease the pressure we put on our environment, greater effects are achieved when the economy moves towards a more sustainable form. Packaging is omnipresent and unfortunately will remain a major burden for generations to come, as it is mostly made of plastics. We talked about the issue with Rolandas Vainutis, General Manager of Smurfit Kappa Baltic. He represents one of the world’s leading providers of paper-based packaging solutions.

by LUK A ANL AUFF

aste from packaging is one of the symbols of worldwide pollution. How can producing packages contribute to a greener future? Paper is one of the most collected materials with over 70% collection rates, so we capture much of that back into our recycled system to be remade into paper. In fact, paper biodegrades back into nature faster than a leaf! So even when our product is outside the controlled waste system, it will still biodegrade naturally in a couple of months. Therefore, we believe that choosing paper-based packaging can make a huge impact with regard to a more sustainable future. What are the raw materials for your cardboard products? Where do they come from? Smurfit Kappa produces paper and packaging from virgin and recycled fibres. Our industry is a significant and visible user of wood fibre. It is our basic raw material, and we ensure its origin is sustainable. The re-usability of paper fibres contributes to the sustainability of our products, and recycled fibres make up 75% of the fibre content of our products. We are committed to sourcing and managing our natural

resources in the most efficient and responsible way possible, through sustainable forest management at our own plantations and forests, and transparent processes across the supply chain. We do this not only to meet our own sustainability responsibilities, but also those of our customers, providing peace of mind regarding the origin of the paper-based packaging they use. Is paper such a sustainable material? Don’t you need vast amounts of wood and water? Paper is a sustainable material, as it is 100% renewable, biodegradable with more than 90% collection and 83% recycling rates. Making our packaging from just one material makes it easier to recycle after use. We replace the natural resources we use, and reuse or recycle wherever we can. When recycling the recovered paper and packaging material that form the basis of the raw material for our packaging solutions, we can decrease waste by recovering as much fibre material as possible in the recovered material. A higher fibre yield also reduces the cost of raw material per ton of paper we produce. Over 90% of the water we use is returned to nature in good condition, and the rest is emitted to the air during the process or is bound to the product.

B E S T I N B U S I N E S S | 51

“In fact, paper biodegrades back into nature faster than a leaf! So even when our product is outside the controlled waste system, it will still biodegrade naturally in a couple of months”, Rolandas Vainutis, General Manager of Smurfit Kappa Baltic

Publicity photo of Smurfit Kappa Baltic

Founded in 1995, Smurfit Kappa Baltic, UAB is one of the leading providers of paper-based packaging solutions in the Baltics. With more than 125 employees in Lithuania and €18 million revenue in 2020, they operate mainly in local markets while exporting some of the production to Latvia, Estonia, Poland and Kaliningrad.

Does recycling work? In the Baltics? In Europe? Worldwide? When it comes to recycling, many countries have their own regulations and laws. In Lithuania, collection and recycling has seen an increase in recent years as many municipalities promoted glass, plastic, paper and general waste separation by placing trash containers in residential areas and public places. However, Lithuania and Latvia are still below Europe’s average when it comes to the collection and recycling of materials. On the other hand, Estonia has the highest collection and recycling of litter rates among all Baltic countries,

being close to the customers and understanding their needs. That is why, in 1995, Smurfit Kappa entered the Baltic market by opening a plant in Lithuania and in 2007 a branch in Latvia was established. For over 25 years, we have been creating new local tangible innovations that open up new opportunities for our customers in Lithuania, Latvia and Estonia.

with paper & cardboard, metal collection and recycling being higher than EU’s average. It is hard to comment on worldwide recycling, though, as every year we see more and more interest in separating materials and recycling them. You have branches in both Latvia and Lithuania. What was the reason to expand to these rather small Baltic countries? Referenced as Baltic Tigers in the early 2000s, the Baltic countries showed a GDP growth higher than the EU average and doubledigit market growth for the packaging industry, making them attractive to investors from various manufacturing sectors. Most of them, such as furniture, food, biotechnology and electronics, use paper-based packaging solutions. Uniqueness and development of packaging can only be achieved by

What do you think of the existing and planned rules concerning packaging in the EU? Are they too strict, too short? The new planned rules are a great opportunity for a better planet with less waste and more sustainability-driven consumers. Therefore, I truly believe that only strict regulations will help the EU tackle the waste impact on the environment and create opportunities for a greener future, starting with sustainable packaging. At Smurfit Kappa, we see it as our mission to help our customers and business partners by offering, where possible, to replace their current packaging with sustainable paper-based packaging solutions through our “Better Planet Packaging” initiative. We use our strength and industry-leading expertise in sustainable materials to develop sustainable packaging solutions for our customers that are renewable, are designed to be recyclable and are actually recycled and, if littered, they biodegrade naturally without leaving a trace.

52 | B E S T I N B U S I N E S S

by LUK A ANL AUFF

The solar potential of Lithuania and Latvia is comparable to Germany, which is the European leader in installed PV capacity. Now, Green Genius is focusing on expanding solar parks in Lithuania, Poland, Spain, and Italy.

“Renewable is the new normal”

reen Genius started as Modus Energy in 2006 and was part of the Modus Group. Back then, your business was run by automotive sales, parking facilities and a woodprocessing factory. What was the reason for your investment in renewable energy? Our first energy project was compressed natural gas (CNG). This is the alternative fuel for the transport sector and the aim of this project was to reduce pollution from buses. It is important to mitigate the climate change and we knew that from the beginning. We started our investment in 2011, when the renewable energy law was adopted in Lithuania. Our main focus is solar energy and biogas. We were among the first companies to build solar power parks in Lithuania. We are proud to be pioneers in the renewable energy sector in Lithuania and I strongly believe that renewable is the new normal.

There are two prospects for the future of mobility: biofuels and electric cars powered by green energy. Which one do you see prevailing in the coming decades? I believe that the electric cars will prevail in society because they will become casual cars for families, etc. In my opinion, biofuels will be the future of heavy and public transport. Is green energy competitive, with low oil and gas prices? The answer is definitely - yes. Even, if we don’t take into account the importance and advantage of green energy for reducing climate change, green energy is almost always cheaper than conventional energy. Not so long ago, we had substantial changes in solar energy pricing because we managed to reduce production costs. In effect, solar energy became cheaper than, for example, coal energy.

Are the Baltics a good location for solar energy? Of course. The solar potential of Lithuania and Latvia is comparable to Germany, which is the European leader in installed PV capacity. Only solar irradiance is slightly lower in Estonia. Now, we are focusing on expanding our solar parks in Lithuania, Poland, Spain, and Italy. These countries have a favourable legal framework and enough sun for solar power projects. Calls for a change towards sustainability are getting louder. Has there been a higher demand for renewable energy in the last two years? We really feel that people are more concerned about saving our planet and they are taking real action to achieve this. Demand for this energy is increasing because of that and the lower price of renewable energy. But if we want to have a faster transition towards a renewable future, we still need to accelerate our efforts. Nothing should be taken for granted now, and everybody should take part in mitigating climate change from an organizational to a personal level.

Publicity photo of Green Genius

Green Genius is constructing and managing solar and biogas plants all over Europe, from Spain to Ukraine. Founded in 2006 as a branch of the Lithuanian “Modus Group”, the company emerged as one of the three key businesses of the group, next to automotive and mobility. Today, Green Genius has nearly 200 employees and owns a network of power plants with a combined generation of more than 300 GWh. We spoke about this success story with Ruslan Sklepovič, CEO of Green Genius.

B E S T I N B U S I N E S S | 53 “Straw is an ideal construction material. It’s renewable, largely available, and mostly has no other use.”

by LUK A ANL AUFF

Building as part of circle

Straw is far from being a new building material, as it is actually a very old one. However, because of its short stability and high flammability risk, straw went out of favour a long time ago and was replaced by bricks and concrete. In recent years, methods have been developed to overcome the weaknesses of straw as a construction material, so that now its benefits can shine again. Straw is renewable, easily available and mostly has no other use. EcoCocon’s panels are made of 89% straw in 10% wooden frameworks – just enough wood to provide the necessary structure. The immediate value for the environment is obvious. 99% of

EcoCocon

Foundation: 2008. Employees: 19 Revenue for 2020: €1,200,000

the EcoCocon panels’ components degrade quickly once they are disposed of. Forests play an important role in the storage of carbon, so the use of wood on a grand scale is, in fact, not as green as it might seem. Straw, on the other hand, is organic ‘waste’, so using it for building only delays the natural course of its decay. This is, however, just one of the many points in favour of straw. Marius Tarvydas envisions a network of panel production plants in all the supplied countries to keep the cost and impact of transport as low as possible. “Today, our mission goes beyond the borders of our company. We are a global network of passionate individuals who want to be the voice of change in the construction sector.” A big challenge in reaching the European carbon emission goals is more efficient heating. In other words, this refers to the insulation of buildings. A wall made of compacted straw provides the same insulation value as a conventional one with the currently predominating polystyrene layer,

with the welcome side effect of being a breathing wall. That means water can steadily diffuse in and out of the walls, regulating the room climate by absorbing excess humidity, even though the wall is completely airtight. “Since the beginning of the crisis, the number of our orders has doubled.” The corona crisis has been a difficult time for the construction sector. Surprisingly, the opposite is true for EcoCocon, whose prospects look promising. Since the beginning of the crisis, the incoming orders have doubled, confronting the company with a shortage in wood supply and difficulties in finding skilled employees. Tarvydas says that people have taken the time to think about planning a private home and about how they want to build and live. As he is convinced that zero-emission homes will be the standard in the future, the boom in his industry would then just be the beginning of rethinking construction as a whole.

Publicity photo of EcoCocon

or a long time, the construction industry has dodged the attention of the climate debate, while the share of buildings in global carbon emissions climbed to a shocking 38% in 2019. The massive use of concrete and steel is untenable in the long run. Having realized this already ten years ago, EcoCocon is now waiting in the wings with their panels made of an innovative, yet familiar building material: straw. We talked to Marius Tarvydas, director of EcoCocon, to learn more about this simple, yet clever idea.

54 | B E S T I N B U S I N E S S

Offshore wind potential in the Baltic Sea is huge RWE Renewables is RWE´s renewables powerhouse of the future. While until 2022 up to €5 billion net will be available for renewables and innovative storage technologies, the operating business is focusing on offshore and onshore wind as well as photovoltaics, according to Sven Utermöhlen, COO of Wind Offshore Global of RWE Renewables in conversation with Baltic Business Quarterly.

RWE Renewables by FLORIAN LEONHARDT

How does your strategy link to the idea of a green economy?

hat is RWE Renewables’ vision and how do you plan to implement it?

A main key to a sustainable future and a green economy is the transformation of the global energy system. Let’s take Europe as an example: The European goal of achieving climate neutrality by 2050 will lead to a growing demand for electricity as a result of electrification and new technologies such as e-mobility and green hydrogen. RWE will play a key role in delivering what is needed to meet this increasing demand for electricity from renewable sources. In the period from 2020 until the end of 2022, we aim to significantly expand our renewables portfolio by investing €5 billion net. In addition, we are entering the market to produce green hydrogen. This is backed by the implementation of one of the most ambitious programs to reduce CO₂ emissions in the entire industry. We are consistently and responsibly withdrawing from fossil energy sources to become carbon neutral by 2040.

We are one of the world’s leading renewables companies and we want to continue to be that – and significantly grow our business. Our experienced and highly motivated team from across the world operates along the entire value chain from the development of renewable projects, to engineering, commercialization, construction, through to operation. This means we can address all value pools to produce green electricity as competitively as possible for society. Our business covers all relevant technologies: offshore and onshore wind as well as photovoltaics and battery storage. We have wind and solar power plants with over 9 gigawatts in operation, while more than a thousand megawatts are also under construction. Our solid financial strength and renewables project pipeline of more than 30 gigawatts give us good options for further growth – in Europe, the Americas as well as in the Asia-Pacific region.

It means that at RWE wind energy will soon replace coal as the strongest energy source,

Sector: Renewable Energy Investments: Up to €5 billion net available for renewables and innovation of new storage technologies (by 2022) Number of employees: Approx. 3,500 Markets: Focus on Americas, while core markets are Europe and Asia-Pacific

demonstrating that economy and ecology are by no means mutually exclusive. What are the advantages for RWE to be green? What barriers did you face? At RWE we are all pulling in the same direction because it is obvious that renewable energies are the future for us as a company, as well as for society. At the same time, we are respectful of what has made us strong so far and contributed heavily to the prosperity of society. RWE has undergone fundamental changes to become a major player in the field of renewables. Size is a crucial aspect when it comes to successfully competing worldwide, so we want to hold sizable positions in every market we operate in to realize

B E S T I N B U S I N E S S | 55

“We consider the whole Baltic Sea as a promising area for further growth. It offers good conditions – with constant wind speeds and fewer waves than in the North Sea,” Sven Utermöhlen, COO of Wind Offshore Global of RWE Renewables

Photo: RWE

economies of scale. However, we are disciplined and focused with regards to where we invest: We are active in countries with strong fundamentals in terms of market size, growth, political and regulatory stability, and a solid energy market design. And what is your view of the conditions in the Baltic states? Can you give us an overview of where things stand – especially with regard to offshore wind energy? We see huge potential in the Baltic Sea for offshore wind development, also expanding on the Baltic Sea Declaration that was signed by all three Baltic countries. All three countries have ambitious climate and renewables targets, and offshore wind expansion is often at the core of these plans. For example, Lithuania has announced plans to organize a first offshore wind tender for a wind farm of up to 700 megawatts by the end of 2023. Last year, Estonia and Latvia signed a Memorandum of Understanding to collaborate for a 1,000-megawatt cross-border wind farm in the Gulf of Riga. We have been following these developments with great interest.

So far, all the signs point in the right direction and are very promising. We will continue to monitor the regulatory developments closely and will also offer RWE’s insights and expertise. We consider the whole Baltic Sea as a promising area for further growth. It offers good conditions – with constant wind speeds and fewer waves than in the North Sea. We have experience from constructing and operating three offshore wind farms in the Baltic Sea – off the coast of Denmark, Sweden and Germany. In addition, we are currently developing offshore wind farms in the Polish Baltic Sea. Energy independence and decreasing electricity imports along with substantial increases in renewable energies are major goals in national energy plans. What contribution can wind power make to this independence? The Baltic countries have strong interconnections both internally as well as with neighbouring regions. The planned sub-sea Harmony Link between Lithuania and Poland will add to this interconnection capacity while the region’s desynchronization

from Russia’s grid by 2025 is on track. Pushing ahead with an ambitious renewables build-out – and offshore wind in particular – is a logical next step. Not only will it substantially contribute to the countries’ energy independence, but it can also help to open the Baltics to energy export opportunities with neighbouring countries and bring economic benefits in terms of new jobs created and tax income. In order to achieve this, crossborder grid connections across wind development areas throughout the Baltic Sea are the long-term goal. You have a close look at offshore wind, but looking ahead, can you imagine developing onshore wind farms in the Baltic states? Or entering the fast-growing hydrogen energy market? As a major player in onshore wind, we always have an eye on the developments across all European markets. In addition, we firmly believe that green hydrogen will be an important factor in the success of the energy transition. In many sectors, hydrogen is needed as an alternative to the direct use of electricity. Hydrogen will replace fossil fuels in many industrial processes and will be used in transportation in cases where batteries are unsuitable. RWE is currently the only German company involved in all stages of the green hydrogen value chain, ranging from electricity generation from renewables to hydrogen generation and storage, through to distribution to industrial customers. We hope to apply our wealth of expertise so that the EU can achieve its ambitious vision of a European hydrogen economy.

56 | B E S T I N B U S I N E S S

One of the cleantech giants in the future Estonia-founded energy storage start-up Skeleton Technologies helps to save energy. Baltic Business Quarterly talked to Dr. Sebastian Pohlmann, VP of Innovation at Skeleton Technologies about the green economy and the company’s future prospects.

by FLORIAN LEONHARDT

lease tell us briefly about Skeleton Technologies Skeleton Technologies is the global technology leader in ultracapacitor energy storage in automotive, transportation, grid and industrial applications. We work with some of the largest companies in the world – from leading tier one automotive firms and industrial OEMs to truck fleet operators and aerospace prime contractors – to decrease CO2 emissions and fuel consumption, to improve power quality and protect equipment and infrastructure from power peaks, and to power electrification to fight climate change. Our ultracapacitors, based on patented “curved graphene”, represent the biggest technological advancement in the industry in the last 20 years and the use of this innovative material provides our products with an unparalleled advantage in power and energy density. Skeleton Technologies Group has three main locations: manufacturing in Großröhrsdorf, Saxony, Germany, materials development in Bitterfeld-Wolfen, Saxony-Anhalt, Germany, and electrical engineering in Tallinn, Estonia. Since its foundation in 2009, the company has grown from 4 to more than 160 people. What are your most popular products and what benefits do they offer?

Our ultracapacitors offer high power density, almost instant charging and discharging, high reliability, and very long lifetimes. As you can charge and discharge them over one million times, ultracapacitors can easily work for 15+ years without the need for maintenance. Ultracapacitors have very little internal resistance, allowing them to work at close to 100% efficiency, also eliminating the need for cooling in most applications. They are significantly lighter than batteries and don’t contain harmful chemicals or toxic metals. Please explain what the idea of the green economy means for your company? The fight against climate change is the biggest challenge of our times. Individual behaviour alone will not mitigate the climate crisis. According to the IEA, electricity and heating combined account for over 40%, transportation makes a little over 20% and industry and manufacturing also account for approx. 20% of global carbon dioxide emissions. So, if we really want to address the climate crisis, we need to aim for structural changes in these sectors. And reducing CO2 emissions in these sectors is exactly what Skeleton Technologies does. From a business perspective, the fight against climate change is also the biggest business opportunity since the internet revolution. We are sure that 2021 will be a year of historic surge for the green and cleantech sector. Climate action and the energy

Skeleton Technologies

Sector: Ultracapacitor energy storage in automotive, transportation, grid, and industrial applications Year of foundation: 2009 Revenue: 3X revenue for three years running Number of employees: > 100 Locations: Großröhrsdorf, Germany (manufacturing); Berlin, Germany (sales); Tallinn, Estonia (R&D and pilot production)

transition are considered symbiotic partners for the coronavirus recovery, and it is really the private sector and financial markets that hold the keys to the massive decarbonization of the economy. You can already observe this trend in the creation of multiple energy storage hubs in Europe, including several “Gigafactories”. Your company operates sites in Estonia and Germany. How do you rate the willingness of Estonian and German companies to invest in the green economy and are there any differences between the countries? Both countries have seen great developments in the green and cleantech sectors in the last few years. Germany is increasingly becoming the main hub for founders of green and clean tech start-ups. What’s more, German corporations are moving forward with decarbonization and electrification.

B E S T I N B U S I N E S S | 57

Photo: Publicity photo of Skeleton Technologies

“We are sure that 2021 will be a year of historic surge for the green and cleantech sector,” Dr. Sebastian Pohlmann, VP of Innovation at Skeleton Technologies

In the energy storage and battery sector, for instance, Germany is among the top leaders globally, as evidenced by the IPCEI “European Battery Innovation – EuBatIn”. Skeleton Technologies GmbH is a part of this project, while the whole European project is coordinated by Germany’s Federal Ministry for Economic Affairs and Energy. Estonia is also uniquely positioned to turn the fight against climate change from a crumbling cost factor to a high growth net positive driver for the economy. Estonia’s startup mentality, expertise in IT and world-class education are amazing assets. As we saw during the Estonian Startup Awards 2020, the new generation of start-ups seems to have “green-mindedness” programmed into their DNA. In fact, a quarter of the shortlisted nominees for 2020 were cleantech by nature: not only Skeleton, but also Woola, Roofit. Solar, Single.Earth, Ampler Bikes, Comodule, to name just a few. These companies all have the potential to be Estonia’s next unicorns.

Can you recognise any impact of the Covid pandemic on the green economy? Climate change is the biggest challenge and danger of our times and is going to disrupt our societies in much bigger ways than Covid-19. It is here to stay, which is why it is important to act now, and not to believe that Covid-19 should have the priority and that we should postpone climate action. As we saw, even if lockdowns caused the largest ever annual fall in CO2 emissions, global CO2 emissions have not considerably declined during the pandemic. As the world rebounds from the pandemic, global carbon emissions from energy are forecast to jump this year. There is no silver bullet to protect the climate and “fix” the climate crisis. But technology can get us closer to our climate targets. How do you see the future of the green economy and which trends will emerge? Vehicles and the way they are used will change more in the next

decade than they have in the last 100 years, due to falling battery costs, the need to decarbonize the economy and the development of existing technologies. The world’s biggest economies have committed to becoming carbonneutral by 2050. The mobility and transportation sector being one of the main emitters of CO2, major changes will have to happen there. Automakers are accelerating their EV launch plans. Passenger EV sales jumped from 450,000 in 2015 to 2.1 million in 2019 and Bloomberg estimates around 26 million in 2030, i.e. almost 30% of total sales. A very recent study by BCG even stated that 50% of all sold vehicles in Germany will be electric by 2026. Hydrogen fuel cells will be competitive, particularly in railway where it should replace most of the diesel-powered trains, and will also feature in buses and trucks, although this will not be the best option for passenger vehicles. Energy storage is one of the largest trends and the innovations in the ultracapacitor world are part of that trend. Looking ahead, what does the future hold for the company and is there still anything you would like to achieve? We are the biggest manufacturer of ultracapacitors in Europe. We have the right products and R&D to capture a dominant market share in the energy storage industry globally and we have a clear roadmap to further increase our competitive advantage and increase both the energy and the power density of our products. Within the coming years, we will launch products with previously unseen energy and power densities, based on the unique properties of curved graphene. Consequently, we expect to become the world leader in ultracapacitor energy storage and one of the cleantech giants in the future.

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AERONES

Flying high Aerones entrepreneurs were initially involved with heavy duty drones. This gave them the idea to create a more stable, durable and less weatherdependent solution. They are a focused start-up with the approach of delivering high-quality standards for the wind energy market. The focus is to ensure that maximum wind energy is accumulated.

erones, founded in 2015, is a company in the robotics and wind energy sector and has developed a range of unique robotic solutions for wind turbine inspection and maintenance. They have a robotic arm and patented balancing system with many specific applications, serving as inspection and maintenance tools for onshore wind turbines. They have proven to customers that, with the use of robotic tools, inspection procedures can be completed faster, provide more accurate measurements and eliminate so-called idle days, as robotic tools can work during periods of stronger winds, which humans cannot do safely. Aerones is actively developing solutions to take advantage of the challenges of offshore wind power and is specifically working on robotic projects to withstand wind gusts and operations at sea. The goal is to conduct the first field tests this summer. Aerones’ history is rooted in the drone business and the technical ideas to develop industrial drones as multi-functional tools for proxy industries. The company has

Publicity photo of Aerones

by TERESA MÜNZBERG

Aerones is a company in the robotics and wind energy sector and has developed a range of unique robotic solutions for wind turbine inspection and maintenance

pioneered in various fields: it is the first to introduce “drone boarding” as a recreational sport, and it was the first to perform a successful human jump from an industrial drone. Despite the innovative and sometimes even fun applications of heavy-duty drones, they also saw the challenges that drones have in their daily use as tools in the service of the wind industry, and this gave them the idea to create a more stable, durable and less weather-dependent solution. Aerones is growing and company is proud to have expanded team to 50+ talented specialists. The most recent milestone achieved is, together with TüV Nord in Germany, having certified Aerones’ technology and inspection services, according to the relevant IEC/ DIN norms in the industry. Aerones’ experience of operating in the German market is positive and the company is working towards the goal of high standards – Aerones has harmonized procedures and received ISO 9001 and ISO 14001 certifications. The company sees the many different types of wind turbines as

Sector: Robotics and wind energy Founding year: 2015 Turnover: €300,000+ Aerones attracted EU funding of €2,400,000+ [EUROPEAN COMMISSION EASME/EMFF] Number of employees: 50+ employees

a pool of technical challenges. From the point of view of Aerones’ founders and engineers, it is interesting to develop knowledge across the whole spectrum of the market and ensure the growth of the company by expanding the knowledge and providing better solutions for broader markets. The wind industry is evolving and rapidly introducing bigger and more powerful turbines, while both offshore and onshore wind turbines are getting bigger to deal with stronger winds. Proactive maintenance is also important and that is Aerones’ niche. One of the biggest obstacles the company faced during the Covid19 pandemic was the inability to travel like the people could before. Aerones quickly restructured and the company was able to weather these difficult times and even grow. Logistics and planning have ensured that company can operate safely on three continents. Aerones continued to develop new products and solutions, and in the year of the pandemic they started to develop specialised robotic solutions for the offshore market.

by TERESA MÜNZBERG

Food for Future

‘We believe that the number of vegans will continue to increase, as will the number of flexitarians. People will pay more attention to the ethical aspect of what they eat.’ Enno Ence, owner of MILZU!

MILZU! produces organic food from natural ingredients. New entrants during the corona pandemic included vegan meat alternatives based on organic grey peas. The trend is growing, according to the owner Enno Ence, as more and more people will be looking for a healthier and sustainable diet in the future.

What are your products now and how do you envisage the future? Our breakfast cereals are made from rye, an ancient grain with high nutritional value, containing mainly fibre, vitamins and minerals. Nevertheless, our new cereals Veggy Cereal and also Veggy Crush Burgers and Balls are made from organically grown grey peas. This is an innovation in a market where the sustainable and responsible use of products and natural resources is increasingly

in demand. Our products have a short list of ingredients. We do not use flavour enhancers, E-numbers, preservatives or added vitamins. They are organic, and shoppers can immediately understand what the products contain by reading the ingredients. There is nothing incomprehensible on the list. For our consumers, food is not just something to satiate their hunger, it is an investment in their well-being and health. How was your company founded and who came up with the idea? I always knew I wanted to have my own company in the future. When my children were born, my wife and I noticed that products for them were often too sweet and had various food additives, which gave us the idea of making healthy cereals. We started experimenting in our kitchen until we decided to work with scientists to develop the perfect formula. What is your opinion about the green economy? Most of our products are organic. Our new brand Veggy Crush, which was launched in 2020, offers organic plant-based products. We use traditional grains in the products - rye, oats, and grey peas. We truly believe that organic products need to become part of the mass market.

MILZU!

Sector: breakfast cereal, confectionery, frozen and ready-made meal sectors Founding year: 2005 Turnover in 2020: approx. €1 million Export amount: around 70% of all production Main countries for export: Germany, Poland, Ukraine, China

You recently developed a vegan meat alternative. Do you think the vegan lifestyle is the future? We believe that the number of vegans will continue to increase, as will the number of flexitarians. People will pay more attention to the ethical aspect of what they eat. Conscious eating will become more popular. The organic sector will continue to grow. I can call myself a flexitarian. I pay a great deal of attention to the food I eat. I want to know where it comes from or what benefits it has. Regarding the disadvantages of the vegan or vegetarian diet, sometimes the products are packed with chemicals and food additives. You cannot then call them clean, health-promoting foods, even if they do not contain meat.

Publicity photo of MILZU!

he Latvian company MILZU! was founded in 2005 and operates in the food sector. From the very beginning, they relied on scientists for their product development and focused on organic products as well as innovative solutions. Primarily, they produced breakfast cereals, but the company has since expanded its range by developing organic and non-organic products for other segments, such as confectionery and plant-based meals. The company sees its future in simple, clean products and is willing to implement innovations that increase the value of traditional Latvian crops and expand their applicability in the world. The MILZU! team is driven by the prospect of creating a healthy alternative in the food sector by developing new products.

60 | I N V E S T M E N T S

Competition among Baltic sisters is intensifying Between the Baltic States, wthere is a struggle not only to attract new potential investors, but even for the relocation of existing companies to competing countries, entrepreneurs see trump cards for each of the Baltic States. JĀNIS ZELMENIS

JSC «BDO LATVIA» PARTNER

ompetitiveness in the Baltic region is discussed almost every year, when a country changes tax rates, their rebate system, application procedures, introduces new or raises existing incentives for attracting investors. Undoubtedly, electricity costs, especially the amount of the mandatory procurement component, distribution network tariff, are important issues for potential investors of energyintensive production facilities, while in the field of mining industry the conditions for obtaining a mining license and the term of the license are important. In turn, over the past two years, the challenge for some potential investors (and also companies already operating) has been to open an account with a bank in Latvia, to meet the requirements of money laundering regulations and even to obtain appropriate documents confirming the true beneficiaries.

Many indicators

Potential investors want to make money, not create new jobs, pay taxes to a treasury, so those who have the money and willingness to invest very carefully assess everything that will affect their investment conditions, rate of return, competitiveness, labor availability, infrastructure, operations ensuring the availability of the necessary services and, of course, possible state (municipal) support. Representatives of different spheres have very different factors of interest - for example, potential investors in the real estate sector are most interested in issues related to building permit conditions, deadlines, who pays for the necessary infrastructure - water, electricity, heat, street (road) construction, as well as information on real estate tax rates. In turn, the main interest of the company interested in wood processing

I N V E S T M E N T S | 61

business in Latvia was not only the nuances of corporate income tax, but also the possible volume of cutting of one tree species (availability of raw materials resources) in the next 10-15 years (potential risk - decline in timber production). In recent years, we have had to deal with investors who value the Baltics and even initially prioritize Latvia, but the set of requirements (for opening accounts, documentation of true beneficiaries and evaluation of business partners in accordance with anti-money laundering regulations and developed methodologies) is so high that after a while Lithuania is chosen as the best solution, which, like Latvia, is an EU member state and complies with EU directives and regulations on money laundering, but it does not have such exaggerated fears and doubts about «but if» cases.

Income tax factor

Although several years ago Estonia was the only country not only in the Baltics, but even in the world, where corporate income tax had to be paid only if profits were distributed in dividends, now the same procedure applies in Latvia. It seems that in 2017, Estonia decided to reduce the corporate income tax rate for regular dividend payers from 20% to 14%, which means that the northern neighbor will apply for a profit center position throughout the Baltics, as in Lithuania the tax rate is 15% but the effective rate is even lower because it is reduced by various costs and the amount of depreciation. The introduction of a 14% corporate income tax rate in Estonia should be seen as a response to the corporate income tax reform in Latvia.

Those who have the money and willingness to invest very carefully evaluate everything that will affect their investment conditions, rate of return, competitiveness, availability of labor, infrastructure, availability of services necessary for operation and, of course, possible state (municipal) support. It should be reminded that since 2018, Latvia has introduced essentially the same corporate income tax (CIT) solution as it has been operating in Estonia since the beginning of this century. Namely, Latvia’s new corporate income tax regulation envisages not only a higher (20%) rate of this tax compared to the former 15%, but also that profits not distributed in dividends will not be subject to corporate income tax. It is necessary to take into account some detail - this tax rate, moreover, according to the formula the amount of 0.8x20% must be paid for those expenses that are comparable to the distribution of dividends - for expenses that are not related to economic activity. This calculation formula has also led to the calculation that, for example, a company pays EUR 100 for a service that is considered to be unrelated to an economic activity, then applying that formula (EUR 100/0.8x20%) we obtain that the tax payable, is EUR 25 - so, the CIT rate is already estimated at 25%, as it was before 2002.

It should be noted that the Estonian state will collect income tax on smaller companies on the share of distributable profits that will be paid in dividends each year, but this process will be gradual, adding up each year the share of profits paid in dividends on a regular basis. This system is beneficial for those companies that regularly pay dividends. Namely, a company that pays dividends of EUR 100,000 in the first year would be subject to a 20% corporate income tax - for example, EUR 20,000. In turn, the following year, a third of the dividend profit of EUR 100,000 would be subject to a 14% rate (EUR 4,667), while the remaining amount would be taxed at a rate of 20% (an additional EUR 13,333) and would add up to EUR 18,000 (18% CIT from dividends – EUR 100,000). In the third year, dividends of EUR 100,000 with the 14% rate are assumed to be paid in the previous two years - EUR 200,000 - and one-third are subject to this rate EUR 9,333), while the 20% rate would be applied to the remaining dividends, EUR 16,000 (16% CIT from dividends EUR 100,000).

62 | LA W & TA X

Finally, dividends payable in the fourth year of EUR 100,000 at the 14% rate are assumed to have been paid in the previous three years at EUR 300 000, and one third would be subject to this rate (EUR 14,000), while the 20% rate would be applied to the remaining dividends (14% CIT from dividends EUR 100,000). Dividend recipients in Estonia, even if they pay 14% corporate income tax, still have to pay 7% personal income tax on the dividends received, while in Latvia, when receiving dividends, personal income tax is 0%.

Lithuania’s somersalt

Lithuania’s decision to introduce a 20-year corporate income tax rebate from 2021 for private investors who will invest at least 20 million EUR in the southern neighborhood should be considered very important (in the Vilnius region - 30 million EUR) and will create at least 150 (in the Vilnius region - 200) new jobs. Interestingly, only private investors can expect a 20-year income tax holiday, not state-owned companies. In essence, Lithuania has introduced a mechanism similar to the one in Latvia that was in force until 31 December 2017, only with the difference that the amount of investments in our country had to exceed 10 million EUR. The southern neighbors have differentiated the amount of this investment, because in the most economically powerful Vilnius region, a potential income tax holidaymaker will have to invest 50% more than if the same investor invests in Klaipeda, for example. With this offer, in essence, Lithuania is not only

applying for attracting potential investors, but the 20-year corporate income tax rebate offered to investors in the Baltic and Polish regions significantly reduces the opportunities to attract large investment projects to other countries in the region, including Latvia. It is too early to assess the impact of this Lithuanian innovation on attracting investors.

Free zone factor

Industrial zones have become a prerequisite for attracting investors in the manufacturing industry. Potential investors have a great choice. Poland and Lithuania are the main competitors for investment in production from Germany, while Estonia is the main competitor for investment from the Nordic countries. In the conditions of fierce regional competition for foreign investments, there are questions about the Latvia’s industrial zones offer (appropriate premises, infrastructure) and special economic zones offer (real estate tax and corporate income tax rebates) competitiveness in respective of those offered by Poland and Belarus.

Northerners against southerners

Analyzing personal income tax rates, it must be concluded that of all the three Baltic States, it is most advantageous for holding companies, their managers, top managers, as well as highly paid specialists in the field of ICT to be in Estonia, as their salaries are taxed at 20%, while in Latvia Recipients of the highest salaries pay 31%, but in Lithuania even 32%. It should be noted that in Lithuania the most significant

reforms have been carried out in the field of mandatory state social insurance contributions, where the rate has been reduced from 40.2% to 21.29%. Particularly favorable treatment is given to employers, whose contributions have been reduced from 31.2% to just 1.47%. In turn, the amount of employees’ contributions has been increased from 9% to 19.5%. In addition, similarly to Latvia, the southern neighbors have also introduced the maximum amount of compulsory state social insurance, but this is not the case in Estonia. However, unlike Latvian employers, Lithuanian and Estonian colleagues do not have to pay a 25.5% solidarity tax on income exceeding EUR 62,800 per year.

Property taxes

The most friendly for real estate managers, and especially for renovators in the Baltics, is Estonia, where there is no real estate tax on buildings. Namely, the real estate tax policy in Estonia is significantly more favorable for building owners, especially for the managers of old, architectural monuments, because when renovating them, the real estate tax will not increase, unlike in Latvia or Lithuania. Thus, the northern neighbors have found a great opportunity not to burden those building owners who have invested money in their renovation with an additional tax. In Lithuania and Latvia, the real estate tax policy is similar, although the size of the applicable tax rates is different. Unlike the Baltic neighbors, Latvia has a very detailed gradation of tax rates, for which real estate tax rate must be paid.

THE ATTRACTIVENESS of Estonia, Latvia and Lithuania

FOR FOREIGN INVESTORS

Latvia

Estonia

Lithuania

PERSONAL INCOME TAX RATES T 20% up to EUR 20,004.00 annually, T 23% from EUR 20,004.01 to EUR 62,800.00 annually; T 31% for more than EUR 62,800.00. T Solidarity tax 25.5%, for income over EUR 62,800.00 annually.

T 20%

T 20% for up to EUR 104,278.00 annually T 32% more than EUR 104,278,00 annually

EUR 500.00 (differentiated, ceiling EUR 2110.00 monthly).

EUR 350.00 (ceiling EUR 2666.00 monthly).

TAXABLE MINIMUM EUR 300.00 (differentiated, ceiling EUR 1800.00 monthly).

STATE COMPULSORY SOCIAL SECURITY CONTRIBUTIONS 34.09% T Employer 23.59% T Employee 10.5%

37.4% T Employer 33.8% T Employee 3.6%

21.29% T Employer 1.79% T Employee 19.5% Health tax 9%

From July 1, the minimum payment is EUR 170.00 monthly.

The minimum payment is EUR 192.72 monthly.

The minimum payment is EUR 40.00 monthly.

CORPORATE INCOME TAX RATES: 20%

14%; 20%

15%

nonexistent

0.5-3%

0.1-2.5%

0.01-4%

REAL ESTATE TAX RATES 0,2-3% LAND TAX RATES 1.5-3%

SOURCE: BDO STUDY.

64 | LA W & TA X

Seven lessons from data breaches for businesses in the Baltics

MARI- LIIS ORAV

ARINA STIVRIŅA

MINDAUGAS CIVILKA

SENIOR ASSOCIATE AT TGS BALTIC ESTONIA

ASSOCIATE AT TGS BALTIC LATVIA

PARTNER AT TGS BALTIC LITHUANIA

WHY TALK ABOUT DATA SECURITY AND DATA BREACHES? Data security and data breaches attract constant and vocal attention from the media and the public. Businesses today face increasing pressure to address this matter and make it one of the management’s top priorities. Long-visioned entrepreneurs as well as other stakeholders appear to realise that data and IT systems have become core corporate assets and that there is no place in the modern economy for “non-IT”/ “non-data” companies anymore. Thus, data and information security are gradually evolving from “nice to have” to “needed for survival”. Of course, most businesses in the Baltics still naively hope that they are “too small” to suffer a meaningful data incident or simply that nothing will happen to them. At the EU level, one can easily locate more than a few pieces of legislation,

both general and sector-specific, that set out key principles of data security and impose requirements on companies engaged in data-driven or data-related business activities. One such piece of EU-wide legislation is the General Data Protection Regulation (GDPR), which lays foundations for universal personal data protection framework in the EU.

liability can only arise for a business where a data breach is handled in a negligent, inappropriate or concealed manner, or when the breach is in fact caused by a lack of security measures on the part of the company.

Among other things, the GDPR imposes a general obligation on every person that processes personal data to (a) record all data breaches internally, (b) in some case notify the supervisory authority about a data breach (within 72 hours of learning about it!), and (c) in some cases even notify the natural persons concerned. Importantly, the GDPR contains no detailed requirements for how exactly a data incident should be managed, and even more importantly, it imposes no liability for a data breach which has been suffered. GDPR-driven

Based on our experience, we put forward seven lessons from data breaches in the Baltics which we believe are useful for companies in various states of preparedness:

WHAT LESSONS HAVE BEEN LEARNED?

Awareness on the part of personnel is key for managing any data breach. Experience shows that ongoing education and training of teams is always vital for preventing, detecting, and responding to data incidents. If people do not know what to look out for, you can hardly expect them to avoid or report incidents reliably.

LA W & TA X | 65

Having a detailed overview of your data processing activities (including a comprehensive data flow map, up-to-date records of processing activities, a register of IT systems, and a register of data processor contracts) is crucial for determining all the locations and vulnerabilities of a leak. Remember, you only have 72 hours to decide whether to report a breach or not. That includes non-business hours (hopefully you will not become aware of a breach on a Friday!) and you might have to gather a lot of information before deciding whether to notify. Note that a decision to notify might require board-level approval and it may take some time for information about a breach to get elevated to the board level, so the board might only have a few hours to make its decision. You will never make it if you only start mapping your data and systems when a problem occurs.

Alignment and collaboration of IT, PR and legal teams is absolutely essential for timely and effective management of an incident. Experience shows that valuable time is wasted on internal discussions and co-ordinating

D ATA

issues, messages and tasks among these roles and functions.

Make sure the data protection officer or legal professional helping you with a data breach has experience managing data breaches, from helping assess incidents, to notifying the supervisory authority and data subjects and, ideally, handling an investigation by the supervisory authority and related media coverage. While retaining someone with that experience may incur extra costs, it could help you avoid even more costly mistakes.

Transparency with the supervisory authority and individuals is key for an effective data breach response in both the short term and the long term.

Tools that automate incident management processes save crucial time and help avoid commotion in the wider context of managing a crisis.

And last but not least: print out your data protection documents. Yes, on paper! A data breach management policy is useless if it has been encrypted

B R E A C H E S

I N

T H E

by ransomware and is not available during the notification period. The key take-away words are “awareness and preparedness”. WHY RECORD AND NOTIFY? First and obviously, it is obligatory under the GDPR. Failure to record and provide due notification of data breaches as required by GDPR will most probably result in a fine. Second, recording and giving notification about data breaches helps both the company in question and others to strengthen their data security practices. Third, proper detection, recording and notification of data breaches has become increasingly relevant in legal due diligence processes where data protection compliance is among the top issues investigated. Many companies are still reluctant to notify a supervisory authority about a data breach as they believe such notification will in itself immediately bring negative consequences. The truth is that supervisory proceedings are initiated only sometimes, and even if initiated, proceedings often end without actually imposing any fine. Failure to notify, on the other hand, will most likely be penalised.

B A LT I C S

I N

2020

ESTONIA

LATVIA

LITHUANIA

Number of notifications in 2020

138 (20% increase)

113 (5% increase)

181 (1% increase)

Main causes (more than one may apply to a given instance)

Human error (>50%), phishing scams and ransomware attacks (25%), software bugs, intentional malicious activity with customer databases

Confidentiality breaches (~90%), availability breaches (~10%), data integrity issues (~3%)

Confidentiality breaches (~90%), availability breaches (~10%), data integrity issues (~9%)

Main sectors

Healthcare, public sector, finance

No information

Financial, public sector (e.g., registries), e-commerce, healthcare

66 | B U S I N E S S LO C AT I O N by MĀRIS ĶIR SONS

JELGAVA: a city with an automotive past and a metalworking present Though Jelgava has no special economic zone, it has become one of the hubs of economic growth, and a magnet for processing industry investment

his is what a SIA Lursoft study has shown based on information from the Register of Enterprises. Specifically, in late 2019, 2669 active businesses had a registered address in Jelgava: a 60% increase compared to 2010. It should also be kept in mind that there are companies not registered in Jelgava that operate in the city. The companies registered there paid almost 75 million euros in taxes last year, which is 84% more than six years ago, in 2014, when the tax income was 40.7 million. Jelgava’s attractiveness to business is helped by its proximity to the capital and its airport: a good 42 km road connects the city to Riga; Jelgava is also home to Latvia University of Life Sciences and Technologies, and two professional secondary schools: Jelgava Secondary School of Crafts, and Jelgava Technical School.

Without RAF

During the late Soviet period, Jelgava’s claim to fame were the RAF

BUSINESS INFORMATION

Number of active businesses in Jelgava* * whose registered address is in Jelgava Quantity 2019 – 2669 Total net turnover (million euros) 2019 – 964.42 Total profit (million euros) 2019 – 28.19 Number of employees 2019 – 14479 Tax paid (million euros) 2019 – 70.20, 2020 – 74.91 Source: SIA Lursoft

(Riga Bus Factory, ‘Rīgas autobusu fabrika’) vans, the production of which began in 1976. RAF was the city’s biggest employer, providing some 5000 people with jobs, and making about 15,000 of its very much in-demand vehicles during its most productive years. For various reasons RAF failed to survive the transition from a socialist to market economy, and in 1997, the production was shut down, followed by the company’s liquidation. A few historical sources mention RAF conducting talks on a possible partnership with VW; however, information available to the Certus think tank shows that VW did not follow through on this plan due to the instability of the Baltic states. There were also negotiations for the production of specialised vehicles with GAZ, but the contract was blocked by the Latvian government. Jelgava municipal council submitted its bid in a tender for the construction of a factory announced by BMW, which resulted in another setback, as Leipzig made a better offer for the

investor (subsidies in the amount of DM 700 million). Currently the RAF site houses an industrial park with companies working in various fields.

Other players

In 2010, an automotive manufacturer from Moscow, AMO Zil, invested in the construction of a new bus assembly facility, called AMO Plant; however, the company was shut down in 2015, and its production assets were sold to the cooling system manufacturer AKG Thermotechnik Lettland, which set up two new factories there, making it possible for the company to significantly increase its production output. During the Soviet period, in addition to the RAF automotive plant, Jelgava had smaller factories making agricultural machinery and general mechanical engineering products. Today, Jelgava has become one of Latvia’s metalworking centres. The country’s first sugar plant was commissioned in 1926, and shut down in 2007, and the factory

B U S I N E S S LO C AT I O N | 67

NP Jelgava Business Park is a large-scale industrial park located in the territory of former car building facility RAF with total area of 23 ha, offering rental space that exceeds 70 000 sq. m.

Photo: Ritvars Skuja

buildings were demolished. An ambitious project began at the site of the former sugar plant: UVZ Baltija planned to invest 75 million euros in setting up a railway wagon factory creating 300 jobs (production was to begin in 2015). The project was suspended and eventually cancelled.

Food and timber

Given the specialisations of Jelgava’s university, it does not come as a surprise that the city is home to woodworking and food processing companies. There used to be a dairy processing plant and a bakery back in Soviet times, and the processing of milk in the city is carried out by a more recent company, SIA ‘Latvijas piens’ (in 2017, a German investor, Fude+Serrahn Milchprodukte, became its shareholder); there is also a confectionery plant, SIA Chocolette Confectionary. Recent years have shown rising activity in woodworking, as two major factories were created in Jelgava, with the SIA Cross Timber Systems large solid wood panel

production plant, and the nearby facility of SIA IKTK making large folded bonded wooden structures (actually located in Ozolnieki Municipality); there are also two major furniture plants (SIA Luwo and SIA Marks M), the wooden window producer SIA Flora, as well as a few other woodworking companies. During the Soviet period, Jelgava also had a fibreboard panel factory, which has since disappeared, though a facility of the same type has been opened in Jaunlaicene.

Other industries rising, too

As in the rest of Latvia, the biggest proportion of companies in Jelgava operate in wholesale and retail, which are followed by construction and services associated with it, vehicle maintenance, transport and other services. Jelgava’s flax processing factory and a ceramics plant are in the past too, though they’ve been replaced by many other businesses that have shown considerable growth in recent

MAIN BUSINESSES* BY INDUSTRY

* That submitted their annual accounts for 2019 Wholesale and retail trade; car and motorcycle repair services . . . . . . . . . 676 Construction. . . . . . . . . . . . . . . . . . . . . 343 Professional, scientific and technical services. . . . . . . . . . . . . . . . . . . . . . . . . 323 Processing industry. . . . . . . . . . . . . . . 279 Transportation and storage . . . . . . . . 195 Real estate transactions. . . . . . . . . . . 164 Administrative and maintenance service providers. . . . . . . . . . . . . . . . . . . . . . . . 120 Information and communication services. . . . . . . . . . . . . . . . . . . . . . . . . 116 Source: SIA Lursoft

years despite the fact that the idea of setting up an industrial development zone in Jelgava was scrapped in 1997 due to a lack of support. Jelgava has a business incubator, and a few potential industrial zones. The city enjoys good transport infrastructure, making it possible for people living in its surroundings, and even in Riga, to work in Jelgava.

68 | B U S I N E S S LO C AT I O N

by MĀRIS ĶIR SONS

Launching two new factories Having invested some 30 million euros, SIA AKG Thermotechnik Lettland has set up an aluminium profile factory and the company’s second heat exchanger production facility.

oth will start production in Summer 2021. In late 2016, with its own premises at full capacity at the time, SIA AKG Thermotechnik Lettland bought the production facility (13,000 sq. m) and the office building of the insolvent bus assembly company AS Amo Plant, located nearby. Gerhard Ritzmann, board member of SIA AKG Thermotechnik Lettland, stated that a total of 150 new jobs would be created for the two production plants. ‘We began hiring employees in early 2021, and we now have 30 of the 150 we need,’ said G. Ritzmann, when asked about new employees.

Output to rise gradually

The addition of two new factories is expected to boost the company’s net turnover. Currently, at maximum capacity, it can generate a net turnover of some EUR 36 million; in the coming years, it could rise to about 50 million. ‘This year’s net turnover could already be as high SIA AKG THERMOTECHNIK LETTLAND Industry: mechanical engineering, production of cooling radiators Exports: 99% Net turnover: EUR 27 million (2020) Number of employees: 290 Founded in: 2003 Location: Jelgava

as 40 million euros, and from then on, rise gradually to 50 million over four years,’ said G. Ritzmann. He cautioned, however, that today, when the situation can change drastically and very quickly, making highly reliable predictions is difficult. G. Ritzmann offered an example of this from a few months ago: by late November 2020, it had been planned that the company would not generate any profit in 2021, but still keep all 290 of its employees. But shortly before the year ended, there was a flood of orders from current and new clients, which the company could not have fulfilled, even if working at maximum capacity. ‘It could be the case that the clients of heavy industrial equipment manufacturers saw the beginning of the rollout of the Covid-19 vaccine in late 2020, and thought it would tackle the pandemic; prior to that, the same clients refrained from making orders because of uncertainty as to what would happen in the future,’ G. Ritzmann said. He also pointed out that the current situation was made more difficult by the inability of a few suppliers of components and raw aluminium product to deliver as many of these materials as the AKG factory in Jelgava needed. G. Ritzmann also reported that 2020 had been a hard year because of most of the factories run by AKG’s clients closing due to attempts by European governments to limit the spread of

SIA AKG Thermotechnik Lettland board member Gerhard Ritzmann: ‘The two new production plants will make it possible for the company not only to build more cooling systems, but also to become the only producer of aluminium profiles in Latvia, and in the Baltics.’

the coronavirus, resulting in a net turnover of only EUR 27 million for SIA AKG Thermotechnik Lettland in 2020. ‘The government in Latvia was more reasonable than elsewhere in Europe, and allowed manufacturing companies to operate,’ G. Ritzmann emphasised.

99% exports

The cooling systems made in Jelgava are delivered to buyers abroad. ‘90% of the company’s exports go to Europe, with Germany receiving some 60%, and the remaining 10% are sold to clients in America and Asia,’ G. Ritzmann said. He noted that the biggest problem at the time was the lack of shipping containers. The output of the new aluminium profile production plant, which will be the only one of its kind in the entire AKG group, will be consumed by the facility in Jelgava, as well as other AKG facilities in Europe, mostly by its factory in Germany. ‘So far, we have been importing the aluminium profiles used in the manufacture of heat exchangers from Germany; from now on, the process will change direction,’ G. Ritzmann pointed out.

B U S I N E S S LO C AT I O N | 69

Ritvars Skuja, publicity photo

by MĀRIS ĶIR SONS

10 million euros to be invested in expanding production Covid-19 has led to changes in the market of polymers, on which AS PET Baltija relies for its income, and as a result, the company plans to invest some 10 million euros to increase its production capacity and efficiency in the coming two years

he widespread uncertainty caused by the pandemic forced the company to revise its longterm strategy to be implemented over shorter periods of time. This also affected PET Baltija’s production and the sale of recycled raw materials: many companies suspended their orders, and for some positions, the drop in sales was as steep as 30%, with an average reduction in net turnover of about 5% in 2020,’ AS PET Baltija board chairman Salvis Lapiņš said. With the introduction of the pandemic restrictions and rapid changes in the international market, the company had to shut down two of its four biggest production lines, and temporarily let go of some of its employees. ‘The situation in the country and globally has improved, and all the jobs we previously had to cut are now back, and already AS PET BALTIJA Industry: recycling of polymers Net turnover: EUR 35.7 million (2020) (EUR 37.2 million in 2019) Exports: 99% (2020) Key markets: Russia 24%, Germany 16%, Poland 12%, Lithuania 12% Number of employees: 234 (2021) Location: Jelgava Founded in: 2003

filled,’ S. Lapiņš emphasised. He also admitted that last year’s drop in oil prices rippled noticeably into the recycled materials market, forcing manufacturers to reduce the prices of their finished products: this had an effect on the company’s net turnover. However, the market currently seems to be getting back on track. ‘Since December 2020, we’ve actually even managed to increase the sales of our products, and the turnover for the first three months of this year was almost a third of our entire turnover in 2020,’ S. Lapiņš pointed out.

Changing trend

Environmental issues are gaining more and more attention all over the world, which is also reflected in various EU regulations concerning the use of recycled materials- at least 25% of the material used to make packaging for drinks must be recycled in the coming years. In addition to the binding requirements, there are many major companies demonstrating green thinking and planning to exceed this EU threshold, hoping to use 30 or 40% of recycled materials in making packaging for drinks. ‘Furthermore, PEPSICO has already announced its intention to use 100% recycled materials for some of its brands, and we expect

AS PET Baltija board chairman Salvis Lapiņš: ‘We plan to strengthen our position, becoming a leading manufacturer of PET pellets in Northern Europe, which is particularly appropriate because the demand for our end product, food-grade PET pellets, has grown, and will continue to grow in the coming years.’

many other manufacturers to follow their lead,’ S. Lapiņš explained. In view of this trend for growing demand, the issue of expanding the production capacity of PET Baltija has found its place on the company agenda. 2.8 million euros invested last year ‘Though there was a slowdown in new and major investments during the pandemic, we still carefully evaluated the best possible solutions and manufacturers of machinery, and in the coming two years, we plan to expand our production capacity, investing about 10 million euros to do so,’ S. Lapiņš said. Most of the investment is to be spent on the production of PET pellets, for a quadruple increase in production in the next two years. Regarding 2021, the goal is to strengthen the company’s international competitiveness, and introduce production improvements to make it possible to process an even higher proportion of recyclable polymer material bought, putting as much of these materials back into circulation as possible. Significant progress has been achieved here, as investments in 2020 reached 2.8 million euros, up from just under one million a year before.

70 | I N S I D E R

Step by step, in the right direction by ANDA A SERE L A BS OF L AT VIA, E XCLUSIV ELY FOR BA LTIC BUSINESS QUA RTERLY

hy is it important for businesses to think about sustainability at all? There is no single answer. If the company has not ever considered it, then the first impulse has to be rather powerful: sustainability being demanded by clients or employees, practised by competitors, or important for investors. In the Nordic countries, people shop based on their personal values. It becomes increasingly difficult to choose Coca-Cola over local kombucha in a supermarket. Recent job market research shows that two out of three millennials would quit their job if it did not bring them personal fulfilment or if the company did not have a purpose that goes beyond profit. People need a higher purpose to motivate themselves to get up in the morning and go to work. They might as well opt for a company with an equivalent, or perhaps even worse package, which does not exist and operate solely for making money. So far I’ve worked with a few tech companies in the Baltics, and whenever they seek investors, they look at the US and Western Europe. And there we see a growing trend of investors viewing sustainability as important. If a company from the Baltics has no answer to the question of how their tech

Having seen the extent of the impact that a 1600-employee business can create by implementing a sustainability strategy, Kristīne Nagle decided to establish her own sustainability consultancy business, Your Impact House. She can’t wait to see the change in the understanding of sustainability that is to take place among businesses and the general public in the coming decade.

would deal with sustainability challenges, or at least not create problems with sustainability, it has a lot more trouble finding investment. Sustainability is important for everybody but not all people are aware of this, because we use all kinds of financial results as the main measure of success. Why so? Today’s world is built in this way: we use and follow financial results. Once we learn to include sustainability in our financial reporting, we can gradually start understanding that sustainability is an opportunity for reducing various risks, and earn more in the long run. What to do and what to avoid in achieving these new goals? I think the first important step is that people actually start talking about sustainability at the company. Today is the time of green transition. The coming decade will be an era of green innovation. Companies and their managers can teach people about this topic. This is not easy, especially because there is a pervasive view among the public that business people and company managers have answers to all questions. Unfortunately when it comes to sustainability, many people aren’t clear on what it means for their company exactly, and who they can

now trust. This is why businesses must talk about these issues using as many facts and data as possible, and focusing on what they have already achieved, sharing their experience, early successes, though without congratulating themselves too much. Overselling the issue is fine in other fields of marketing, but not in this one: it can turn against you in the long term. I’d recommend going to your employees first when beginning the communication about sustainability. This is the most important audience: if you can convince them, the task gets easier from there on. To be frank, this thing that we’re trying to start is completely new and we must be aware of sustainability being a time-consuming process. What should we refrain from doing during this process? I have, for example, seen companies that gifted reusable water bottles to their employees, and those bottles are indeed on their desks: all despite the fact that the office kitchenettes are full of glasses. Sure, we replace disposable water bottles in this way, but at the same time, we buy a product that we might not really need. Today we have the Covid-19 pandemic, and if we put the health and safety of employees on one side of the scale, then of course disposable tableware will be

I N S I D E R | 71 ‘Sustainability is an important issue, and a source of business opportunity,’ Kristīne Nagle, founder of Your Impact House, said

Photo: ProudlyLess Sandija Veikša

preferred in certain situations. We hear in the media every now and then that a big company promises to go carbon-neutral. However, we must keep in mind that not all company employees and clients really understand what it means. Sometimes, the general public will better understand a step like sorting waste, improving a process, supporting a local non-profit, or developing a new environmentally-friendly product. How does one avoid greenwashing? Greenwashing is a situation whereby a company deliberately or inadvertently deceives the

public as to its product being green. And it seems to me that most companies that engage in it, don’t do it on purpose. The main reason is the lack of understanding of good practices. Companies know pretty accurately how well they reduce plastic waste internally. But when it comes to posting reports on social media, they start doubting if it’s really necessary to include very accurate numbers or references. Sometimes they decide it is better to add a link to one of their products. In these cases, I’d suggest relying more on specific data and references in communication, so that there are as few misunderstandings as possible.

What do you personally find exciting about sustainability? I find it fascinating that we’re living at the outset of big changes. Even though sustainability is this exclusive thing, available only to big businesses right now, with time, everyone else will go in this direction as well. I can’t wait to see where we get to in 10, or even 5 years. I hope we manage to change our values, and have a different understanding of what we consume, how we live and how we work. It will be a completely different world. And I want to believe that it will be a better version of today’s world. How did you end up creating an agency specialising in sustainability consulting? I’ve been thinking, reading about this topic, researching it for a long time. I tried introducing sustainability in my personal life at first, sorting waste, buying fewer clothes. And at some point I realised that even if I didn’t buy a single new dress for the rest of my life, I wouldn’t change the direction in which the world is going. At the same time, I had the opportunity to work with Printful, implementing their sustainability strategy. This was a way for me to affect a company of 1600 employees who make a million units of their products every month, and to understand how much impact I can have. This goes far beyond using metal straws, saving water and sorting waste in your private household. I pondered the idea of creating my own business for a long time, and I saw setting up my own agency as a way to have a positive effect on the world.

72 | I N S I D E R

Circular economy is not possible with constant economic growth Elgars Felcis is a sustainability researcher and lecturer at the University of Latvia. Together with his wife and three children, he lives in the countryside in Launkalne (Latvia) and runs an open homestead Zadiņi. He says he wants to test sustainable living ideas in practice. Therefore Baltic Business Quarterly talked to him about his experiences by LĪVA MELBĀR ZDE

pen homestead Zadiņi – how did it come about, on what idea or values is it based, and how many members does it have now? The open homestead Zadiņi where I live has existed in its current form since 2018. There is no single main concept or ideology behind it, but most of our ideas are about ecological and sustainable living. We use the benefits of collaboration while having several individual households. There are now 7 adults and 5 children here – or 4 families. We are open for more people to join us. In total, we are managing 90 hectares of land and forest. For me personally, it is interesting because it allows me to combine my academic work with sustainable living. Living in the countryside also helps me to balance my life. I would describe myself as a hobby-farmer in that regard. We do not feel we need to prove that our homestead can be fully self-sufficient. The idea is more about how we can increase our independence. What examples of sustainability do you follow in your daily life? During the winter when we

finish our garden produce, we purchase much of it from other organic farms in the region. We use the possibilities offered by the direct purchase group “Tiešā pirkšana” so we can buy our food directly from farmers. I stopped flying several years ago. Before that, I lived abroad for eight years and flew quite a lot but now I don’t feel I am missing anything by not flying. I would say that travel is important and a crucial part of life experience, but that can be acquired also without long-haul flights. There are also other mobility issues, such as reducing the use of a car. When I go to Riga, I use public transport; I cycle to the bus stop and take the bus to Riga. I have changed my general shopping patterns, trying not to buy things I don’t need, and if I do buy something I make sure that it is of high quality and will last for years. How would you describe the development of the circular economy in Latvia and the Baltics? The ‘green economy’ and ‘circular economy’ have gained great popularity in recent years. However, there is also an illusion that we can maintain business-as-usual by doing everything the same way as before and just calling it green.

It requires very thought-through processes and clear support from the government to genuinely develop the circular economy. If it’s only left to free-market rule, the use of raw materials will mostly stay cheaper than recycling. If there are no clear incentives or political support for green procurement, the green economy will never come to fruition. Consumer demand is there so companies are trying to be more environmentally friendly and responsible, but their actions are not ambitious enough. Which area of the green economy do you think our society is more open to? The situation with renewable resources here in Latvia is really upsetting. The subsidies system wasn’t designed as thoughtful support but as a corrupt scam which, of course, created a huge public backlash and led people to think that we don’t need renewable resources. At the same time, there is not enough information about the subsidies assigned to fossil resources, although there are huge subsidies of several hundred million euros every year. Of course, there is great influence from Russian fossil fuel companies and a lack of political will. Yes, we have several huge

I N S I D E R | 73

We are used to living with the idea that everything will get much better, that technologies are developing so fast, and that there is progress in everything. It might be not that way in the future, Elgars Felcis, sustainability researcher

Photo: Toms Grīnbergs, LU Department of Communication and Innovation

hydropower plants in Latvia and they make us quite green when it comes to the question of how much green energy we produce, but there could be much more. The zero-waste movement is becoming quite popular because it is something that can be done on a personal level. However, it must be a part of a wider change in behaviour. It is good that we think about what kind of food we buy and don’t use plastic straws, but if we then drive hundreds of kilometres each day or fly as often as we want, it’s not really a green lifestyle. What has the Covid pandemic changed in terms of green thinking and sustainability? The pandemic has definitely overshadowed other issues like climate change and other environmental crises. However, the environmental problems are still here and the climate changes are happening very fast – not in thousands of years but decades. Yes, the pandemic has reduced

the use of fossil fuels but this is just a short-term achievement and it will be reversed soon because economic growth is always related to increased use of energy resources and more emissions. The circular economy can’t work 100% in circumstances where constant GDP growth is demanded because the GDP increase always drives more material and resource use. That needs to change. It is much more important to consider how to support family-owned enterprises and not the bigger ones. This is because small-scale enterprises could live without the need constantly to expand and grow and produce ever more cheaply. Which habits of humanity do you think will be eradicated in the next 10 years? Why? It is difficult to make predictions, especially about the future. Who predicted this pandemic? It can be said that transport is rapidly moving in the direction of electric mobility. This pathway will

continue. I think it is important not to have unrealistic hopes that the transition will suddenly become much faster than it is now and to believe that my life is much greener and sustainable just because I now drive a Tesla. The future isn’t the linear extension of the present. We are used to living with the idea that everything will get much better, that technologies are developing so fast, and that there is progress in everything. It might be not that way in the future. Then you have to answer the question: What is better – the highly individualized, technologized lifestyle that many people have or the de-intensification and a slower, more humble life? The same things are also happening even during the pandemic – the rich are getting richer and the poor are getting poorer. This is also a topic for the Davos forum where super-wealthy people come together. Even they are now starting to think about these issues and the questions of how to create a more equal society. The Nordic countries and Germany are working in this direction. Life-work balance, shorter working times, more work sharing, remote work – all these things are highly topical and must be done in the next decade and onwards. A focus on social wellbeing is more important than economic measurements when we talk about sustainability.

74 | I N S I D E R

Joining forces to innovate sustainably The goal of the Future Hub open innovation accelerator, which is the first of its kind in the Baltics, is not only to help green technology start-ups grow, but also to make it possible for companies to try the format of open innovations in tackling sustainability challenges. by ANDA A SERE L A BS OF L AT VIA, E XCLUSIV ELY FOR BA LTIC BUSINESS QUA RTERLY

part of the Future Hub sustainability accelerator created by Swedbank and the innovation strategy company Helve, prominent companies joined the programme to propose the sustainabilityrelated business challenges that they face. The Helve team then sought start-ups appropriate for each of the challenges, with the purpose of jointly developing pilot projects intended as solutions for dealing with these sustainability challenges during the programme. More than 160 applications from 40 countries were received as part of this process. A quarter of them came from the Baltics. Ten European start-ups joined the Future Hub programme. ‘One of the decisive criteria was that the start-up’s solution had to be appropriate for the sustainability challenge of the company, so that it’d be possible to carry out a pilot project during the programme. The start-up’s country of origin was not a criterion for admission,’ Anna Marija Ķiesnere, head of Business Development and Partner Relations at Helve, explained.

Avoiding greenwashing

In order for the accelerator to succeed and for every one of its

participants to get benefit from it, it was important in planning the programme that every company proposed the sustainability challenges that were critical for its business. This is the reason why the Future Hub team did not limit the companies, letting them decide on the topics, because the companies know best what sustainability challenges they face internally. ‘In terms of sustainability, however, one of the accelerator’s main goals is to seek and develop solutions to current challenges in sustainability, and avoid creating false impressions of how eco-friendly a product or an activity of a company actually is. That’s why it was so important for the accelerator to exclude challenges that were formulated as greenwashing initiatives,’ A.M. Ķiesnere said.

Adapting to new standards

‘Sustainability is our generation’s biggest challenge in creating new and innovating things. At first, business innovation aimed at digitising companies. Then there was a new trend: attempts at implementing the ideas generated by start-ups in large enterprises. The next, and possibly most important wave, is for innovation to pave the road towards sustainability in business practices,’ A.M. Ķiesnere said. ‘The development of innovative solutions is always the centre of attention in start-ups. It’s one

of their main business activities. This means that working together with a start-up company will make it possible for us to offer a better solution to our clients, while enabling us to devote resources to our main business, developing infrastructure. In our view, this is the biggest benefit produced by open innovations. Our goal with the Future Hub accelerator is to bring more attention towards cooperation as a model for business development. We are happy to be joined by other companies that see the advantages of co-creation. Working together will get us much further than competition,’ head of Swedbank Latvija, Reinis Rubenis, said.

Green technology start-ups accepted by Future Hub: Everimpact (France): Environmental monitoring tool for businesses and local governments Ecomate (Italy): ESG assessment platform for businesses Parking Energy (Finland): Large-scale electric vehicle charging solutions AgeVolt (Slovakia): Innovative digital system for charging electric vehicles MClimate (Bulgaria): Smart building solutions and IoT solutions in buildings Linc Tools (Spain): Energy efficiency monitoring and control equipment for digitising buildings Miils (Finland): Solution for healthy and sustainable food recommendations and shopping online Eachthing (Denmark): Digital solution promoting sustainable and thoughtful shopping Plant Jammer (Denmark): Smart recipe app aimed at promoting sustainability in cooking and reducing food waste Food 4 All (Luxembourg): Provider of services intended to reduce the amount of food waste on the level of supermarkets

S K I L L E D - U P | 75

Helping to think bigger

MIDA KALVAITIENĖ HEAD OF HUMAN RESOURCES AT THECA FURNITURE

Skilled-up vocational education and training for employees of wood processing companies was launched in Estonia, Latvia and Lithuania in October 2019. Some of the participants of this program have enjoyed opportunities that they could not even have dreamt of. by LĪVA MELBĀR ZDE

HANNES KAIL FURNITURE SALES/DESIGN AT ARUUT OÜ This program is definitely very useful both in terms of knowledge and social life. There are many benefits – the training opens your eyes and adds plenty of insights. The centre has very modern machinery and excellent teachers. I think the program certainly needs to be expanded, as there is a huge shortage of skilled workers in our field. There could certainly also be such programs in other segments. For example, the metal industry and the food industry. The experiences of other learners broaden your horizons and help you to think differently. MARTIN LÕKOV PRODUCT DESIGNER AND OWNER OF DARKENERGY OÜ

Publicity photos

I know something about designing products, but very little about production and management. So it felt completely natural to join this extremely useful program. It covers a wide range of key topics and aspects in the given sector. Our trainers are all very professional, and it is a pleasure to be in these lectures. But the magical part is

making new friends and business partners. The only drawback is one missing day in the working week. One impressive outcome is that TSENTER is interested in me giving lectures about product design to entrepreneurs and final course entrepreneur students. The second and even more important development from this program is an extensive partnership between me and Kase Furniture OÜ (one of the participants in the Skilled-up program). At this point, we have a new trademark, two new products ready to launch soon and a few products in late development stages. MINDAUGAS NAUJOKAITIS STUDENT IN THE SKILLED - UP PROGRAM IN LITHUANIA I like this project not only because it expands your circle of acquaintances, but also because I acquire a lot of new knowledge. The negative aspect is that, because of Covid-19, the lectures are held online and sometimes it is difficult to understand what the teachers are trying to say. Nevertheless, the Skilled-up program fully lives up to my expectations: I expected to learn more and gain some qualifications, and that did indeed happen. I find it is now easier for me to communicate with managers and get what I want. Regarding my future after the completion of the program, I see two possibilities: the first is to find a job as a production manager or furniture designer, and the second is to start my own business.

During 2021, our company intends to create more than 300 new jobs in its factories in Lithuania. Therefore, the skills of employees in all areas is very important and the company also participates in the Skilled-up program. It has paid off for our company. One of our employees working as an upholsterer gained both theoretical and practical knowledge in various aspects related to production: quality management, communication, the raw material supply chain, occupational health and safety, and environmental protection. The employee involved in the program especially appreciates the unique opportunity provided by the Skilled-up project to meet employees from other industrial companies and share experiences. I sincerely hope that the program will continue and that a number of Theca Furniture employees will have the opportunity to participate.

Disclaimer The European Commission’s support for the production of this publication does not constitute an endorsement of the contents, which reflect the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein.

76 | A D V E RTO R I A L

Work Better

To understand the impact the pandemic has had on what people need and expect in the office, Steelcase conducted research in 10 countries and engaged over 32,000 people in multiple studies. Synthesizing these studies uncovered five overarching needs that will drive macro shifts in the overall work experience and lead to new ways of planning and designing offices.

To Be Safe and Feel Safe

Offices never had to help mitigate the spread of disease, but people are now pandemic aware. They will make decisions about where to work based on a new set of safety standards to help prevent transmission in the office.

Deeper Sense of Belonging Feeling isolated while working from home is the biggest concern people identified in every country and their top reason to return to the office is to connect with coworkers. People want to feel a sense of belonging at work, which is not only good for their wellbeing but it also helps business results — feeling a strong sense of community is the top indicator of people’s productivity, engagement, innovation and commitment to the organization. To Be Productive The most important things people want their workplace to support are very pragmatic. The top three requirements people say they want from their office are all about being more productive: to collaborate with others effectively, easier access to tools and resources and the ability to focus.

Holistic Comfort During stay-at-home for many people discomfort has grown exponentially. Pain, distractions and stress have caused people to wonder on equality of physical, emotional and cognitive comfort back in the office. People need the ability to work in a range of postures, change settings and to move throughout their day. They need a quiet, distraction free environment when they need to focus and to feel connected to their coworkers and the organization’s purpose. Greater Control People want options, so they can choose where and how to work on the task they’re doing. While some people feel working from home has allowed them to navigate their day and avoid distractions, nine of 10 countries rank a “quiet, professional environment” in their top five reasons for wanting to return to the workplace.

I N C O O P E R AT I O N W I T H S T E E LC A S E A N D W O R K S PA C E R I G A | 77

People’s expectations about their work experience changed during the pandemic. Living through a life-altering experience has caused many to think about what’s most important to them and to question assumptions about how work should happen. Leading organizations, in turn, see this moment as an opportunity to reinvent their policies, offices and overall work experience. Steelcase predicts this will lead to macro level shifts in four key areas.

Design Safer Workplaces 67% of EMEA employees said their top concerns are air quality and adherence to safety protocols. To help mitigate disease transmission, such behavioral strategies as mask wearing and distancing, need to be supplemented with changes to the built environment. Understanding how pathogens move through an environment will help companies develop new systemic strategies to help prevent infections at work. Design to Inspire People who have lived through a crisis want inspiration — they want to feel a part of something meaningful. The top two reasons people say they want to be back in the office are to connect with colleagues and feel a sense of shared purpose with the organization. These are both attributes of a strong community, along with trust, inclusivity and resilience. In turn, a strong community correlates with key business outcomes — engagement, productivity, innovation and retention. The workplace can intentionally foster meaningful interactions and signal that change and adaptation are part of the culture and something to be embraced. Design for Productivity People’s desire to accomplish something meaningful, has only heightened during the crisis. Before the pandemic people were frustrated with workplaces that didn’t give them ways to control their privacy and do focused work. During the pandemic, working from home didn’t make that any better for many people. Among employees who were unsatisfied with their work-from-home situation engagement declined 14% and productivity dropped 12%. People want a better experience in which they can easily shift between group and solo work in both physical and digital environments. Design for Flexibility Historically designed for permanence, buildings and offices have been dominated by fixed architecture, power and furnishings. Going forward, organizations will offer more flexible work policies and they will need places that can adapt easily to the changes in where and how people work and also respond to changing business circumstances. Workplaces will need to embrace multi-use spaces that can support diverse types of activities. Furnishings will easily move to allow spaces to expand and contract as needed. While living through a crisis has not been easy on anyone, it has caused people and organizations to think about our shared humanity and what we want to achieve together. We can use this moment as a catalyst for reinventing an office that is not just a container for work, but a place that creates a community where people can feel a renewed sense of belonging, resilience and purpose. Steelcase is the world’s leading manufacturer of office environments. Inspired by over 109 years of insight gained serving the world’s leading organizations, Steelcase designs for a wide variety of customer needs through a comprehensive portfolio of architecture, furniture, technology and services. WorkSpaceRiga is a proud partner of Steelcase in Latvia since 1999. *complete WorkBetter study please view at WorkSpaceRiga.com under subfolder “the future”

78 | T RA D E F A I R S

Vineta Šķērīte

Photo: Messe München

FAIR TO SHARE

Representative of Messe Düsseldorf GmbH and Messe München GmbH in Latvia

How to recreate a physical trade fair experience online Booth design

At a traditional trade fair, you spend a lot of time preparing your booth to look fantastic. If you want your virtual booth to stand out from the crowd too, you will need to plan your strategy carefully and use different booth equipment, such as videos and downloadable information packs. Make sure that any material you offer is consistent with your business branding, as this will help you look professional.

Promotional freebies

Even at an online trade fair, you will likely experience that people are keen on getting some free goodies. Try to find some creative ways to incentivize attendees into visiting your booth. For example, you could offer discounts or access to educational booklets when attendees sign up to your mailing list. Though the costs are a bit higher, you could send out some physical freebies, like a branded tote bag filled with print media. In this way, you can turn those casual visitors into valuable leads.

Networking

Many trade fair hosting platforms offer exhibitors different features and tools to help recreate the face-toface networking encounters. Research the features listed on the host’s website in good time. For instance: will you be able to video chat with

attendees who visit your booth, or can you schedule educational sessions, or one-on-one meetings with potential leads in advance? Check out all the features the hosting platform has to offer and then design a strategy allowing you to use them effectively.

Booth promotion

Make a concerted effort to drum up interest in your brand and your booth before the trade fair starts. Because it is impossible to recreate physical eye contact, it is especially important to pique people’s interest and offer them incentives to visit your booth ahead of time. There are many ways to do this. You can create a blog post offering a preview of your trade fair content and share it via social media. The aim is to spread your brand and the booth’s details. You can also look at avenues the trade fair organizer might offer for promoting your booth. For example, you might be able to promote your logo and booth on the trade fair website? It may also be worth trying to secure some coverage on their social media channels, too. If you have the budget, look at sponsoring an ad on their mailing list or blog to sufficiently advertise your booth. Online trade fairs can provide you with valuable opportunities for networking and securing new leads.

TRADE FAIR NEWS

IMOT moves for 2022 to the Munich fairground In 2022, the International Motorcycle Exhibition IMOT will move to the Munich exhibition grounds in Riem. The new location offers the organizer various possibilities to expand the event spatially and make it even more attractive. In the future, IMOT will be able to display more than 20,000 square meters of exhibition space in two large halls on the exhibition ground of Messe München for the presentation of new products in the areas of motorcycle, scooter and quad, as well as accessories and tuning. The range of products at IMOT is not limited to motorbikes, but accessories and tuning parts are also on display. In addition, tour operators who specialize in bike tours will be exhibiting their products as well. The program is completed by the possibility of test drives on motorcycles or quads as well as various show events. In 2020, IMOT welcomed around 300 exhibitors and more than 60,000 visitors. The 2021 fair was canceled due to the coronavirus outbreak. In 2022, the IMOT will run in parallel with the Bavaria’s largest trade fair for travel and leisure f.re.e., whicht welcomed around 1,300 exhibitors from 70 countries and more than 130,00 visitors in an area 87,000- square meters large. Visitors will be able to find out about the latest trends and highlights from the motorcycle industry, to enjoy the travel area, caravanning & camping, outdoor & sport, the bicycle zone, the Munich AutoDays and the Munich Golf Days. The first IMOT will be held at the Munich fairground in Riem from February 18 to 20, 2022.

IMOT 18-20 FEBRUARY 2022, MUNICH imot.de

T R A D E F A I R S | 79

Photo: Messe München

368

TR ADE FAIRS 2020 IN GERMANY WERE CANCELLED OR POSTPONED

22 BILLION €

ECONOMIC CONSEQUENCES OF CANCELLING TR ADE FAIRS 2020

The year of no trade fairs ar

large number of the 2020 German trade fairs had to be cancelled because the uncertain general conditions did not offer any planning security for exhibitors and organisers. For a number of trade fairs, the organisers have decided to postpone dates to 2021 and 2022. More than 70% of all trade fairs planned for 2020 in Germany (a total of 368) were cancelled

or postponed. However, in many cases the trade fair organisers have developed substitute formats, in particular digital events with company presentations incl. interaction possibilities and a digital congress programme. Around 50 such events took place in 2020. Exhibitors were thus able to maintain customer contacts and inform them about innovations.

According to the organisers’ plans, around 380 trade fairs should be held in Germany 2021. Already about 110 fairs have been cancelled or postponed to 2022, 2023 due to the ongoing pandemic. The cancellation of trade fairs not only results in losses for the directly involved players such as exhibitors, visitors, service providers and organisers, but also has serious macroeconomic consequences. The sectors affected include the hotel and catering industry, the transport sector etc. According to calculations by the Institute of the German Trade Fair Industry, the overall economic consequences of cancelling trade fairs amounted to 22 billion euros for 2020.

JULY – SEPTEMBER 2021

TRADE FAIR

INDUSTRY

NEXT DATE 2022-2023

AUGUST 28 SEPTEMBER 05 DÜSSELDORF

CAR AVAN SALON World’s Largest Show for Motor Homes and Caravans

VEHICLES, LEISURE

AUGUS T / SEPTEMBER, 2022

AUGUST 28 SEPTEMBER 05 DÜSSELDORF

TOURNATUR Hiking and Trekking Exhibition

TOURISM

TOURNATUR.COM

AUGUS T / SEPTEMBER, 2022

SEPTEMBER 03 - 07 BERLIN

IFA Consumer Electronics Unlimited & IFA Global Markets

CONSUMER ELEC TRONICS, MULTIMEDIA

SEPTEMBER, 2022

SEPTEMBER 07 - 09 HANOVER, DIGITAL

L ABVOLUTION European Trade Fair for Innovative Laboratory Equipment and the Optimization of Laboratory Worlflow

L ABOR ATORY TECHNOLOGY, BIOTECHNOLOGY, MEDIC AL ENGINEERING

SEPTEMBER, 2023

SEPTEMBER 07 - 12 MUNICH

IA A MOBILIT Y World’s Leading Trade Show for the Automotive Sector

AUTOMOTIVE, SMART MOBILIT Y

SEPTEMBER, 2023

SEPTEMBER 08 - 10 HAMBURG

MARITIME INTERIORS CRUISE & FERRY GLOBAL EXPO Interior Design, Equipment and Technology for the Cruise & Ferry Industry

SHIPBUILDING, PORT MACHINERY, OFFSHORE ENGINEERING

SEPTEMBER, 2023

SEATR ADE EUROPE CRUISE & RIVER CRUISE CONVENTION

CRUISE SHIPS, SHIP EQUIPMENT, TOURISM

SEPTEMBER, 2023

C AR AVAN -SALON.COM

IFA- BERLIN.COM

L ABVOLUTION.DE

IA A.DE

MARINEINTERIORS - EXPO.COM

SEPTEMBER 08 - 10 HAMBURG

SE ATR ADE- EUROPE.COM

80 | C U LT U R E

by ALE X ANDER WEL SCHER

was a giant installation that filled the entire space of the Tallinn Art Hall. Thousands and thousands of painted empty milk cartons were lined up along the floors and covered the walls of the main exhibition space. The massive milk carton monument was part of the most extensive retrospective of the Estonian artist Erki Kasemets. Working primarily with old and used packaging materials, the Tallinn-based artist elevates trash and garbage into aesthetically pleasing sculptures and artwork. Using these discarded objects in his works is not a critique of capitalism and consumerism culture as such,

Litres of the past Erki Kasemets is one of the most well-known and consistent representatives of trash art in Estonia. The respected environmental artist creates unique works of art from things that everyone else might consider to be garbage – to capture time and recycle it. but rather a means for analysing themes like time and memory. In collecting abandoned or empty items, painting them over and arranging them into paintings, assemblages and installations of different size and patterns, the 1969-born Kasemets wants to capture time, materialize different moments and preserve them. What he does is both recycling as art and artistic recycling. “The biggest motivator for me is time. There is no greater mystery or more powerful experience. Everything around us and inside is temporal. Time also creates assessments and values. Time evaluates objects, including works of art. Time turns former objects of desire into rubbish.

The latter process has become increasingly fast, and the useful life of new goods may be very short or even non-existent”, is how the artist and graduate of the Estonia Academy of Arts explains what prompted him to turn trash into colourful creations of art.

From trash to treasure

Among the first objects that found a place in his work and which he started collecting at the end of the 1980s during Soviet times were one-litre milk cartons. “In my youth, I was very impressed by the appearance of disposable cardboard milk packaging on store shelves. Before that, the predominant memory in my experience was glass milk bottles, which were reusable and had

Photo: Dénes Farkas, publicity photos

Erki Kasemets at the Spring exhibition of Estonian art 2021.

a significant monetary value when they were empty. The new, cardboard packaging was made of a stronger material and with nice proportions, so just throwing it in the trash didn’t make sense to me. I started to keep them, tried to make something out of them and I gradually started to cover them with paint. This coincidence led to a longer process in which I have been painting packaging for decades. Each one of them is a completely different work.” Milk cartons have become artistic brand of Erki Kasemets and were used in various installations at exhibitions in Estonia and abroad.

Installation made of painted milk cartons at Tallinn Art Hall (2013)

Kasemets has been painting on milk cartons for more than three decades now and continues to so, even though he has not been keeping up with his previous pace of painting one pack a day. Over the course of time, a colossal, ever-growing collection has been formed by this conceptual art project which displays a colourful array of the artist’s everyday life. Each milk carton, painted over by the artist and bearing the date plus a diary entry, marks one day. “These packages now contain the time lived, the litres of the past”, he emphasizes.

Publicity photo

While milk cartons have become his artistic brand and were used in various installations at exhibitions in Estonia and abroad, they are not the only things that Kasemets has collected and turned into art during his life. Other regularly used materials in his works are drinks cans, cigarettes packs, matchboxes, CDs and other packaging that he also sources from friends and acquaintances. He has also collected buttons that he keeps sewing on a trouser suit – it is worn only on special occasions.

Looking at trash in a new light

“The essence of my trash art is that I turn low-value material into something new, I lift it outside the usual garbage category. This makes the object become ambiguous. On the one hand, its original essence – what it was once intended and produced for – is recognizably preserved and, on the other hand, the work of art will hopefully create a new image itself”, adds Kasemets about his approach, which is highly recognized by art critics and experts. Many of them describe him as a data collector similar to an archivist who recycles time and information by creating unique modular and encyclopaedic systems of them. And how do most people react to his art? “It’s different. The mere fact that so-called waste materials have been used can already be disturbing for some, although everything in itself can be absolutely sterile”, Kasemets explains. “However, in the exhibition halls, the feedback has been mostly positive. Familiar materials are seen in a certain way, and when highlighted as a work of art, garbage inevitably creates different associations and feelings than in a normal situation.”

82 | L E T‘S D O I T

by ALE X ANDER WEL SCHER

Cleaning up the world What started as a voluntary countrywide initiative in Estonia in 2008, has grown into a global operation. The Let’s Do It movement engages tens of millions of environmentally savvy volunteers every year around the globe to collectively clean up their neighbourhoods – to make the world a cleaner and greener place.

raving yet another of the cold spring days this year, people across Estonia took part in the annual Let’s Do It campaign on 1 May to tidy up their private backyards and gardens or engage in other springtime activities. Organized via a collective action website, almost 2,283 different events were registered – with many thousands of Estonians participating safely and in compliance with the current Covid19 restrictions. Almost 800 biodiverse flower meadows have been sown, and more than 400 compost bins and insect hotels have been built all across the Baltic country. People could register as helpers in advance on the website or just drop by spontaneously. Everyone helps as much as they can and want. The Let’s Do It campaign started thirteen years ago and was born from one simple idea by a small group of people around the project initiator Toomas Taipedo: What if we can clean up the whole country! Looking for support, they approached Estonian entrepreneur Rainer Nõlvak in 2007, introducing the idea to solve the illegal waste problem together with volunteers in about five years’ time. Nõlvak agreed, but to the disbelief of many upped the ante by saying that it will be done in just one single day.

“Nobody had done this before and at first we had no idea how to do it. But we were certain that it could be done”, recalls Nõlvak, former long-time council member of the Estonian Nature Fund and now Chief Motivator of the Let’s Do It! World movement, when talking about the beginning of the campaign that initially aimed to clean up about 10,000 tons of waste. To achieve this, at least 40,000 people with helping hands were needed. But how to do it?

Creating a bottomup civic movement

In a first step, the project team put together professionals from all kinds of fields and embarked on a grassroots campaign to generate a buzz and attract volunteers by engaging organisations, communities and opinion leaders to become campaign partners. Each partner supported the nongovernmental movement however they could and provided resources such as staff and manpower, transportation means or free media air time. “We were told that at some point we were like the mafia – nobody would say ‘no’ to us”, says Nõlvak with a smile. Connecting civic power with an IT solution helped in the next step to outline and create a real-

time virtual garbage map. The trash sites were geotagged by over 700 volunteers using specially developed mapping software that combined Google Earth and other freeware programs. “That software made mapping very easy. Just by walking around the forest and pressing a few buttons on their mobile phones, people could mark a trash site”, software developer Antii Heinla explains. In total, data on more than 10,000 trash sites was automatically uploaded to the waste map, indicating their location and some basic information about them. Everyone could follow the process online. “It was fun to sit behind the screen and watch the garbage points appear on the map”, says Heinla, who was one of the developers of Skype and the founder of the robot delivery company Starship Technologies. Using the visuals of the trash map, the project’s next step was to organize a massive communication and awareness-raising campaign. Estonian celebrities, business and cultural leaders, and even the State President, lent their faces and voices for free to generate interest among the citizens for the one-day clean up event – with great success. More

What a waste The world generates 2.01 billion tonnes of municipal solid waste annually, with at least 33% not managed in an environmentally safe manner and being openly dumped or burned. The World Bank estimates that waste generation will increase to 3.40 billion tonnes by 2050.

L E T‘S D O I T | 83

Get ready for World Cleanup Day 2021 Want to join millions of volunteers in 180 countries to clean up the world in one day? Then mark down 18 September 2021 in your diary and put aside some gloves and an empty garbage bag for collecting trash. Or take them and go out at once to make a difference. More information: worldcleanupday.org Estonia’s then-Prime Minister Jüri Ratas collecting rubbish in Tallinn during World Cleanup Day 2019

than 50,000 people came together on 3 May 2008 and participated in the first nationwide environmental event – more than 4% of the entire population. Estonia was cleaned up in just five hours!

Stenbocki Maja

The organisers calculated that, in normal circumstances, it would have taken the Estonian government three years and €22.5 million to achieve the same outcome. The Let’s Do It campaign managed it for €500,000 and much less time. No wonder that the news of the civic movement went viral and spread around the world. Inspired by the Estonian civic action, Latvia and Lithuania were first to follow suit and organise similar campaigns that remind some people of the mass subbotnik during Soviet times – the (not entirely) voluntary community labour day.

From the Baltics to the world

Based on the great success of the campaigns in the Baltics, the Let’s Do It movement gained positive momentum and became a global phenomenon. Every year, more and more people and countries joined in and an even more ambitious idea was born – to clean up the whole world in just one day. The first World Cleanup Day took place on 15 September 2018, uniting around 18 million people across 157 countries. The following year, it grew even bigger and involved 21.2 million people across 180 countries and territories. This was the biggest ever waste cleanup action in human history, with a 36-hour green wave of cleanups stretching across the globe. Despite the coronavirus pandemicrelated restrictions in many

countries, the World Cleanup Day was also held in 2020. More than 11 million people from 166 countries participated in cleanups spanning all time zones on 19 September, resulting in probably the biggest global live mobilising event of last year. For countries in lockdown or with severe movement restrictions, a digital cleanup day was organised on 22 April. While the Let’s Do It campaign was originally intended to collect rubbish for the good of nature, now almost everything is allowed and possible. The main thing is that it is collective work for the environment and well-being of the community, by pulling together for a common aim: That the world will be a lot more cleaner and beautiful than it was before.

84 | EVENTS Photo: AHK

In celebration mood Achim Naumann (left) gives the membership certificate to Mr. Bodo Zeitler, CEO of Bodo Zeitler Bau GmbH.

decided to develop activities in the insurance industry here too.” The first visit by Nauman took place in October 1989 and led to the declaration of intent for a joint venture with Lietuvos Draudimas (Lithuanian State Insurance). “After a year of hard work, we were quite successful in Vilnius and decided to found another joint venture in Riga, “RIGAS FENIKSS”, with the Latvian CEO Ilmars Veide”, says Naumann. In 1994, they acquired as the majority shareholder a young Estonian company “BICO” (Baltic Insurance Company) in Tallinn, which was already well positioned in the market.

German-Baltic Chamber of Commerce (AHK) continues to celebrate its 25th anniversary. This year the celebration is in Lithuania. It is interesting to learn how it all began. Achim Naumann was the President of the Lithuanian-German Business Association, which was the forerunner of the AHK in the Baltic States. “The foundation of the German-Baltic Chamber of Commerce was not easy because of the legal conditions involved. After we were able to convince the German Chamber of Industry and Commerce (DIHK) of the usefulness of the 3-country AHK, the German-Baltic Chamber of Commerce was founded according to German association law. The founding chairman was Otto Graf Lambsdorff. Dr. Gunter Dunkel of Nord-LB later took over the presidency. Ralph Tischer, who contributed the most to the success of the AHK foundation, became Executive Director”, says Achim Naumann about the beginning of the AHK. He himself became vice-president. Naumann came to the Baltic states as early as 1989. “In the course of my 35 years of activities in management positions at the Alte-Leipziger-Hallesche insurance group, I assumed responsibility as a member of the board of AlteLeipziger Europa Beteiligungsgesellschaft AG in 1989/1990. After the social changes in Central and Eastern Europe at the time of perestroika under President Gorbachev, we

“During my time in the Baltic republics, Dr Ralph Tischer was a representative of German business based in Tallinn. After more and more German companies became active in Lithuania, we were able to found the Lithuanian-German Business Association in 1994. I became its president. A short time later, the Latvian-German Business Association was founded. Dr. Tischer was the managing director of both associations. Due to the existing office in a building at the city wall of Tallinn, all administrative work was relocated there. This building later became the property of the AHK”, says Naumann when recalling the course of events. “The number of members of the German-Baltic Chamber of Commerce grew rapidly in the first few years, which meant that it soon became one of the largest chambers in the Baltic republics. Later, other European countries such as France, Sweden, Denmark, Italy, the Netherlands, Iceland as well as the USA became active in these markets”, Naumann adds. Now large German companies are also represented in the Baltic countries such as “CONTINENTAL” and “BOSCH”. Estonia’s high level of skills in digitisation should be emphasised, while the creativity and motivation of the people are exemplary. This is how it should stay. I worked in Lithuania, Latvia and Estonia for 15 years. I would like to thank all my trusted colleagues at the AHK for some of the best years of my career. I would like to thank the various presidents of the GermanBaltic Chamber of Commerce, especially the managing director Dr Ralph Tischer and my colleagues on the board in Vilnius”, concludes Achim Naumann.

EVENTS | 85 Photo: AHK

Smarter meetings For a good year now, we have been meeting most people online. And although face-to-face meetings have a special charm, some of our new formats are quite popular and even bring more people together than before. In spring, we had several webinars and offered some exclusive cybersecurity training for our members in cooperation with the Konrad Adenauer Foundation and CybExer Technologies. We had virtual meetings with several ministers from the new Lithuanian government, including the Lithuanian Prime Minister Ingrida Šimonytė, the Minister of Economy and Innovation, Aušrinė Armonaitė, and the Minister of Finance, Gintarė Skaistė, and we listened to a revealing presentation by Arūnas Dulkys, the Minister of Health. We had virtual members’ meetings with the Mayor of Vilnius Remigijus Šimašius and the head of the Investment and Development Agency of Latvia (LIAA) Kaspars Rožkalns. We were happy to continue our new morning coffee format and in April we got a morning kick-start from the CEO of Luminor Bank Peter Bosek. In addition, the annual general meeting of the AHK took place virtually. In this context, the year 2020 was evaluated, the members of the board were discharged, and the new Estonian board was elected. Finally, we heard a keynote from futurologist Kai Gondlach. He gave us some insights into what our lives might look like in 10 years. LM

In a thought-provoking edition of Morning Coffee with a CEO, we spoke to Peter Bosek, a new resident of Tallinn and CEO of Luminor Bank, about Luminor‘s future mission to benefit Baltic businesses.

The mayor of Vilnius Remigijus Šimašius

Kai Gondlach, futurologist

Ingrida Šimonytė, the Prime Minister of Lithuania

86 | A H K N E W M E M B E R S

PREMIUM MEMBER INDUSTRY

SERVICE

Luminor Bank AS

RWE Renewables GmbH

Tallinn, Estonia Dr. Peter Bosek +372 628 3300 peter.bosek@ luminorgroup.com www.luminor.ee Luminor is the third-largest provider of financial services in the Baltics, with some 900,000 clients, 2,500 employees, and a market share of 16% in deposits and 18% in lending as of 31 March 2020. Total shareholders’ equity amounts to EUR 1.6 billion, and Luminor is capitalized with a CET1 ratio of 20.5%. Luminor has a strong and capable team that is committed to achieving our strategic objectives. We are dedicated to supporting sustainable growth in the Baltic region by providing a long-term commitment to businesses and individuals.

Essen, Germany Carmen Neumann +49 15209297905 carmen.neumann@ rwe.com www.rwe.com RWE Renewables is one of the world’s leading companies in the field of renewable energies. With around 3,500 employees, the company owns onshore and offshore wind farms, photovoltaic plants and battery storage with a capacity of around 9 gigawatts. RWE Renewables is driving the expansion of renewable energies in more than 15 countries on four continents. By the end of 2022, RWE Renewables plans to invest 5 billion euros net in renewable energies and expand its portfolio of renewables to 13 gigawatts net capacity.

INDUSTRY

Energiatehnika OÜ Tallinn, Estland Jüri Joller +372 5024303 uri.joller@ energiatehnika.ee www.energiatehnika.ee Energiatehnika is an engineering company founded in 1992; it provides engineering services and imports various components. The products are diverse, freely programmable microcontroller boards with user interface and sinusoidal power supplies for device tests up to 1 MW. We offer our partners an individual development and production of control or test systems for original devices and machines. Energiatehnika is a competent consultant for whose services it is possible to apply for grants at the Estonian Business Development Agency.

INDUSTRY

Helmes AS

SERVICE

EK Steuerberatung Krefeld, Germany Elena Kruth +49 17647389823 elena.kruth@ yahoo.com ek-steuerberatung.com Tax consultancy in Germany and other EU countries, registration of companies in Germany and the UK, fiscal representation of foreign companies, financial accounting, payroll accounting, income tax returns, corporate tax returns, trade tax returns, annual VAT returns, gift tax returns and inheritance tax returns, preparation of annual financial statements and tax balance sheets. Disclosure of annual financial statements in the electronic Federal Gazette.

INDUSTRY

Elektros taupymo sprendimai, UAB Tallinn, Estonia Jaan Pillesaar +3726106100 jaan.pillesaar@ helmes.ee www.helmes.com

Helmes is an international software development company focusing on business-critical software solutions and complex system integration projects. The long-term success of Helmes is built on lasting partnerships bringing tangible business gains. Helmes has development hubs in Estonia, Belarus, Latvia, India and the USA, with customers all over the world. For over 30 years in business, Helmes has provided custom software development services to more than 500 organizations.

Didžioji Riešė, Vilniaus raj., Lithuania Tomas Pukas +370 61070055 info@ecolight.lt www.ecolight.lt Established in 2009, the ECOLIGHT industrial lighting factory is located in Linksmakalnis town, Kaunas district. Our products are sold to more than 17 countries around the world including Germany, Slovenia, Poland, the United Arab Emirates, Great Britain, the Czech Republic, Latvia, Denmark, Jordan, Saudi Arabia, Ireland, Italy and others. The ECOLIGHT brand embodies the concept of high quality and minimal design luminaire. As official Philips partners, we use only the most advanced and certified electronic components in the production of industrial luminaires.

A H K N E W M E M B E R S | 87

INDUSTRY

UFLOAT SIA

CEWOOD SIA Rīga, Latvia Ingars Ūdris +371 28 02 00 55 maris@cewood.com www.cewood.com CEWOOD is a Latvian company with a factory in Jaunlaicene, which produces wood wool panels widely used in the world. Material is perfect for ceiling and wall decoration, providing a number of advantages: 100% natural origin, effective noise absorption and creates pleasant microclimate. Panels are cost-effective, quick and easy to install, long-lasting, fire resistant. Panels are used in various building objects, starting from educational institutions, public buildings, sports centers, offices, till private homes in more then 36 countries.

SERVICE

BNM Finance UAB Vilnius, Lithuania Simona Matiukienė +37052000111 info@bnmfinance.lt www. bnmfinance.lt

BNM Finance is a team of experienced experts for accounting, business activities and financial management, which is supporting customers to efficiently manage the finance of their companies and the processes related to that. The enterprise is active for more than 10 years with branches in Vilnius, Kaunas, Klaipėda and Tauragė and more than 75 highly qualified employees. One of the company’s main services is accounting. BNM Finance also offers CFO-financial, legal and BPO-business process coordination, debt management, Power BI-business analytics and consulting.

SERVICE

AMSTON, UAB Rīga, Latvia Frank Kuks +37129406119 info@ ufloat.eu

UFLOAT SIA sells online and through distributors plastic pontoons and floating platform, raft and jetty DIY kits. We deliver to most places in continental Europe, our biggest markets are Germany and the Netherlands. All pontoon models are design protected. Our clients are end users with a dream of active lifestyle by and on the water and country tourism companies. Ufloat was established in 2008.

SERVICE

NEWSEC advisers LT, UAB Vilnius, Lithuania Ugnius Meidus +37052526444 info@newsec.lt

The field of activity of the international group of companies Newsec is a wide range of commercial real estate services and real estate consulting. The company mediates in investing in real estate as well as renting and selling it. Newsec is a licensed real estate and business valuation service provider with one of the largest research and analysis divisions in Northern Europe. The company‘s experts follow the RICS (Royal Institution of Chartered Surveyors) standards. The group of companies is a member of the real estate alliance BNP Paribas.

Vilnius, Lithuania Adomas Milašiūnas +37065592153 info@amston.lt www.amston.lt Amston is a leading strategic HR management solutions company, with talent recruitment at the heart of our business. Our people are dedicated experts always passionate about delivering the best solutions across every stage of the employee lifecycle. Our recruitment services cover many business areas: IT, Finance & Accounting, HR, Marketing, Legal, Sales, Customer Service, Life Sciences & Biotech, Manufacturing, Construction Services and other. Amston services: recruitment, employer branding, headhunting, HR consultancy, FDI consultancy, temporary employment.

SERVICE

Hertz Lietuva. Autolux UAB Vilnius, Lithuania Mantas Narkevičius +37052660500 hertz@hertz.lt www.hertz.lt

Autolux UAB present Hertz, dollar, Thrifty brands under franchisee in Lithuania, Latvia and Estonia. Hertz provides short/ long term rental, full service leasing and chauffeur drive services in Baltic countries. With the biggest rental car fleet we can always offer the best solution for the companies and/or individuals. Hertz, one of the most recognized brands in the world and currently ranked #1 in Customer Satisfaction by J.D. Power, has a long-standing legacy of providing a fast and easy experience designed to make every journey special.

88 | SHOOTING STAR

The Future of Agriculture Seen in Microbiology

Photo: Matīss Markovskis

The microbiological fertilisers produced in Latvia have impressed conventional households as well, even conquering exotic export markets such as Brazil. by LĪVA MELBĀRZDE

met with Jānis Keterliņš, co-owner and board member of Bioefekts, at the Salaspils production plant, where the company has only been located from the beginning of this year. At the moment, the investments in equipment have already reached a million euros; an amount equivalent to the company’s planned annual turnover. In the coming years, it is planned to invest several million in equipment, to be able to grow the company’s volume of exports.

With a History of 100 Years

The history of Bioefekts is quite long, beginning in the 20s and 30s of the previous century when Latvian scientists, in collaboration with German scientists, began researching soil microorganisms. The first strains of microorganisms were also isolated then. In the more than 50 years to follow, when Latvia was part of the Soviet Union, soil microbiology was of no specific interest to anybody, and only some researchers were doing individual work in the field within the framework of the Institute

of Microbiology. In the 90s of the previous century, when Latvia regained independence, the Institute of Microbiology did not have the money to preserve the collection created, so it was taken over by Dr. biol. Anita Lielpētere, a microbiologist, who founded the company Bioefekts in 1992, in this way making a step towards the commercialisation of scientific research. Three years ago, the retired microbiologist was looking for somebody to take over the process she had started and the company, then operating with a turnover of 160 000 euros, was purchased by Mārtiņš Vizbulis and Mārtiņš Tutāns, increasing the turnover to 400 000 euros last year. This year, the total last year’s turnover level was already reached in spring, giving hopes that Bioefekts would grow to a turnover of a million euros this year. At the moment, the company is able to produce up to 3000 litres of microbiological solutions per day, which is a volume covering roughly 2000 hectares; however, a notable increase in volume is planned with the new equipment and bioreactors.

Hand in Hand with Scientists

Bioefekts products may substitute fungicides and partially also insecticides, serving as fertilisers as well, because the Bioefekts bacteria can perform nitrogen fixation and

release the elements contained in the soil, for instance, potassium and phosphorous. The need for chemical fertilisers is decreasing thanks to this. “Our newest field of operation is plant growth regulators because upon growing, microorganisms release substances necessary for the plant as hormones. Growth regulators are one of the most widely spread pesticides, but we can achieve the same effect by natural means,” Jānis Keterliņš adds, indicating that at the moment the company is working hand in hand with 8 scientists of the microbiology field, with the scientific back-up of the company provided by the Faculty of Biology at the University of Latvia. “At the moment we have 28 micro-organisms in production, but potentially we are researching around 180. This year we will be starting export to the Czech Republic, and Sweden, Lithuania and Estonia are our export markets as well. This year we want to expand to central Europe; we are searching for a partner in Germany,” Jānis Keterliņš explains. “We have a partner in Canada, who has directed our products to Brazil, where the testing product volume is equal to the total product sales volume in Latvia, but we are ready to increase our production capacity,” the co-owner of Bioefekts says, outlining the future potential.