EUROPEAN MODEL OF CLIMATE-NEUTRAL BUSINESS DEVELOPMENT BASED ON DIGITALIZATION PRINCIPLES

Iryna MAKSYMOVA; Carmen NASTASE

doi:10.35774/jee2024.02.336

Authors

Iryna MAKSYMOVA State University of Economics and Technology, Kryvyy Rih https://orcid.org/0000-0001-9754-0414
Carmen NASTASE Stefan cel Mare University of Suceava, Suceava https://orcid.org/0000-0002-1660-2087

DOI:

https://doi.org/10.35774/jee2024.02.336

Keywords:

European Union, climate neutrality, business, SMEs, digitalization, green-digital transition.

Abstract

The article explores the characteristics and approaches of climate-neutral business development in the European Union based on digital transformation. The focus is on small and medium-sized enterprises (SMEs), which currently generate a significant share of global economic emissions and need to accelerate the integration of effective decarbonization models. The data indicates that the proportion of emissions generated by SMEs in the business sector and their energy consumption represent the most crucial indicators for assessing the climate neutrality of a country’s development. These indicators exhibit a considerable degree of variation across EU countries. Concurrently, the research indicates a notable disparity between SMEs and large corporations in terms of their preparedness to implement various climate-oriented initiatives and their capacity to integrate digital solutions. The article presents a systematic analysis of the potential for digitalization to reduce the SMEs’ carbon footprint across various emission areas. These include direct emissions from industrial processes, indirect emissions from energy consumption, and key links in the value chain. Five clusters of digital solutions were identified as the most effective and particularly supported in the European model of climate-neutral development. Systemic directions and recommendations for their strengthening are identified.

JEL: F20, L86, О10, Q40.

Author Biographies

Iryna MAKSYMOVA, State University of Economics and Technology, Kryvyy Rih

Ph.D. in Economics, Associate Professor

Carmen NASTASE, Stefan cel Mare University of Suceava, Suceava

Doctor of economic sciences, professor

References

OECD (2022). Financing SMEs for sustainability: Drivers, Constraints and Policies, OECD SME and Entrepreneurship Papers, No. 35, OECD Publishing, Paris, https://doi.org/10.1787/a5e94d92-en.

OECD (2023). Assessing greenhouse gas emissions and energy consumption in SMEs: Towards a pilot dashboard of SME greening and green entrepreneurship indicators, OECD SME and Entrepreneurship Papers, No. 42, OECD Publishing, Paris, https://doi.org/10.1787/ac8e6450-en.

Stoker, L., Ghosh, U. & Shao, X. (2023). Reuters Impact: Global Sustainability Report. https://www.thomsonreuters.com/en-us/posts/wp-content/uploads/ sites/20/2023/10/Sustainability-Report_Reuters-Impact.pdf

Vasilescu, M. D., Dimian, G. C. & Gradinaru, G. I. (2023). Green entrepreneurship in challenging times: a quantitative approach for European countries. Economic research-Ekonomska istraživanja. 36(1), 1828-1847.

Ogrean, C., & Herciu, M. (2021). Romania’s SMEs on the Way to EU’s Twin Transition to Digitalization and Sustainability. Studies in Business and Economics, 16, 282 – 295. https://doi.org/10.2478/sbe-2021-0040.

Mojska, K. (2023). Multinational Enterprises’ Mandatory Human Rights and Environmental Due Diligence. The Case of European Union Law Underway. Przegląd Prawa Konstytucyjnego. https://doi.org/10.15804/ppk.2023.04.21.

Maksymova, I., Kurylyak, V. (2022). World industry digitization in the context of ensuring climate neutrality. Journal of European Economy, 21(3), 343-360.

Capros, P., Zazias, G., Evangelopoulou, S., Kannavou, M., Fotiou, T., Siskos, P., Vita, A., & Sakellaris, K. (2019). Energy-system modelling of the EU strategy towards climate-neutrality. Energy Policy. https://doi.org/ 10.1016/j.enpol.2019.110960.

Lenz, N., & Fajdetić, B. (2021). Globalization and GHG Emissions in the EU: Do We Need a New Development Paradigm?. Sustainability. https://doi.org/ 10.3390/su13179936.

Axelson, M., Oberthür, S., & Nilsson, L. (2021). Emission reduction strategies in the EU steel industry: Implications for business model innovation. Journal of Industrial Ecology, 25, 390 – 402. https://doi.org/10.1111/jiec.13124.

Bastar, K., & Pucihar, A. (2023). Pregled obstoječih orodij za merjenje digitalne zrelosti. 42nd International Conference on Organizational Science Development. https://doi.org/10.18690/um.fov.3.2023.57.

Ogrean, C., & Herciu, M. (2021). Romania’s SMEs on the Way to EU’s Twin Transition to Digitalization and Sustainability. Studies in Business and Economics, 16, 282 – 295. https://doi.org/10.2478/sbe-2021-0040.

Krogt, A., Rensma, A., & Reijswoud, V. (2023). Twin Green and Digital Innovation by SMEs in the Construction Sector. European Conference on Innovation and Entrepreneurship. https://doi.org/10.34190/ecie.18.2.1473.

Ionascu, I., Ionascu, M., Nechita, E., Săcărin, M., & Minu, M. (2022). Digital Transformation, Financial Performance and Sustainability: Evidence for European Union Listed Companies. www.amfiteatrueconomic.ro. https://doi.org/10.24818/ea/2022/59/94.

SME Climate Hub (2023), SME Climate Hub Survey 2023, https://smeclimatehub.org/wp-content/uploads/2023/02/SME-Climate-HubSurvey-2023.pdf

Business NSW (2022), Unfinished Business – Putting small business energy policy back, https://www.businessnsw.com/content/dam/nswbc/businessnsw/ thought-leadership/November_2022_ECA_Survey_Report_low-res.pdf

Blundel, R., & Hampton, S. (2021). How Can SMEs Contribute to Net Zero?: An Evidence Review. State of the Art Review series, (51).

Agrawal, R., De Tommasi, L., Lyons, P., Zanoni, S., Papagiannis, G. K., Karakosta, C., ... & Güemes, E. L. (2023). Challenges and opportunities for improving energy efficiency in SMEs: learnings from seven European projects. Energy Efficiency, 16(3), 17.

IEA (2022), Coping with the Crisis: Increasing Resilience in Small Businesses in Europe through Energy Efficiency, https://www.iea.org/reports/coping-withthe-crisis-increasing-resilience-in-smallbusinesses-in-europe-throughenergy-efficiency

Hilger, L., Schneiders, T., Meyer, F. P., & Kroll, J. P. (2018, May). Use of smart technologies for energy efficiency, energy-and load management in small and medium sized enterprises (SMEs). In 2018 7th International Energy and Sustainability Conference (IESC) (pp. 1-8). IEEE.

Hilger, L., Große-Kreul, F., Feldhaus, C., & Schneiders, T. (2022). Digitally driven energy management practices in SMEs–exploring potentials and barriers. Die Unternehmung, 76(3), 360-380.

Tanane, B., Bentaha, M. L., Dafflon, B., Ferreiro, V., & Moalla, N. (2021, July). Toward an adaptive approach to implement predictive maintenance in metallurgical industry SMEs through IoT and AI. In IFIP International Conference on Product Lifecycle Management (pp. 537-547). Cham: Springer International Publishing.

Warren, P. (2017), «The Potential of Smart Technologies and Micro-Generation in UK SMEs», Energies, Vol. 10/7, p. 1050, https://doi.org/10.3390/en10071050

Fawcett, T. and S. Hampton (2020), «Why and how energy efficiency policy should address SMEs», Energy Policy, Vol. 140, p. 111337, https://doi.org/10.1016/j.enpol.2020.111337.

Jalo, N. et al. (2021), «Barriers to and Drivers of Energy Management in Swedish SMEs», Energies, Vol. 14/21, p. 6925, https://doi.org/10.3390/en14216925.

Mickovic, A. and M. Wouters (2020), «Energy costs information in manufacturing companies: A systematic literature review», Journal of Cleaner Production, Vol. 254, p. 119927, https://doi.org/10.1016/j.jclepro.2019.119927.

European Union (2022), Annual Report on European SMEs – SMEs and environmental sustainability, https://www.google.com/url?sa=t&rct=j&q=&esrc= s&source=web&cd=&ved=2ahUKEwjhirLYsPT9AhXpVaQEHTpBBcIQFnoE CAwQAQ&url=https%3A%2F%2Fsingle-market-economy.ec.europa.eu%2 Fdocument%2Fdownload%2F40742729-315d-48ed-b7f1-6335ce2819b8_ en&usg=AOvVaw1tEdd3rXSxkn8xsib

Johansson, I., Thollander, P., Baurecht, D., Engers, C., Esteban, E., Janssen, M., ... & Scimemi, G. (2020). Review of regional energy efficiency policies towards industrial SMEs from within Europe. In Proceedings of the ECEEE (pp. 15-22).

Fleitera, T., J. Schleich and P. Ravivanpong (2012). Adoption of energy-efficiency measures in SMEs – An empirical analysis based on energy audit data, Energy Policy, Vol. 51, pp. 863-875.

Maksymova, I., Savelyev, Y., Zvarych, I., Kurylyak, V., Lyzun, M., Sachenko, S., & Lishchynskyy, I. (2023, September). Global Differentiation of Climate-digital Projects in Terms of Low-carbon Economy. In 2023 IEEE 12th International Conference on Intelligent Data Acquisition and Advanced Computing Systems: Technology and Applications (IDAACS) (Vol. 1, pp. 859-864). IEEE.