Sustainable Innovation: The Role of Nordic Technologies in Shaping a Green Future
There is increasing recognition across the globe that transforming our society to a more sustainable path, that is, ensuring long-term social, economic, and ecological vitality, will require not only coordinated action by governments and industries but also technological advances that will significantly reduce the environmental and social burdens imposed by industrial activities.
Nordic countries are widely recognized as having developed notable competencies in areas such as energy and resource efficiency, the creation of sustainable buildings and urban structures, the use of information and communication technologies for developing smart cities, the bio-based circular economy, and proactive approaches to integrating sustainable principles in business development.
This text demonstrates the place that Nordic countries, and Sweden in particular, have made in creating technologies that lead to sustainable benchmarks and discusses relevant policies at both the national and EU levels. Based mainly on cases provided by a Swedish company, the text focuses particularly on how ICT technologies can be an enabler for sustainability.
Sweden's involvement in these developments is notably important during the timeframe from 2009 to 2013, when various Swedish governmental bodies collaborated with Nordic and other global organizations, alongside the private sector and associations.
This expansion can be evaluated in relation to the converging challenges of transformation, which encompass global warming, significant biodiversity loss, an increasing accumulation of harmful waste, diminishing raw material availability, and lingering effects from banking and financial crises, such as rising unemployment and substantial government debt. Collectively, these evident issues are prompting a reassessment of the objectives and methods within international policies.
Of particular interest are three European Union sustainability initiatives, namely: "Green Growth," the "Resource Efficient Europe" strategy; the "Green Action Plan for SMEs"; and the lead that Sweden has introduced for a "Circular Economy," as well as recent European Commission communications.
Understanding Sustainable Innovation
Before discussing the role of Nordic technologies in shaping a green future, this article has taken into account the processes and the channels through which sustainability-oriented innovations trickle out in the economy.
This section thus sketches out the main insights derived from the two main contributions to the analysis of the relationship between innovation and sustainability. The concept of sustainable development, its boundaries, and related implications for innovation are examined in the works at the junction of ecological economics and innovation research.
Ecological innovation diffusion channels are also examined, such as trade, investment, know-how, and policy influences. In addition to this general sense, it is of great importance how to foster eco-innovation and what regulatory or other types of intervention are crucial for the socio-technical transition towards sustainability.
The command-and-control regulation paradigm, taxes, and market-based approaches are compared in the presence of imperfections like asymmetric information, technological progress, static rents, and dominance with respect to innovation dynamics and absorptive capacity or entropy aspects.
Technological innovation may promote or hinder such a transition, depending on a number of factors. The intensity of the survival and expansion strategies in a given sector will define corporate short-termism and the favorability of technological opportunities in the sustainable direction; the features of innovations are important for who is better off and in which way.
The evolutionary factors are examined from a viewpoint that recognizes the historical oscillation between capitalism and socialism. Addressing these phenomena necessitates a comprehensive array of studies at the firm, network, and industrial levels, which also encompasses corporate social responsibility considerations. This includes evaluating the strategic implications of implementing environmental and organizational policies aimed at enhancing eco-technological innovation capabilities and the processes of organizational change.
The Nordic Model of Innovation
The specific conceptualization of the Nordic model of innovation and, in more general terms, the question of what differentiates the Nordic way of orchestrating societal development is a complex one and will not be resolved here.
However, it suggests the need for more thorough studies on the concept, how the 'Nordic', 'the green', and the 'Nordic green' interact and co-evolve, and how new configurations, new development models, and new institutional designs could be put in place.
A good starting point could be an analysis of the governance systems and institutional design of the Nordic countries. However, the concept should not be reduced to a metric that prescribes 'that others should do what the (economic) ICT leaders did'. Such an oversimplification can lead to policy homogenization, not allowing any kind of diversity and complexity of existing models or new future development paths.
This section conceptualizes and explains the importance of the Nordic model of innovation, highlighting how sustainable 'environmental innovation' within a socio-cultural, economic, and industrial context in the Nordic countries has emerged, including the role of public policies and the experience from the development of innovation systems.
As this is an explorative study with its main theoretical foundation based on the evolutionary economic geography concept, our narrative draws upon the literature on innovation, corporate strategy, and public policy.
A theoretical revisit to the theory of transition management also originates from the perspective in this article. That is why we choose to understand the theoretical and conceptual foundations of a bottom-up approach. When we discuss environmental innovation within the Nordic countries, we focus on the 'micro' level, the 'real economy', and the industries' ability to develop and offer measures that are consistent with sustainable development.
Historical Context
During the 1960s and 1970s, after a long period of peace and economic growth in the Western world, when everything seemed possible and convenient, some scientists and movement groups began to point out that human activities could have devastating effects on the quality of the environment. This was the start of environmental awareness in Western countries, both in the sense that the environment started to be considered a qualified public good worth protecting, and as a development perspective, i.e., that economic progress could be internalized in order to be achieved without growth. Ideas such as sufficiency or weak sustainability were formulated within this approach.
Referring to the economy, the 1970s already saw the emergence of significant contributions such as the critique of GNP measurement as an indicator of economic well-being and the need to de-link economic growth and environmental impacts. These contributions were to constitute the steppingstone for later, more closely knit and structured reflections that were called forth by the general crisis of Western economic models in the 1980s.
At the political-legal level, on the one hand, these extemporaneous reflections would become themes of primary importance as of the Stockholm Conference in 1972, while on the other they became a fundamentally significant issue under both the environmental perspective and as a differential factor between advanced and backward countries in North-South relations from the first United Nations Conference on Environment and Development that took place in Stockholm.
Key Characteristics
The overview provided in the preceding sections underlined the remarkably positive significance of the contributions made by Nordic countries in terms of environmental technologies. This positive reality is not coincidental.
The set of innovative activities, combined with positive and fostering interaction between public and private entities, mirrors some key long-term, deeply embedded characteristics present in the Nordic economies.
Although mere characteristics do not in themselves explain Norway's innovation system or the heavy concentration of export duties of Denmark's institutions, these culturally driven characteristics of our economies do guarantee that growth-enhancing public policies stay on track to give rise to innovative ideas and their technology daughters. The purport of this chapter is to unravel some of these characteristics.
The six Nordic countries share several historical, cultural, and economic traits. Close attention to the central elements of the institutional design of these nations' innovation systems clarifies the role of public policies in shaping the current industrial state of the art in green technologies, given our public policies driven by explicit experimental growth models.
The common stories have to do with the pivotal role of public sector institutions. The potentially most important of the public institutions is the national research agency with business acumen, namely various research councils and technical research centres, to name a few key national players. These institutions are well respected and always feature high in leading international benchmark assessments.
Technological Advances in the Nordics
Green energy is generated from the elements and gases of the earth, such as from water, wind, cold and warm air, etc. Wind energy is ultimately the result of the sun's effect, but the air around us heats up unevenly. The air over the land receives the sun's heat and warms up more quickly than the air over water.
The continuous heating and cooling of both air masses, i.e., air over land and air over sea, lead to the formation of wind. Wind has kinetic energy, which can be captured by a device known as wind turbines. These turbines can be simple or efficient scientific tools that convert wind energy directly into the form of electricity. But first, we have to convert direct current into alternating current by using an inverter before using it in our daily electronic life.
A comparison of a domestic residential wind turbine with a typical house building already mounting a solar panel by owners west of the city, 2500 meters above sea level. If the Norwegian island of Smøla is to be an example, the future of decentralized renewable generation will be an unattractive mix of unsympathetic new wind turbines, solar panels, organic matter for fueling pyrolysis, and anaerobic digestion for biofuels.
More advanced designs are needed to fully harmonize renewable technology with the environment, even as pioneering research communities begin to work toward recovering energy from waves, tides, and solar light more profitably and efficiently for storage and distribution. Norway has demonstrated that it is serious about cutting its own emissions and absorbing more CO2 than they create. Anyone who questions this should breathe in the country's foresight and witness the technological expertise being developed.
Renewable Energy Technologies
As the utilization of renewable energy is a key element in many policies for sustainable development, the innovation in renewable energy technologies will play a crucial role in making such policy objectives a reality.
When it comes to the possible positive contribution of innovation to the promotion of sustainable development patterns, renewable energy technologies are held to possess some particularly attractive characteristics.
Renewable energy technologies do not typically generate as high social costs as do harmful environmental and health effects of energy supply based on fossil fuels or nuclear power. On the contrary, renewable energy technologies may contribute to social and national security.
A switch towards a biomass-based energy system to the broad benefit of European and district farming and rural areas has also been explored and perceived as potentially extremely attractive. Large renewable energy resources are located in many countries, facilitating energy supply diversification, which may also translate into reduced price volatility.
Finally, many renewable energy technologies share common features that all make them particularly suited for electricity generation on a small or medium scale, often suitable for decentralized and flexible operation.
Despite the favorable conditions for renewable energy industries, the growth trend was stalling to be non-existent until the 1970s. Only two to three energy sources, such as certain niche applications, showed constant growth and development over time.
The main reason for this slow and selective development was the natural abundance, although the difficulty in setting up a reliable, efficient, and competitive energy production system certainly also contributed. Even more importantly, it must be realized that in the end, inferior social and economic barriers stemming from market and policy biases have been the main reason for the absence of sustainable development patterns in the energy sector.
In terms of barriers to market entry and diffusion, fossil- and nuclear-based energy systems benefited significantly from economic, political, and institutional conditions not helpful to renewable energy systems. Providing low or non-existing external costs became less and less relevant during the 20th century, and a range of primarily top-down energy security concerns have been heavily promoted and used up to date to justify both direct and indirect subsidies to a non-sustainable energy industry.
The development of renewable energy technologies has enhanced the energy supply security for many communities. An increased ability to generate power from local resources has several benefits for rural economies and structures.
The use of renewable energy technologies also protects landscape and cultural heritage, forms part of the industrial applications from the traditional use and supply of solar and wind technologies, as it comes to be particularly attractive for many rural areas. In addition, the use of local resources will enable the supply of heat and power in remote areas, some of which might be prone to experience the effects of conflicts, thereby enhancing social security.
Finally, the local ownership potential of renewable energy systems, i.e., the chance to develop, own, and operate a resource pool, would support and include social structures, provided that a favorable, potentially competitive market environment is maintained.
Smart Grid Innovations
When people can charge their car at home during off-peak hours, due to various tariffs, it can be beneficial for the customer. The home energy management system can also use the battery as a power source for the house, and by this structure, manage energy consumption in the right way and focus on low electric energy costs. For battery electric vehicles, this is a must to be able to stay competitive.
Through the connection, it can transfer electric power both ways. This means it will enable the framework for the future electricity network, the smart grid. With a smart grid, many more consumers will have homes that are self-sufficient for electric energy, with their solar panels, wind generators, and perhaps also their battery electric vehicle. The battery electric vehicle can store the excess electric energy when these renewable sources produce more than needed and use the excess when energy demands arise.
Today, the most positive benefit of the V2G function is that you can sell your service and get extra income. The question is, who will buy such a service? During peak hours, it can be beneficial because it can be cheaper to deliver from a parked battery than from the entire power plant. The problem with peak hours is that they are only for a short period of the day.
It is hard to sell a battery for a low price when it is idle most of the time. On the other hand, we have some potential volume for V2G during the off-peak hours. Only during off-peak hours is there a need to produce positive power over a longer time, alternatively to charge the battery. Then we could also use the ability to steer the power output from the battery.
The general expectation is that the utilities will be the ones responsible for providing the corresponding infrastructure. That will cost money, and the general expectation is that this money has to be paid by a customer base.
Utilities will get a lower income from demand during peak hours. At least we can say that there are some factors that indicate that utilities can become less profitable in the future. The majority of the research projects regarding the V2G concept are sponsored by public authorities. Then it is still not sure that public authorities are interested in investing taxpayers' money to save utility shareholders' money and make them richer. There must be some more direct political benefits from the V2G than that.
Waste Management Solutions
However, so far, the idea of waste as a resource has prevailed only to a limited extent, and organic waste in particular has often been regarded primarily as a problem. In the Nordic countries, however, a more positive view is being taken of waste, and a number of regulations that set transparent and responsible operating parameters for the concrete implementation of "waste as a resource" policies are in place.
Moreover, the historically high level of sectoral and specific subsidies for renewable energy coming from waste can be expected to continuously be halved until 2024. Even today, the Scandinavian countries are exemplary in this respect and are exporting their technologies for waste utilization as well.
At the same time, the high utilization rate also reflects the high level of material intensity of the industrialized economies of the Nordic countries. As the primary processing step of first-class recyclable materials, waste disposal and recycling services are therefore provided to a large extent by third parties, either within the country or across national borders.
However, the gigantic amounts of waste-to-energy capacities, with their investment costs, must be taken into consideration as well and are rightly questioned not only by protectionist but also by environmental organizations in some of these countries.
Therefore, a clear growth area of sustainability in this segment is the avoidance and reduction of waste in the first place. In the case of managing and disposing of residual waste, relative costs and the environmental impacts can be expected to increase in the future too.
Case Studies of Successful Nordic Innovations
This section discusses and examines the role Nordic industry, researchers, and policymakers play in creating a more sustainable future by presenting several cases of successful innovations. It is based on research and builds on one success story in each of the Nordic countries.
The cases of successful adoption of green technologies and business and policy ideas in this chapter are some of the exemplar cases of success that Nordic countries and elsewhere should foster. They are seeds of industrial growth, but they also demonstrate that a green transition brings much benefit in the way of cheaper and better results, more sustainable use of resources, and also social and environmental benefits, many of which are not currently monetized.
Part of the transition to become low carbon, implemented by businesses, is the deployment of existing green technologies, resulting in the reduction of greenhouse gas emissions. Finland, Norway, and Sweden have mainly focused on wind power.
There are a number of reasons for the successful Finnish versus less successful Danish wind industry. On the contrary, Sweden entered the expanding onshore wind business much later than Denmark but has had similar growth rates in recent years.
The best-siloed wind power to date is the Norwegian Scatec, primarily acting in emerging markets where hydropower is less feasible. However, Siemens Gamesa is as important for the successful Norwegian industry as the domestic firm. Someone could even argue that onshore wind is a more important industry for Norwegians than Danish and Swedish wind power, since it is, from the outset, a globally competitive industry, and 70% of the revenue comes from less subsidized power.
Denmark's Wind Energy Success
In 2011, Denmark accounted for 28% of the total turbine manufacturing capacity in the world. More importantly, Denmark's wind energy success was recognized as having installed the highest penetration of wind in its power system and having a significant number of high-penetration systems. This was an impressive record for Denmark, given that wind consisted of approximately 20% of its total electrical generation.
In addition, Denmark held a strong position in many of the key wind turbine component sectors, manufacturing a significant percentage of the gearboxes, blades, hub, and control systems that equipped wind turbines worldwide. Correspondingly, Denmark had a comparable leading presence of services and supply chain companies, making the country a key part of the global wind industry. Additionally, the Danish government promoted and supported the creation of several key variable renewable energy technology innovation centers.
Sweden's Circular Economy Initiatives
Sweden’s efforts to promote a more sustainable, circular, and bio-based economy were reviewed by the Swedish government during the beginning of 2018 and pursued primarily four key objectives:
- more value from fewer resources;
- more effective management of pollution and waste and the preservation of ecosystems;
- taking advantage of the opportunities to utilize the circular economy as a driver for new innovative business so that Swedish industries can set the standard and improve international competitiveness, and
- ensuring jobs and growth in all parts of the country.
Some of the results from efforts so far include a proposal for an ecolabel for investment funds to enable consumers to become aware of which funds contribute to sustainable investments and also relieve potential issues of cross-sector carbon leakage.
Various regulations for risk reduction in technical management of waste, and for processes that recycle waste into a new product, and to change the terminology from waste to product will be worked on.
Public procurement’s role in transitioning to the circular economy will be evaluated by buyers being given the opportunity to assess the environmental properties of the entire lifecycle of specific procured goods or services, which should incentivize suppliers to describe the environmental advantages of these products.
All fact sheets or purchasing information will include the total environmental cost, or a so-called natural capital valuation. The government is also providing support for special loan products, and among the long-term measures identified is the need to develop an international standard for assessing the societal cost of food waste and actions for more efficient use of marine resources.
The transition to a bio-circular economy will also be discussed with actors in various movements, particularly within the bioeconomy, where the opportunities for creating a circular society with the increased renewable content in material production and possible cooperation with the agricultural and forestry sectors can potentially create new loops on both material and energy levels.
Another key area is cleaner methods for processing contaminated substances in these loops. The question raised is: Are circular development methods negative to method development in terms of waste management?
Norway's Electric Vehicle Adoption
Norway has the largest proportion of electric vehicles worldwide and is moving towards a world where only zero-emission vehicles are sold. Despite the congestion in the heavily congested metropolitan area, the countryside of the country remains sparsely populated, and people have to travel long distances to reach city hubs.
Norway's population is familiar with long drives and is thus very aware of costs – both monetary and environmental. As such, the demand for electric vehicles is strong in trajectories outside the car as in the city, and the geographic distribution of the population with long ranges on rural roads combined with an average wealth leaves room for transition. Additionally, governmental strategic signaling and tax-exemption policy make the adoption of electric vehicles even more appealing.
Furthermore, Norway's domestic electricity demand is largely already powered by renewable hydroelectric power, implying that the environmental impact of electric vehicles is less than in economies where the electricity demand is dominated by fossil-fueled power stations.
Nevertheless, Norway is a net exporter of energy and has a high energy production from the North Sea, which acts as an enabler of electrification of transport. As electric vehicles are only one form of electrified transport, and electricity can be utilized as an energy source in such a wide array of applications that extend beyond transport, Norway has considerable flexibility to innovate and reap the commercial benefits from domestically proven transformative technologies driven by electricity.
This is a point worth considering, as developments in Norwegian industry often have a tendency to be dominated by inertia from existing forms of specialization and compensations for ignored externalities are typically made at a later stage of the value chain.
The Role of Policy in Promoting Sustainable Innovation
The governance of the innovation process involves a complex web of policy measures, regulations, and institutions. Yet policymakers often lack the knowledge needed to stimulate the innovation and diffusion of green solutions.
The problem is further compounded by the fact that today's innovation activity draws on past investments, and that technologies already embedded in existing production facilities have a strong influence on the CO2 emissions from various economic activities.
In various applications, the inherent technological, commercial, and policy uncertainties related to technological leaps and the emergence of radical new environmentally friendly technologies have been highlighted as factors that may make government intervention more important, not less.
Two broad groups of environmental policy instruments have been identified as being used to stimulate the private sector's decisions. The first group encompasses public support for R&D aimed specifically at influencing the directions and content of such efforts; and the second group includes market-based policy instruments with effects that are channeled indirectly through the market for technologies, such as pollution charges, energy taxes, and the establishment of binding standards.
While earlier studies have focused almost entirely on different policies, more recent research also investigates the importance of environmental policy instruments for promoting the market introduction of environmental goods and services. An argument that is often encountered in popular debates on sustainable innovation and various emission reduction targets is that a focus on R&D policies has high potential to stimulate environmentally benign innovation and solve the problem.
Government Initiatives
The ambition to solve pressing societal challenges involving sustainable development is manifested through government strategies and innovation policies. The strategies result from increasingly complex governance models, incorporating not only national goals and visions but also policy goals and scientifically based goal recognition.
The additional factors are shortened timeframes for goal achievements and more dispersed locational corrections. The global nature of the societal challenges leads to a five-level policy hierarchy to regulate intersectional multifaceted solutions, which is characterized by policy instruments that operate concurrently with varying national impacts.
The authority to act internationally is often with supranational and intergovernmental bodies, and policies are implemented by partially responsible governments, by national governments that are accountable to supranational stakeholders, directly by regions that may adopt stricter regulations, or by developing niche solutions in coordination with global project partners.
As a pioneer of sustainable productivity and the forerunner of innovations that facilitate sustainable choices, governments play a significant role in the transition of a society to a sustainable future. However, strategic investments are neither effortless nor risk-free, nor are they infallible. It was remarked that "a sustainable society is not just a vision for the future, it is a plan for the future," and added, "Usually, the most difficult part of a secretary of state's work is not to aim too high, but to aim hard for what is perceived as achievable instead."
Furthermore, the formulated strategies can be perceived in various ways and interpreted by political actors with differing agendas. Reconciling the standpoint differences into a common direction of development does not guarantee consensus.
Despite the disagreement, policies are designed, resources invested, rules applied, and regulations monitored. These policy influences give direction to private sector stakeholders in businesses and society and change the societal ecosystem as a complement to the external forces concurrently bundling with other regulatory actors internally.
Public-Private Partnerships
Public-Private Partnerships are potentially a very effective means of channeling public support into useful projects. With innovation projects, the room for benefiting from leveraging a few public pounds into many private pounds is very large indeed.
However, such partnerships so far operate on a very small number of rather similar kinds of projects, and those that operate at the business level still tend to be national in focus. This is, of course, a simplifying comment, but it underlines that given the size of the changes sustainable innovation is aiming to make, the transformations are not yet happening fast enough.
For the Nordic conundrum, this argues first of all for the public actors to take a greater interest in public-private partnerships on all types of projects sustainable innovation could contain. There is an urgent need for providing not just consistent but stimulating policy frameworks at the member-state level for a far greater range of SCIs than at present.
Second, at the larger level, the framework programs could provide an ideal vehicle in which to broaden the range of public-private partnerships, partly by stimulating them, but particularly by requiring multi-member-state participation in both funding and projects.
This requires funding from at least three member states for projects to be eligible and ensuring calls specify that projects are to be taken in a minimum of three different member states. Once a number of multi-national joint problems have been seen as needing to be shared, the obstacles to a wide debate on a consistent position will be less than those to initiating the debate in the absence of such joint purposeful action.
Challenges Facing Nordic Technologies
Now that a resource for sustainable innovation for Nordic technologies has been set by location and agents, the next step is to review the innovative challenges these need to address. The following list of challenges to be addressed by Nordic technologies has been revealed.
These are very brief indications of the various problems that need to be addressed. These tasks now need to be scrutinized in much greater detail by scholars from many disciplines, and it is necessary to delve into many key problems: corporate social responsibility; identify, analyze, and explore; ICTs as facilitators of dialogue.
In view of these challenges, some key issues can be summarized as follows: the challenges facing technologies are numerous, far-reaching, diverse, and complex. A key part of the strategy for social innovation is to tease out the various social sensitivities and other concerns in order to ensure that future solutions are not only technically sound but also socially robust.
There are implications for governance, which must now engage in proactive measures to involve stakeholder dialogue and forestall problems with implementation due to poor social awareness. Such dialogue is already facilitated by ICTs, and there is a significant opportunity for the study of this development.
Funding and Investment Issues
This chapter has described the current state of sustainable innovation in the Nordic countries together with insights into the potential for future growth. Clearly, this book points out that reaching that potential has several challenges that need to be addressed.
These are not only technical or commercial in nature but also include – if not overshadowed – wider social and institutional concerns. Nevertheless, one factor stands out 'which, if not in itself a sufficient condition, is clearly a necessary one': funding.
Against this background, this chapter examines present levels of adoption of sustainability innovation in Nordic countries and then government measures that are being taken – or might be taken – to boost them. It also considers to what extent the adoption of such measures is likely for private firms to be affected by the nature of the owners, that is to say their general social and environmental concerns.
After surveying the possibilities for a wider role for the Nordic banks, these themes were discussed in a more broadly 'comparative Nordic' perspective by examining some more general links between funding mechanisms and competitive advantage.
Every four years, the EU borders programs aimed at stimulating regional economic development, a total of €10 billion. €8 billion in regional and €2 billion were allocated to the exchange of young people. The program will allow the use of loan programs of the European Investment Bank, the sums of which in the areas must comprise a total of €3.3 billion, of which €0.75 billion is guaranteed to establish a knowledge-based economy, and the remaining €1 billion to reduce disparities between the economies of the region.
Under the same subject, 4 European program funds will be in the amounts of €7 billion. In the EIB loans allocated €3.3 billion, and for innovation and development of the knowledge-based economy of the new member countries in the region – €0.75 billion. The rest of the EIB intends to allocate to infrastructure projects, energy supply, and environmental projects in the field of communications.
Market Adoption Barriers
Even when a technology exhibits no net negative impacts, it may still not be adopted if decision-makers do not internalize these impacts in their decision-making. In economics, this is the underlying rationale for an array of tools designed to affect so-called taxes, subsidies, and requirements. Whenever there are positive net benefits to society at large, these tools are needed to align investment incentives with what is socially optimal.
As these incentives are being misaligned, there are net costs to society at large associated with this. Furthermore, the development of these new technologies requires substantial investment, often in the public sector. Efficient adoption is clearly in the interest of the public, and so this research seeks to identify the institutional structures that are currently distorting that adoption.
It is useful to consider the institutional level at which these distortions occur. The expression "technology transfer" often implies a disconnect between those incubating a technology and those needing or wanting that technology.
This specifically applies to the forces in place that could facilitate or prevent that transfer. This report examines the effects of the policy, legislative, economic, and social environments on the strategic innovation of technology-based firms.
Considering the path-dependent and evolutionary nature of innovation for many technology-based firms, it also considers the historical obstacles and the current ones that technology-based firms are facing. Finally, it identifies and examines the critical human networks that firms use to confront these and other problems.
The Impact of Nordic Innovations on Global Sustainability
This article has shown that Nordic nations have become global leaders in eco-sustainable innovation across a variety of sectors important to mitigating climate change and promoting the transition towards a bio-based and circular economy.
Moving past the COVID-19 pandemic, it is critical for national governments and other key stakeholders to assess how current innovation system frameworks impact the direction of these technologies as they contribute to national and international sustainability goals.
Five analyses help to contribute to a broader understanding of the role and impacts that Nordic technology is playing on a global scale and the sustainability of the countries' innovation strategies.
In 2015, the United Nations formulated 17 sustainable development goals. These goals, spanning across multiple societal and planetary functions, are designed to holistically address the grandest challenges on the planet, ranging from eradicating poverty and malnutrition to fostering equality, ensuring access to affordable and clean energy, and protecting the world's biodiversity.
This special section contributes to the literature connecting global issues related to innovation and the environment, focusing on the role technology plays in enabling a more sustainable world. Through the exploration of various initiatives of the Nordic research landscape, we specifically address the roles that Denmark, Norway, and Sweden play—both alone and in collaboration with other nations—in shaping sustainable development pathways that align with the aims of the sustainable development goals.
Exporting Green Technologies
It is interesting to see how the pressure on companies, both from society and from their shareholders, to produce green products is increasing and how the share price of many companies is influenced more and more by their sustainable strategies and performance.
It is likely that more and more export markets will follow the example of stipulating green standards as requirements for purchasing products from abroad. Companies and countries that are able to adjust to new market standards will be successful in exports. Imagine how the market will develop for selling energy-saving plants or waste incineration plants throughout the world.
The world will continue to be actively engaged in trade, but in the future, we will see that products will need to show a high degree of environmental performance, and many companies in many regions are not ready for this.
In particular, many new member states have a great environmental challenge at their front door. We see an increasing demand for technologies in this region, and companies should follow up on this great opportunity and develop their position in a market that, no doubt, will be as interesting as other parts of the world have been during the last decades.
Collaboration with Emerging Markets
Simply choosing to adopt the Nordic technology approach will not solve the sustainability issue globally. Given the immense environmental and natural capital issues facing emerging countries, these five Nordic principles can offer considerable aid.
Green technology transfer can be greatly enhanced if Nordic countries, including policymakers and engineers, can work together with emerging economies. The Nordic investment community should work closely with the stakeholders in setting up demonstration projects and providing not only economic but also environmental returns to the investors.
Nordic governments and policymakers can help. But with a focus on emerging economies, it is important for the companies to share their technology and business model. Education and knowledge transfer are very important if the Nordic model is to have a long-lasting global influence.
To what extent can these principles be applicable to other regions? To what extent can the Nordic principles be shaped in conjunction with other regions? These are interesting research questions, but they are beyond the scope of this chapter.
The sufficiency of the five principles for meeting sustainability goals is still empirical, and more rigorous evidence is needed if these principles are to be used as policy guidelines. We believe that the principles have good synergy and potential for sustainability-based opportunities.
Future Trends in Nordic Sustainable Innovation
The forthcoming sections provide a vision of different trends and market patterns that may shape Nordic eco-innovation in the future and will be explored mostly in the realms of urbanization, digitalization, maker culture, and finally new forms of collaborations.
The trends serve as a backdrop for exploring the role of technology in shaping future solutions and the subsequent discussions on the specifics of projects providing empirical illumination of the findings. The role of technology, with a particular focus on the digital and physical, is discussed as key resulting findings indicate that sustainability needs must be integrated at early stages in order to avoid solving problems that the creation of solutions leads to increased demand for current energy and natural resource inputs.
This is done as environmental impacts are often traded off against user benefits of products, systems, and services that tend to grow over time.
Producing breakthrough solutions for future sustainability is seen as crucial because, to a large extent, today's environmental issues are due to dated or unsustainable technology introduced to society many years ago.
New technology families, in several cases, have the potential to solve at least part of the problems; however, the fact that users typically appreciate and consume benefits created by technology rather than the technology itself makes the established solutions developing technological paths large, invasive, and difficult to dethrone.
A novel context is perhaps about to occur as rapid digitization makes physical products increasingly coordinate with digital databases, which have the potential to make user benefits and technological paths increasingly decoupled as databases may generally be developed faster than physical products.
Digitalization and Green Tech
Digitalization can deliver substantial benefits for the environment: it can dematerialize the economy, improve the efficiency of resource and energy use, and reduce the overall environmental footprint of societies.
Mobile applications and the Internet have the potential to replace physical products and services in various domains, including printing, entertainment, and financial services. However, they can also be vehicles for boosting energy and resource efficiency in manufacturing, transport, and energy use.
All of these technological advancements are based on ICT hardware, which makes data processing possible. The effect of these technologies on the environment and product service systems is difficult to determine because of their indirect effect, basically through changes in other businesses and consumption patterns.
The assertion that digitalization would dematerialize the economy and alleviate the environmental effects has long been part of popular belief and is founded on the implementation of the diminishing materiality of digital products.
Furthermore, several earlier studies documented the main obstacles in achieving dematerialization. For example, it was concluded that, because ICT is a small percentage of the global carbon footprint, the dematerialization potential of one of the most celebrated and talked about industries in the world, the ICT and electronics industries, has been canceled out in its entirety, with the rest of the economy only accounting for the majority.
It was suggested that the growth performance of the economy is not as ICT-intensive as the users of ICT hardware, due to the problem of neglected corresponding innovations that are embodied in the complementary factor input. In simple terms, once the diminishing materiality of resources in ICT products and the environment-saving characteristics of e-services exist, data and data centers create demand for the increased manufacturing of thousands of supporting ICT products.
Integration of AI in Sustainability
Artificial intelligence (AI) is expected to play a major role in enabling more efficient use of resources, helping to reduce waste in industries, and overall increasing our capacity to fulfill the UN Sustainable Development Goals. AI-assisted equipment maintenance in the production industry, for example, is already significantly reducing the frequency of major incidents by continuously monitoring production interruptions and speed-ups or by analyzing production data.
Given that energy and materials consumption follow the dynamics of production, smarter production also reduces the unnecessary use of materials and energy. So far, 45% of industrial companies collect digital data from their productions, 60% analyze the data to find possibilities to increase the efficiency of the manufacturing process, and 45% act on the data from their productions.
There is, however, still a large potential to use AI in production management for finding the best markets, optimizing marketing expenditure, as well as for steering the entire network of factories and suppliers.
Another example comes from the transport sector, where fully autonomous vehicle technology has great potential for reducing accidents, minimizing the risk of traffic jams, avoiding inefficient parking, and decreasing the need for transporting vehicles.
Clear energy savings will also be obtained through the implementation of electrical engines and by mixed traffic flow. Likewise, the chemical industry should be able to utilize digital twins of process steps, either for controlling the process without using the actual chemical sensor machinery or for increasing efficiency and reducing risk.
AI is expected to be a strong driver for decentralized production and service systems by increasing support for the operator in a way that minimizes the need for a large, centralized factory or service center.
This can hence drastically simplify the technological solution by turning huge central production facilities into small, but often updated, sets of distributed production sites, and this will also imply that the commercial and economic arguments will change significantly through new business models based on a large number of customers.
At the same time, we synergize industrial leadership, new consumer relations, better resource efficiency, and decreased stress on transportation systems as goods will be produced locally. Multi-functional mini factories producing day or night according to energy availability or logistical needs and the customer's claim to service around the clock will make bonded inventory large and reduce working capital in the logistics chain by an impressive amount.
Notably, industrial scientists have already made the first studies of collaboration in human-robot mixed teams in order to direct the operator to the most efficient strategy and operation, and this comfortable use of AI-powered tools and robots is expected to further expand.
The Role of Education and Research
A clear focus on sustainable development has always been an important component of Nordic education and research. Today, higher education is distributed all over the world, and it has become clear that good education can help solve global problems such as conflict, climate change, and the great differences in living conditions. Education is also a means of reaching research that is less volatile and more beneficial. Optimally, education will tie in with both society's needs and different areas of research.
The Nordic countries — Denmark, Finland, Iceland, Norway, and Sweden, as well as their autonomous areas, the Faroe Islands and Greenland, and the Åland Islands — are in an excellent position when it comes to education. They also have a long tradition of providing good general education. Finland has a stronger position than the other Nordic countries.
Nordic higher and further education also stands for quality and coherence: lower in the vocational hierarchy, work experience can formally be counted as a continuum, extending from professional schools through upper levels of universities. Migration or brain drain is the price of globalization in technology and education. Central issues will nonetheless be to define sustainable routes for brain gain and regaining, and to specify the best interfaces with local and national strategies.
Universities as Innovation Hubs
Universities have been likened to "innovation intermediaries," acting as the natural "bridging institutions" between the demand- and supply-oriented spheres in social systems and providing a crucial crop of human resources, which are central to market demand and the innovativeness and competitiveness of enterprises.
Besides educating students at undergraduate, master's, and doctoral levels, universities can deal with the valorization of knowledge through various mechanisms, including partnerships with business, providing consultancy, intellectual property management, technology transfer, providing funding, investment, and business incubation services.
The involvement of universities in research and collaboration with public and private sector partners is the backbone of innovation and innovation systems. Therefore, it is not surprising that regional and national policies increasingly place relevant emphasis on the role of universities in regional innovation and development.
This chapter reviews evidence on some of the issues and defines directions and lessons regarding two key dimensions of the engagement of universities in innovation, in the form of policy recommendations, attuned to the present state of universities as well as the wider economic environment and the nature of their interaction with firms in particular circumstances. It also draws conclusions regarding the issues and defines directions and lessons.
The chapter also delves into guidelines for the "innovation hub" role of universities and the nature of the collaboration support, the mechanisms for facilitating access to research, and implications for policy, listing strengths and weaknesses of current policy actions, aiming at improving the effectiveness of the policy support of universities as facilitators of innovation.
Research Collaborations
One of the characteristics of the real world today is the high degree of complexity. At the same time, multidisciplinary research challenges and quick technological development in the field of science point out the benefits of both public and private actors pooling resources, sharing costs and risks, and carrying out joint research projects.
During the past five years, most Nordic research cooperations have been institutionalized in a comprehensive manner. The driving force in the initiatives has usually been collaboration between the national funding agencies, where the organizational integration, rules for participation, as well as forms for financial and legal administration have been developed.
With the need to focus governmental efforts on research and development, specific centers of excellence or consortia have been formed not only in the individual Nordic countries or in the EU family but in the whole world.
Often, the economic resources are seriously limiting the ability, even within a major country, to carry out first-rate research in all technologically challenging areas. Coordinated and targeted national and international efforts are the most effective way of gaining a better understanding of the potentially intrinsic economic advantages offered by different research and technological developments.
In fact, the side-by-side comparison of closely related research carried out in different laboratories of research centers in different countries is often the most powerful tool in understanding the cost of international cooperation and identifying any potential advantages and limitations that may impede greater convergence of research efforts.
Public Perception and Community Engagement
It is important to remember that while practical solutions are at the core of technological innovation, these are always directed by societal concerns. To achieve the transition to more sustainable technologies, society has to be suitably engaged with the developments expected. Unfortunately, if these developments appear distant and tall, we naturally lose focus and engagement.
But technology changes the way we live, and we need to be reminded about what can be achieved to persuade people to participate in the process of change. The first message is that technology is not a distant future phenomenon but something that we live with constantly today and every day.
It is only innovation that is a more distant future aspect, but the speed of innovation today is making this more and more immediate, and the changes imposed on our lives are more or less regular.
It is not only about climate change but also about sustainable living and the benefits of quality of life. It seems natural that there should be a call for a greater amount of common sense in the design, application, and utilization of technologies.
They should, for example, be as user-friendly as one would wish of any other product. It is strange that often this is not a requirement that is evident in the design of our practical world. How do we bridge the gap between the dream world and the day-to-day?
It can only be by the involvement of the communities in the decision-making process. This calls for the intelligent engagement of every member of the community in the process of bringing about a world that can be no worse than the one that we and our forefathers lived in, but one that should be better.
Awareness Campaigns
The main priority of sustainable campaigns is the improvement of human lifestyle through the promotion of concepts such as the protection of the environment, economic viability, social justice, rural development, equal opportunities, and future generations.
Among successful examples of awareness campaigns, there are information campaigns to promote awareness of the need to combat noise carried out in the Netherlands and the Eco-Management and Audit Scheme drawn up by the European Commission.
Another review includes communication tools to enhance public awareness about global environmental change. These tools consist of worldwide, regional, and outreach sections, events, products, and materials.
The worldwide section comprises projects described in an accessible format for an informed public to see and understand how these projects are improving knowledge about global environmental change and changing public scenarios; track these projects in the stage prior to the fulfillment of designed results; follow the activities of groups involved in global environmental research.
The regional section integrates the large projects that contribute to, focused on land, metropolitan cities, and industrial sites. This information allows the users of the website to see and understand what is happening in areas identified as hot spots by the experts involved.
Finally, the section about outreach contains available educational and web materials, lists of manufacturers and stakeholders interested in acquiring products, and enriched documentation provided during lectures.
Community-Led Initiatives
Societies are dynamic and pluralistic. In parallel with innovations developed by industry and government, community-led innovations also contribute to sustainability. A set of institutions including households, NGOs, cooperatives, labor unions, and municipal governments mediate and help manage the relationship between individuals, families, and markets.
A significant part of social life is not part of the quid pro quo exchange mediated by money. People must also cooperate and collaborate individuating goods and services undermines social cohesion and may also undermine the capacity of societies, families, and individuals to govern, care for, and support themselves.
As society deploys new technologies, existing patterns of cooperation and collaboration are apt to change. For good or ill, cluster developments may increase or decrease the economic vitality, social capacities, and environmental impacts of particular places.
Much networked economy activity, such as listening to a concert broadcast by a distant orchestra, does not depend on particular places. Many other activities remain localized because delivering the customization valued by customers requires substantial bandwidth and cost-effective networking at the nanospatial, microspatial, neighborhood, and regional scales.
In the past, the areas for which firms were locally responsible constituted a self-sustaining cluster of closely integrated organizations; to an increasing extent, many such areas represent little more than different businesses subscribing to the same service provider.
As such communities slowly and painfully dismantle walls between towns and villages and open borders to migrants, they must develop new means, ends, and will promote neighborhood and neighborliness in the digital age.
The Future of Nordic Technologies in Global Context
Nordic technologies for sustainable innovation are emerging from deep historical and socioeconomic integration of technology in society. This paper has depicted the deep connections between how Nordic societies have engaged in their energy, material, and food provisioning, and innovations carried out to overcome problematic configurations in these sectors.
These innovation processes have come to be characterized by a focus on design and function, by interdisciplinary coherence between design and engineering disciplines and social sciences, and across governmental, professional, and market channels.
Market pull has historically been enacted through regulation, with a hands-on approach to industry support when new technology generations have not yet had the time or self-sustaining market pressure to become competitive on present, narrow terms.
While characteristic of Nordic innovation practices, these features have increasingly appeared as inherent, or at least aspired, characteristics of sustainable technology developments globally. Policies form a possible explanation.
Green technology development policies are informed by the average comparative strengths of northern European technology capabilities. They also, however, promote researchers and other professional communities and society as a whole to engage in these sustainability-driven innovation practices.
Therefore, the policies facilitate learning and adaptation more generally. It can thus be argued that many of the successes of the Nordic sustainable technology projects discussed below to both analyze and innovate between society and technological provision, to configure products and processes together with niche market actors, and to localize global generic technologies and global market objectives have come to be recognized and valued beyond national boundaries.
The Nordics are no longer at the periphery of sustainability policymaking; they are no longer only problem solvers for intractable societal needs like the energy trading of tiny Iceland or margins in green luxury. Scandinavia is marketed as sustainable to the world.
Our analysis of the Nordic innovations in the realm of sustainability allows for several conclusions. Energy and circular economy clearly dominate the Nordic sustainability innovation field. These are where Nordic competencies are increasing. The region’s initial strength in sustainability innovation was in agriculture and food.
However, whereas the region’s overall strength in sustainability innovation has grown over the decades, it is slightly decreasing in biotech and emission control. There is potential for the Nordic know-how in sustainability to be deployed more in specific areas of green tech. The region has considerable strengths in smart industry, ICT solutions, and systems for managing the risks of extreme weather. However, a greater share of green tech innovation is happening outside the region.
One question to ask after such a study is: so what? Why is this information relevant, or indeed necessary? We argue that the challenges the world is facing demand a high performance of the sustainability innovation system. It needs to provide improved cost-effective and resource-efficient solutions; and to do more than just develop a new technology, it must also make sure that the technology gets diffused quickly and widely.
To do this, it needs to manage its own development and diffusion well. This is where the policy relevance of our study comes in. Further from our quest to help firms be ready and willing to assume responsibility for the delivery of the desired green future, we draw both research and practical implications.