Helping companies in their green transition
In addition to more efficiency, the change brings improvement of the environment and care for society, it became clear at the conference “Business and Regions – Transformation”
The big Bulgarian companies started their sustainable transformation a long time ago and for them the new initiatives in this direction are a continuation of what they are already doing, not some new process. This became clear during the discussions in “Business and Regions – Transformation”, organized by the Bulgarian Chamber of Commerce and BGlobal magazine. Government, business and local government representatives participated in it.
The event was opened by the Deputy Prime Minister for European Affairs Atanas Pekanov, who in a video message told the participants that the Bulgarian and European economy faces many challenges that can only be solved with the joint efforts of businesses, local authorities and state administration. According to him, the focus should be directed in three directions – regional development and reduction of regional imbalances, policies for decarbonization of the economy and digitalization. He added that for the realization of the goals, there are enough European funds, which will provide opportunities for the promotion of small and medium-sized enterprises, the creation of new enterprises, scientific and research activities, raising the qualifications of workers, promoting business for high-tech initiatives, etc. “But in order to be successful, it is very important to have a dialogue between the big companies, the small companies, the local government, in order to see exactly what is the vision we want to build for Bulgaria in the next decade. Bulgaria, which keeps up with the times of global processes, and at the same time protects its enterprises and those working in the regions”, concluded Pekanov.
The Chairman of BSK Dobri Mitrev stated for his part that small and medium-sized enterprises are indeed the backbone of our economy, but its locomotive is the large companies, because they are the ones who first implement the policies of sustainability, innovation and corporate social responsibility. “We need to clarify how we envision our mutual commitments so that the transformation affects not just big companies, but small ones, people and local communities.” In order for this transformation not to be dramatic, let us know the socio-economic price that we will all pay,” said the head of the BSK.
During the discussion, Iliya Garkov, vice president of Dundee Precious Metals and executive director of the gold mining company for Bulgaria, shared that for him, transformation means a change from one state to another, and sustainability means that there is no turning back. “This is exactly what we achieved when we built a leader in innovation in the global mining industry from a bankrupt enterprise 17 years ago,” explained Garkov. According to him, the speed of such a transformation is impressive because there are no prerequisites for it in the country. He gave the example of Australia, where it takes 3 months to obtain a permit for mining activity, while in Bulgaria this period is 17 years. Despite this, “Dundee” managed to open the first mine in our country after 40 years – Ada Tepe near Krumovgrad. And in the meantime, it implemented a smart center for remote control of mining activities, an autonomous underground drone and reduced its energy consumption in flotation processes by 10 times. The latest innovation, whose tests have recently been completed, is for an autonomous 45-tonne machine to operate without a driver in the mine.
For Dominik Hammers, CEO of the Geotechmin Group, which manages more than 20 companies with a total of 4,000 employees, sustainable transformation is about understanding how your business impacts the environment, people and the economy. And how to make it so that the business continues to have it. “We don’t have a specific strategy for sustainability, but the balance between ecology, economy and society has always been at the center of our work. This is not a one-time thing, but something that is done constantly. “Perhaps we should not talk about transformation, but about sustainable progress,” he believes. He gave an example of an investment made back in 2009 in the Elatsite mine. Its full automation reduces CO2 emissions by 4,300 tons, long before it became an EU priority. The group is currently installing two photovoltaic plants on the roofs of the ProAuto service bases of Geotrading AD in Sofia and Etropole.
For another company, a participant in the conference, its own electricity production has very specific parameters. Aurubis’ Ivan Gradinarov said the company has set a goal of meeting half of its electricity needs from renewables by 2050. The company has already built a photovoltaic park near its production base, but it only covers 2.5 % of total consumption per year. “In recent months, electricity prices have been quite high. This trend will continue, and with regard to the sustainable development of companies, it is very important that they secure sources. Especially for energy-consuming production, like ours,” added Gradinarov. He also mentioned the current experimental powering of an anode furnace of a group company in Hamburg, which uses hydrogen as fuel. If this experiment is successfully completed, it is no wonder that this technology will quickly be applied in Bulgaria as well.
Biserka Yaneva, Director of Human Resources at Asarel Medet, pointed out that over the past 20 years the company has invested BGN 1.4 billion in seven different directions. Because of the extremely low content of copper in the ore (0.27% compared to an average for the sector of about 0.5 and 1%), they are forced to constantly import and implement new technologies, because otherwise they will lose efficiency and competitiveness. Even during the last pandemic year and the reduced economic activity, 75 million BGN investments were made. Thus, over the years, the company has saved 45% emissions from mining vehicles. With the modernization of the concentrator, the electricity costs of the flotation plant have been reduced by 15%.
Rumen Tsonev, CEO of KCM 2000, pointed out that Bulgarian business has a number of competitive advantages and can emphasize them, instead of just following trends. “20 years ago at KCM we started working and 5 years ago we implemented one of the most innovative technologies in the world – instead of reducing lead oxide with carbon and getting the metal lead and carbon dioxide that we all complain about now, we used the second method to obtain lead – we reduced lead oxide with lead sulphite, which is contained in the ore, and obtained lead and sulfur dioxide, from which sulfuric acid is produced, one of the most used chemicals in the world… We managed to increase the yield of basic and residual products from our raw materials. We have the most modern plant for the production of lead, and we have reduced the energy used by 20 times”, pointed out Tsonev. Today, the company produces batteries for storing the electricity produced by solar and wind power plants, and Tsonev’s question is why they are not used for storage, but batteries manufactured even outside the EU are imported. The state must work to create long supply chains in Bulgaria, to use our competitive advantages, and not just be a market for long chains outside Europe, is the position of the head of the KCM. According to him, the current situation is not sustainable and we must work towards greater self-sufficiency at the national and regional level.
The CEO of UniCredit Bulbank Tsvetanka Mincheva, for her part, announced that the bank is developing credit products that support small and medium-sized businesses in the transition to a carbon-neutral economy. Big companies have the R&D capacity and resources to adapt to changes in the environment, such as digital transformation and the green deal, which will predetermine the global economy. However, small businesses need support. According to Mincheva, today’s financial institutions must know the carbon footprint left by their customers and even if they don’t want to, they bear the risk of climate change. For this and next year, the first stress test will be conducted on the financial sector for its sustainability against the background of climate change.
The speed at which change is occurring is tremendous and continues to accelerate. It is not just some aspect that is changing, but our entire business model, as the banking sector has perhaps changed more in the last 10 years than in the last 100 or 500 years, explained Tsvetanka Mincheva. For this, the banking sector now has three main roles. Be there for customers when they make their investments. Not just involved in drawing up their plans, but working alongside clients in designing the transformation. And at the same time, it is making efforts to maintain sustainability in the context of the green deal and the transition to carbon neutrality.
As an example, she pointed out that currently more than 90% of operations that banks carry out are initiated by a person or organization that is not located in a bank branch.
The map of the regional development of Bulgaria has changed in recent years, and the changes do not follow the administrative-territorial division of the country. With these words of Svetla Kostadinova, an economist from the Institute of Market Economy, the second panel of the “Business and Regions – Transformation” forum began. The observations of the FII show that in 2020, despite the pandemic, in large municipalities with a leading industry, unemployment is decreasing, but this is also happening in some small municipalities. The bottom line is that when municipalities work together, success is achieved. And the markers of success are working in clusters of municipalities, with a focus on human capital, specialization, administrative capacity and cooperation of the local government with the companies already established on the ground, Kostadinova said.
Only since 2013 has the state seen the role of municipalities in attracting and retaining investors, and they can hand over a class B certificate, said Silvia Georgieva, executive director of the National Association of Municipalities in the Republic of Bulgaria. But he hastened to specify that this instrument is not particularly attractive and so far only 10 certificates have been awarded. The industrial zones in Plovdiv, Shumen, etc. however, there is evidence that local government can attract and retain investors.
Georgieva pointed out that more than BGN 7 billion, or more than half of what is foreseen under the EU Recovery and Sustainability Plan, will be for municipal infrastructure, and local authorities are starting to prepare for this. And that according to the new requirements for European financing, it is necessary for at least 3 municipalities to apply in cooperation with the business. Georgieva pointed out that partnerships of 5 or more municipalities are already being created in Northern Bulgaria.
“The municipality fulfills a very important balancing role in the supply and demand of labor, and the retention of people and investments are very important for the development of the municipalities,” said Deputy Minister of Social Affairs Ivan Krastev. He spoke about the uneven regional development and pointed out that in recent years the cost of labor in the capital has been a quarter to a third higher than the average for other regional cities.
Over 1.2 billion under the Recovery and Sustainability Plan will be implemented by the Ministry of Social Affairs, Krastev recalled. One of the major projects will be a platform for digital training of all Bulgarians. The project is for more than 327 million people and by 2026 it should provide training to 500,000 people, which is 1/6 of the working population. The goal is to cover all segments, first of all people with zero digital competences, because the danger is that we will find ourselves in front of a digital gap – a few super qualified, with a digital profile, and a lot of people who are not able to handle digital technologies, said the deputy minister. And he added that the funds under the Program for the Development of Human Resources in the new program period are significantly more – over BGN 2 billion, because investments in the future are investments in the development of human capital.