Factors Affecting Eco-Innovations in the European Union
MARCIN RELICH
Faculty of Economics and Management,
University of Zielona Gora,
Licealna 9, 65-417 Zielona Gora,
POLAND
Abstract: - Environmental concerns and challenges are constantly increasing in recent years. These challenges
affect the national economies of many countries and business strategies in companies. Environmental
regulations and greater awareness of consumers in the aspect of environmental concerns force companies to
develop products that can reduce harmful environmental effects. This paper is concerned with investigating the
importance of factors affecting environmental innovation in the European Union (EU), and the environmental
benefits obtained during the consumption or use of innovative products. Moreover, this study presents the
difference in assessing the importance of factors related to introducing environmental innovations by the EU
innovative and non-innovative enterprises.
Key-Words: - circular economy, environmental innovation, environmental benefits, innovative enterprises,
product innovation, costs and input prices, customer demand.
Received: March 9, 2023. Revised: October 21, 2023. Accepted: November 7, 2023. Published: November 17, 2023.
1 Introduction
Economic development was closely linked to
negative effects on the natural environment over the
past decades. However, the increase in ecological
attitudes among citizens and consumers has resulted
in changing environmental regulations and business
strategies toward incorporating the concept of
sustainable development and a circular economy. As
a result, companies are presently drifting from the
strategy of gaining the maximum economic profit
towards paying attention to social and ecological
issues. The number of companies that have decided
to develop eco-products, including eco-innovations,
is increasing from year to year.
Eco-innovations can be defined as innovations
that provide benefits to both the entrepreneur and
consumer by the limitation of the detrimental impact
of the economy on the environment, [1]. An eco-
innovation can also be seen as a merge of
innovation (in the sense of novelty and creativity)
and ecological awareness or environmental
sensitivity, [2]. Eco-innovations can be classified
into four categories: environmental technologies,
organizational innovations, product and service
innovations, and green system innovations, [1]. In
this study, eco-innovations are considered only from
the perspective of product innovations.
Financing eco-innovations can be based on
internal and external sources of capital.
Environmental policy, including public grants,
subsidies, or other financial incentives, can
significantly support enterprises in developing
innovative eco-products. The possibility of using
national and EU funds to support the design of eco-
innovation and its placing on the market can be seen
as one of the factors driving environmental
innovations. Other factors can refer to increasing
customer demand for environmental products or
increasing costs and input prices. The latter can
result from reducing the amount of energy or
materials needed for production or eliminating
harmful materials by pro-environmental substitutes.
This is particularly significant from the perspective
of the circular economy, where the value of
products, materials, and resources is maintained in
the economy as long as possible, and the generation
of waste is minimized, [3], [4]. The concept of
resource-efficient eco-innovations for a circular
economy in the EU companies was presented in, [5],
[6].
Drivers and barriers to introducing eco-
innovations are widely considered in the literature.
From the perspective of their implementation into a
circular economy, they can be classified into
technical, economic/market, institutional/regulatory,
and social/cultural dimensions, [7]. Another
classification of drivers groups them into political
system (legislation, incentives, market structures),
social system, and educational system, [8], or
production, consumption, and waste management
areas, [9], or public administration, networking, and
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technological factors, [10]. It is noteworthy that in
the last twenty years, the literature relating to
sustainable product development has significantly
increased, [11]. In recent years, there were also
published studies related to eco-innovations in the
EU countries, [12], [13], [14], [15], [16]. Beltrán-
Esteve and Picazo-Tadeo assessed environmental
performance in the European Union in 2001-2013
from the perspective of eco-innovation and
catching, [12]. The results of research conducted by
Cecere and Mazzanti indicated that green products
and service innovations support the creation of
green jobs in European small and medium
enterprises (SMEs), [13]. Analytically, [13],
indicated, using the Community Innovation Survey
2012-2014, that public financial subsidies and a
company’s environment (e.g., existing
environmental regulations and taxes) are the crucial
factors in the process of creation of eco-innovation
with environmental benefits, [14]. Koszarek-Cyra
verified the hypothesis in selected EU countries that
citizens’ high environmental awareness increases
the number of pro-ecological initiatives undertaken
in SMEs, [15]. In turn, Hajdukiewicz and Pera
investigated eco-innovations in the European Union
in the context of key areas for improvement that
include the total R&D personnel, eco-innovation
patents, energy productivity, and implementation of
sustainable products among SMEs, [16]. The
literature review indicated that there is no current
research devoted to the importance of factors
affecting environmental innovation in the EU, and
environmental benefits obtained during the
consumption or use of innovative products. The lack
of studies devoted to the above-mentioned field was
the motivation to carry out relevant research for the
latest Community Innovation Survey that refers to
the year 2020. Moreover, this research investigates
the difference in assessing the importance of factors
related to the development of eco-innovations by the
EU innovative and non-innovative enterprises.
The paper is organized as follows: Section 2
presents materials and methods, including a
description of the database search. Section 3
presents the results of data analysis and discussion.
Section 4 presents the conclusion and further
research.
2 Materials and Methods
The data was collected from European Statistical
System (Eurostat) datasets, namely the Community
Innovation Survey (CIS) 2020. This survey includes
data related to innovation and environment (data
code: inn_cis12_ienv), which is something new
compared to the previous surveys (CIS 2018, 2016,
etc.). CISs are prepared by national statistical
offices across the EU and can serve as the data
source for measuring innovation in the EU. CISs
collect data on the innovativeness of various types
of enterprises, sectors, countries, innovation types,
and economic activity. Moreover, CISs gather data
related to innovation in products and processes,
innovation activity and expenditure, innovation
effects, innovation collaboration, public innovation
research, and the source of information for
innovation patents. Every two years, Eurostat
publishes a successive survey, [17]. At the moment
of preparing this study (August 2023), Eurostat
provides data sets related to CIS12 that refer to the
year 2020, [18].
The second survey prepared for the European
Commission in 2020 refers to attitudes of European
citizens regarding the environment, [19]. The report
called “Special Eurobarometer 501” covers issues
related to general attitudes toward the environment
and sources of information, ways of acting to tackle
environmental issues, and the role of the EU in
environmental protection.
In this study, the following data was collected for
investigation:
- enterprises by type and importance of factors
related to climate change, activity, and size
class (data code: inn_cis12_clim);
- enterprises by type and importance of factors
driving environmental innovations, activity,
and size class (data code: inn_cis12_envf);
- enterprises by type and importance of
environmental benefits obtained during the
consumption or use of an innovative product
of the enterprise, activity, and size class (data
code: inn_cis12_envu);
- national expenditure on environmental
protection by institutional sector (data code:
env_ac_epneis1);
- inflation rate (data code: tec00118);
- greenhouse gas emissions from production
activities (data code: cei_gsr011).
The study aims to verify the four following
hypotheses:
H1: there is a significant positive dependence
between national expenditure on environmental
protection and the high level of importance of
factors related to government policies in the EU
countries;
H2: there is a significant positive dependence
between the level of inflation rate and the high level
of importance of factors related to increasing costs
or input prices;
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H3: there is a significant positive dependence
between the level of awareness of EU citizens
(national expenditure on environmental protection
in households) and the high level of importance of
factors related to increasing customer demand;
H4: there is a significant positive dependence
between greenhouse gas emissions from production
activities and the level of the high level of
importance of factors related to the impacts of
extreme weather conditions.
The verification of the above hypotheses is
carried out using regression analysis.
3 Data Analysis and Findings
This section is divided into three areas of data
analysis: 1) the level of importance of factors related
to introducing environmental innovations in the EU
innovative enterprises, non-innovative enterprises,
and all enterprises; 2) factors driving environmental
innovations and benefits obtained during their
consumption or use; 3) regression analysis for
verifying research hypotheses.
3.1 Importance of Factors Related to Eco
Innovations
The level of importance of factors related to
environmental innovations is presented for the EU
innovative, non-innovative, and all enterprises.
These factors refer to government policies or
measures, increasing customer demand, increasing
costs or input prices, and impacts of extreme
weather conditions (data code: inn_cis12_clim).
Figure 1 illustrates the level of importance of the
factor regarding government policies. The EU
innovative enterprises have indicated the high level
of importance of government policies in 11%,
whereas non-innovative enterprises in 6%. The
medium level of importance has reached 22% and
17% in innovative and non-innovative enterprises,
whereas the low level is 29% and 24%, respectively.
In turn, no importance of government policies was
indicated by 38% and 53% of innovative and non-
innovative enterprises, respectively.
Fig. 1: The importance level of government policies
Figure 2 presents the importance level of the
factor related to increasing customer demand. The
structure of importance of this factor is very similar
to the previous one. The EU innovative enterprises
have indicated the high level of importance of
increasing customer demand in 11%, whereas non-
innovative enterprises in 5%. In turn, the importance
of increasing customer demand was indicated by
39% and 56% of innovative and non-innovative
enterprises, respectively.
Fig. 2: The importance level of increasing customer
demand
Figure 3 illustrates the importance level of
increasing costs or input prices. Again, this factor
has a similar structure of importance as the previous
ones. The EU innovative enterprises have indicated
greater values of high, medium, and low importance
for costs or input prices, whereas non-innovative
enterprises have indicated a greater level of no
importance.
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Fig. 3: The importance level of increasing costs or
input prices
Figure 4 presents the importance level of the
factor related to the impacts of extreme weather
conditions. The biggest difference in the assessment
among the EU innovative and non-innovative
enterprises is in the low level of importance (33%
vs. 26%) and no importance of these impacts (43%
vs. 54%).
Fig. 4: The importance level of factors related to the
impacts of extreme weather conditions
The structure of importance is very similar for
different factors related to environmental
innovations. The EU innovative enterprises have
indicated that the considered factors have a greater
impact on eco-innovations compared to non-
innovative enterprises. In turn, non-innovative
enterprises have mostly chosen the option of “no
importance” for factors related to eco-innovations.
3.2 Factors Driving Eco-Innovations and
Environmental Benefits
Data analysis in this subsection contains data related
to the EU innovative enterprises that have indicated
the high level of importance factors related to
environmental innovations. Moreover, this data
analysis is divided into two areas: the importance of
factors related to introducing environmental
innovations by the EU enterprises, and
environmental benefits obtained during the
consumption or use of innovative products.
Figure 5 presents the importance of factors
related to introducing eco-innovations by the EU
enterprises in 2020 (data code: inn_cis12_clim).
Increasing costs or input prices are the factors of the
greatest importance for developing environmental
innovations by EU enterprises. On average 13% of
enterprises declared the greatest importance for this
factor, before government policies (10.7%),
increasing customer demand (10.7%), and impacts
of extreme weather conditions (6.8%). The factor of
increasing costs or input prices had the greatest
value in Slovenia (21.8%), Germany (21.3%),
Hungary (20.4%), and Poland (17.4%). Hungarian
enterprises have indicated the greatest importance of
factors regarding government policies (20.8%),
increasing customer demand (18.5%), and impacts
of extreme weather conditions (12.8%).
Fig. 5: Factors related to introducing eco-
innovations
The further analysis is the detailed version of
the previous one. For example, the factor related to
government policies is reflected in the following
factors: existing regulations, existing taxes,
regulations and taxes expected in the future, and
government grants, subsidies, or other financial
incentives (data code: inn_cis12_envf). The greatest
important factors regarding environmental
innovations refer to improving the enterprise’s
reputation (on average 15.7%) and the high cost of
energy, water, or materials (on average 12.7%). The
greatest importance of the factor linked to
improving an enterprise’s reputation is consistent
with expectations. In turn, the significant level of
importance for the factor regarding the high cost of
energy, water, or materials can be referred to as the
increase in resource prices that took place in the last
years. On the other hand, the EU enterprises have
indicated the least importance for the need to meet
requirements for public procurement (on average
5.5%). This can result from the low level of
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environmental requirements induced by
governments of the EU countries in the aspect of
public procurement. Figure 6 presents the
importance of nine factors driving environmental
innovations.
Fig. 6: Factors driving eco-innovations
Existing regulations are the important factor
driving environmental innovations in Slovakia
(19.1%), Romania (18.7%), and Germany (18.4%).
Existing taxes, charges, or fees are mainly
considered in Romania (13.7%) and Slovakia
(13.6%). Regulations and taxes expected in the
future are the significant factor affecting
environmental innovations in Slovakia (14.6%) and
Slovenia (12.6%). Government grants, subsidies, or
other financial incentives are the important factors
driving environmental innovations in Lithuania
(9.5%), Latvia (8.9%), and Slovenia (8.9%). The
greatest value of the factor regarding current or
expected market demand was observed in Denmark
(20.0%). Improving the enterprise's reputation is the
significant factor driving eco-innovations in
Denmark (21.6%) and Romania (21.1%). In turn,
the high cost of energy, water, or materials is the
important factor affecting environmental
innovations in Slovenia (20.0%), Germany (18.7%),
and Slovakia (18.1%).
The next data analysis refers to environmental
benefits obtained during the consumption or use of
innovative products (data code: inn_cis12_envu).
The results of this analysis are illustrated in Figure
7.
Fig. 7: Environmental benefits related to eco-
innovations
The greatest environmental benefit of
consumption or use of innovative products indicated
by the EU enterprises is the reduction of energy use
or CO2 footprint (on average 13.0%). This benefit
was indicated the most frequent in Latvia (23.6%),
Estonia (21.6%), and Austria (19.2%). Another
environmental benefit related to the reduction of
soil, noise, water, or air pollution was mostly
indicated in Latvia (20.0%), Estonia (15.6%), and
Italy (15.0%). Facilitated recycling of products is
the successive environmental benefit mainly
indicated in Portugal (17.7%), Estonia (15.4%), and
Romania (15.4%). In turn, extended product life was
mostly indicated in Estonia (19.4%), Latvia
(17.7%), and Romania (16.4%).
It is noteworthy that the range of all
environmental benefits regarding eco-innovations is
very similar. Moreover, the benefit related to
reduced energy use or CO2 footprint can result from
the high cost of energy that rapidly increased in the
EU countries in the last years.
3.3 Verifying Research Hypotheses
The first hypothesis refers to the dependence
between national expenditure on environmental
protection and the high level of importance of
factors related to government policies in EU
countries. Figure 8 presents the trend on a scatter
plot. This hypothesis was not positively verified.
Fig. 8: A scatter plot for H1
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The second hypothesis refers to the dependence
between the level of inflation rate and the high level
of importance of factors related to increasing costs
or input prices. Figure 9 illustrates the identified
trend on a scatter plot. This hypothesis was also not
positively verified.
Fig. 9: A scatter plot for H2
The third hypothesis refers to the dependence
between national expenditure on environmental
protection in households and the high level of
importance of factors related to increasing customer
demand. Figure 10 illustrates the identified trend on
a scatter plot, and hypothesis H3 was not positively
verified.
Fig. 10: A scatter plot for H3
The fourth hypothesis refers to the dependence
between greenhouse gas emissions from production
activities and the level of importance of factors
related to the impacts of extreme weather
conditions. Figure 11 presents the trend and its
parameters on a scatter plot. Also, the hypothesis H4
was not positively verified.
Fig. 11: A scatter plot for H4
4 Discussion and Conclusion
The contribution of this research is the presentation
of current trends within eco-innovation in the EU
enterprises, and environmental benefits obtained
during the consumption or use of innovative
products. The results were obtained using data
related to the last survey (CIS) that was conducted
in 2020. This survey included data regarding
innovation and the environment, which was not
included in the previous surveys (CIS 2018, CIS
2016, etc.). Consequently, the results presented in
this study are wider and more up-to-date compared
to the results presented in [12], [14]. Moreover, data
analysis conducted in this study indicates that the
most important factor driving eco-innovations is
related to improving an enterprise’s reputation and
the high cost of energy, water, or materials. This is
in contrast to the results presented in [14], which are
based on CIS 2012-2014, and indicated that public
financial subsidies and the company’s environment
are crucial factors in the process of creating eco-
innovation with environmental benefits.
Since a company is intended to increase its
market position, the greatest importance of the
factor related to improving the enterprise’s
reputation is consistent with expectations. In turn,
the high level of importance for the factor regarding
the high cost of energy, water, or materials can be
referred to as the increase in resource prices that
took place in recent years in the EU countries. On
the other hand, the EU enterprises have indicated
the least importance related to meeting requirements
for public procurement. This can result from the low
level of environmental requirements induced by
governments of the EU countries in the aspect of
public procurement.
The aim of the presented work was two-fold.
Firstly, the presentation of the importance of factors
affecting environmental innovation in the EU, and
environmental benefits obtained during the
consumption or use of innovative products.
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Secondly, the presentation of the difference in
assessing the importance of factors related to
introducing environmental innovations by the EU
innovative and non-innovative enterprises. The
results have indicated a significant difference
between innovative enterprises and non-innovative
enterprises. Innovative enterprises have indicated
the higher level of importance of government
policies and other factors, whereas non-innovative
enterprises have not indicated the importance of
considered factors. Moreover, the results of data
analysis indicated that increasing costs or input
prices is the most important factor for developing
environmental innovations by the EU enterprises,
whereas the impact of extreme weather conditions is
the least important factor. Another result of the
presented study indicated that the greatest
environmental benefit of consumption or use of
innovative products is the reduction of energy use or
CO2 footprint. Furthermore, this study also includes
the verification of four hypotheses regarding, for
example, the aspect of the effectiveness of national
expenditure on environmental protection and its
impact on increasing customer demand. In addition
to this, the results can support policymakers in
identifying what factors related to government
policies (existing regulations, existing taxes,
regulations and taxes expected in the future,
government grants, subsidies, or other financial
incentives) are the most and least important for
innovative and non-innovative enterprises.
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Contribution of Individual Authors to the
Creation of a Scientific Article (Ghostwriting
Policy)
The author contributed in the present research, at all
stages from the formulation of the problem to the
final findings and solution.
Sources of Funding for Research Presented in a
Scientific Article or Scientific Article Itself
No funding was received for conducting this study.
Conflict of Interest
The author has no conflicts of interest to declare.
Creative Commons Attribution License 4.0
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