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FROM REGULATION TO ACTION: UNDERSTANDING THE GREEN TRANSITION CHALLENGES FOR LATVIAN BUSINESSES
Abstract
The European Green Deal (EGD) represents a transformative policy initiative aimed at shifting the EU economy toward climate neutrality and environmental sustainability. While the EGD provides a strategic vision and financial instruments for achieving green goals, its implementation poses substantial challenges for enterprises, including tiny and medium-sized enterprises (SMEs). This paper examines the perceptions of Latvian entrepreneurs regarding the EGDпїЅs anticipated impact on business performance, the key obstacles to green transformation, and the types of support required for successful adaptation. A mixed-methods approach was employed, comprising desk research on European Union (EU) and Latvian policy frameworks, as well as a survey conducted among existing and prospective entrepreneurs. Factor analysis revealed four principal dimensions shaping entrepreneurial attitudes: growth and expansion potential, cost management pressures, risks of decline, and uncertainty linked to regulatory ambiguity. Compared to other EU countries, Latvian SMEs exhibit lower levels of engagement with green practices, partly due to the fragmented implementation of policies and limited access to tailored support. Survey results indicate that entrepreneurs primarily associate the EGD with rising operational costs rather than competitiveness gains. Moreover, current financial instruments and state aid often fail to align with the real challenges faced by SMEs. The study emphasizes the need for a more cohesive policy framework that integrates financial assistance, advisory services, and regulatory clarity. It also underscores the importance of international cooperation and the need to harmonize support across EU Member States. The findings offer practical recommendations for policymakers, financial institutions, and support agencies to ensure that the green transition becomes an inclusive and economically sustainable process for Latvian businesses.
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