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Thursday, January 20, 2022

Will the Sustainability Valley be in the Nordics?

A new ranking of 59 European cities on who is leading the sustainable innovation wave is out: The Future City ESG Innovation Index by DEEP Ecosystems, the makers of the Startup Heatmap Europe. 

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You can see the publication of the report here

The report reveals a total of >50bn € being invested in ESG focused startups across over 100 European cities since 2018. Included are ESG solutions that will likely see a surge in demand in the future, when the transition to a more green and sustainable economy accelerates. It includes solutions for ecology, waste management and clean energy in the environment sector, health and education solutions in the social ESG sector and e-government, public transport and smart city solutions in the governance related ESG sector.

In particular the Nordic hubs seem to be likely contenders for the next green innovation hub in Europe: Stockholm, that was one of the first European cities to embrace a green economy as a strategy, ranks 2nd for ESG investments in all of Europe with >€5bn raised since 2018. Another hidden champion, Copenhagen scores high due to its government support for ESG solutions. This manifests for example in its top rank in e-government solutions as well as in the 2nd highest number of sharing cars available in the city after Stockholm (1,006 vs. 1,375). 

Top Ranks for Nordic Cities

City Community of ESG Entrepreneurs Support & Investments for ESG Startups Government Support for ESG Societal Backing for ESG Total Rank Europe
Stockholm 1 1 2 1 1 6
Copenhagen 3 2 1 2 2 11
Oslo* 5 5 6 3 3
Helsinki* 6 3 7 4 4
Riga* 2 8 5 8 5
Gothenburg* 8 7 3 7 6
Tallinn* 4 4 9 6 7
Malmö 7 6 8 5 8 17
Aarhus* 9 9 4 9 9

*These cities were not included in the original publication due to lack of data. For Arctic Startup, DEEP estimated missing values and re-calculated the index.

Among the Nordic Hubs Stockholm stands out taking the first position in almost all sub-indexes except for Government Support for ESG innovation, where Copenhagen outperforms the Swedish Capital. Copenhagen in general is a top contender, reaching 11th rank in Europe and 2nd rank in the important support and investments category in the Nordics. Third in the Nordics is Oslo, that has a strong point in the Societal Backing for ESG.

With 52 ESG focused startups founded since 2018, Stockholm has created the most startups in the sector followed by Tallinn (21) and Copenhagen (21). Stockholm also leads in terms of investments with over >€7bn capital raised in ESG since then. Copenhagen reaches 800mn € while Tallinn can boast some 600mn €. For new startups Helsinki might be a great place to look for funding too, as in the 4th placed Finnish capital the highest seed fundings were raised, in particular by environment focused startups (>€3mn on average).

Finally, the Nordic cities are punching way above their weight when it comes to ESG and show a good specialization in sustainable innovation across the bench. However, when it comes to the question on where the Sustainability Valley of the future will be, Stockholm and Copenhagen are the Nordic cities that have a shot at outrunning the competitors in Europe.

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Thomas Kösters
CEO DEEP Ecosystems / Startup Heatmap

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