Slovenia: Portfolios as a way out of linear short-termism

Together with a range of stakeholders, the Slovenian government is embarking on the unprecedented challenge of turning the country towards a circular economy to achieve climate neutrality. As part of the Deep Demonstration of Circular, Regenerative and Low-Carbon Economy programme, they are working to develop a portfolio approach for each of the five identified value chains to prioritise and accelerate the transition to circularity. Over the course of this year, the portfolio for the built environment sector has been developed and stakeholders are currently working on the measures to transition the food sector. Why is the portfolio approach so important for Slovenia’s transition to the circular economy?

Slovenia is a country where people’s attachment to the land, nature and agriculture is very strong because land ownership is distributed. Many people own agricultural land or a forest and are more aware and closer to climate issues than in other countries. They want nature to thrive and regenerate. This is also reflected in Slovenia’s state documents, geared towards prioritising climate action. On the other hand, as many other EU countries, Slovenia has an uphill struggle to put these principles into practice. Therefore, the Slovenian government has decided to try an innovative method to advance systems change with the Deep Demonstration programme and the portfolio approach, orchestrated by EIT Climate-KIC.

The Deep Demonstration programme, places a strong emphasis on portfolio composition. It isn’t limited to a specific project, instead, it encompasses all endeavours associated with advancing the circular economy within the Slovenian ecosystem. This comprehensive approach is designed to facilitate the holistic implementation of activities and measures, recognising that they are interdependent components, collectively contributing to systemic change within sectors like construction and food, and ultimately across the whole country. The role of the portfolio extends beyond providing a high-level view: it also supports the crucial task of prioritisation to understand what is most urgent, promising and feasible to achieve the desired transformative impact.

“The portfolio is an instrument for identifying systemic solutions and I find that its complexity is proportional to the scale of that ambition. Once one understands the underlying principles and steps of portfolio development, it appears as a very logical and straightforward process. I think that the process behind it is really what is important. That the stakeholders come together and that we look at the specific challenge from all angles. And that is also one of the things that is difficult, that requires energy, that requires good organisation and a structured approach so that you can then move forward.” – said Jasmina Karba, Undersecretary of the Ministry of Environment, Climate and Energy of the Republic of Slovenia, who is leading the Deep Demonstration programme.

Portfolio composition: how to develop an impactful action plan of interconnected measures?

Portfolios are a way of bridging the gap between theory and practice. They provide solutions by commencing with tangible activities aligned with national, regional, municipal or even sectoral objectives, and then translating those goals into a concrete and well-considered list of action items. When applying a systemic approach, stakeholders connect these subsequent actions and gradually introduce more, continually adapting the portfolio. This process dismantles the weaknesses within the system. Even when there are overarching goals intended to serve as a driving force for systemic change, when stakeholders encounter difficulties in establishing these connections, they frequently discover that their operations have been fragmented and isolated. The primary purpose of the portfolio orchestrated by EIT Climate-KIC is, therefore, to break down these silos and foster a more integrated and effective approach so that decision makers achieve their climate goals more successfully.

“Slovenia has projects and experts working at the forefront of the circular economy, but every state organism has its inertia. These activities are often single point solutions, and everyone’s internal perspective does not allow to see the whole picture. The Slovenian government has found that it needs an external partner to see these things better, to somehow strengthen and connect them and to coordinate the still siloed climate policy that sits between ministries. We come from the outside, we ask fundamental questions and we can create an additional perspective so that we can say to them, listen, from this exercise of our three-dimensional portfolio of activities we can see, that there is an area where there is a lack of investment, a lack of attention from the state or a lack of cooperation from entrepreneurs from a certain sector. It’s not about feeding Slovenians with external expertise, but rather about better activating the resources they already have.” – said Aleksandra Gołdys, EIT Climate-KIC.

The main objective of the portfolio is to collect available ongoing activities and map the gaps, and the role of Deep Demonstration, is to effectively expand the list of priority areas by monitoring, analysing and supporting these activities, linking them together to achieve greater impact. It is a more complex process than traditional project management, requiring more focus to manage the process. However, the chance of making a mistake that can’t be fixed is much lower because multiple stakeholders work on multiple points and focus on specifics from the beginning. “For example, we have an intervention to change the way we fertilise the land and that is our first point of entry, looking at whether it will have an impact. On top of that, we have an intervention to educate farmers and another one to test whether providing information differently on the packaging of agricultural products will lead customers to make different decisions. So you are acting at once in several areas of a particular field,” – Gołdys continues.

The first step in putting together the portfolio is to map the system to find out what initiatives, projects, businesses, educational activities, funding opportunities, and capabilities exist in a particular sector related to the specific intent of transformation. Once a complete picture is available, the question is how to coordinate these to achieve a better impact and how to ensure a long-term effect to transform specific project activities into institutional change so that government spending, agencies and public institutions can be more effective which is the biggest challenge of the whole process.

Multistakeholder collaboration for a greater impact

A portfolio is a way of coordinating specific decisions and priorities and transforming governance models to move away from the perspective of a single owner of a challenge, as the transformative potential of systemic work involving many stakeholders is much higher. It is a collective effort to select actions, prioritise and in this way bring about change and achieve better results.

”It is the first time that an initiative has come from the government to achieve sector integration and what they are doing actually has a quadruple approach. The Deep Demonstration programme gathers a variety of experts such as public and private companies, NGOs and research institutions with years of experience in the field. They are working on their specific areas and here the initiative comes from the state actor bringing them together in a facilitated approach. This makes it possible to take into account different points of view, needs and ideas. This kind of approach enables collaboration among these actors and leverages their diverse expertise and resources to drive the transformation of the whole system.” – said Jure Vetršek from IRI University of Ljubljana, who participated in the Built Environment portfolio composition process.

The way EIT Climate-KIC structures portfolios transforms the dynamics among key players in the system. Its management demands increased adaptability and the nurturing of collaborative relationships among diverse institutions. This change also affects the distribution of power. Institutions find themselves in new and non-traditional relationships with each other compared to the conventional setup. Therefore, decentralised management naturally emerges as a result of portfolio implementation. Distributed leadership, also known as shared or collective leadership, is an approach in which responsibilities and decision-making authority are spread across a group of individuals rather than focusing on a single leader. It may not be a single entity taking up the challenge, but a network of stakeholders from various corners of the system, not previously collaborating on such a scale.

“The major benefit we see is that we have started working more closely with other institutions such as SPIRIT Slovenia Business Development Agency and the Ministry of Environment, Climate and Energy. We have discovered that we face similar challenges in designing and incorporating sustainability criteria into our financial and soft support measures. These criteria are crucial for evaluating projects from companies and prioritising those with a stronger focus on circular practices. As we all got into this process, we found ourselves asking the same questions: What kind of sustainability criteria should we use? How do we verify them? What kind of documentation does the company need to provide, etc.? We have tried to find solutions on our own and sometimes we have discovered that the criteria we designed were not ideal. We have soon realised that it is more beneficial if we work together. And now, through the Deep Demonstration programme, we are trying to align and develop some kind of list of different sustainability criteria that we could easily include in our public calls to obtain incentives. By doing so, we aim to standardise these criteria for different types of incentives, such as investment grants, R&D grants, start-up grants, micro-loans, guarantees for bank loans, etc. It is really interesting to exchange ideas with other institutions who may have a completely different perspective on things.” – said Ana Vele from Slovene Enterprise Fund (SEF), who also took part in the portfolio process.

Even though the Deep Demonstration programme does not work directly with citizens, the structure to activate the portfolio always ultimately reaches them. “It eventually reaches the tree. It ultimately reaches a particular city. We set in motion the partners necessary for it to ultimately reach the stakeholders who are closer to the citizens. We do not think anyone from the outside can replace citizen engagement. We do not go in and replace the institutions that are on the ground. We work with them, we are a companion for them, but in the end, we make sure that all these processes, including dialogue with citizens, take place with the help of stakeholders and institutions that are there locally”, adds Aleksandra Gołdys, who co-designs the portfolio under the Deep Demonstration programme.

EIT Climate-KIC’s portfolio approach stands as a powerful catalyst for Slovenia’s journey towards a systemic transition to a circular economy. It promotes the implementation of a wide range of initiatives and interventions that address different aspects of the circular economy. These include policies, regulations, incentives, investments, business solutions, research and education. The transition to a circular economy requires significant changes in production, consumption and waste management. The portfolio approach is designed to enable Slovenia to manage risks more effectively by testing and implementing multiple strategies simultaneously. In summary, the particular (or added) value as well as the challenge of applying the portfolio approach in Slovenia’s systemic transition to the circular economy lies in its ability to foster innovation, engage stakeholders, manage risk and adapt to changing circumstances.