By analysing data gathered by the Eustat Innovation Survey, the researchers Josu Santos-Larrazabal and Jorge Gutiérrez-Goiria of the EHU-University of the Basque Country concluded that taxes, subsidies and public procurement are the most effective tools for promoting eco-innovation. Cooperatives can play a significant role in developing eco-innovations, such as reducing CO₂ emissions, which are not solely promoted by governments.

The European Commission and the Organisation for Economic Co-operation and Development (OECD) have highlighted that eco-innovation is of strategic and political importance for companies. Eco-innovations are those that reduce environmental impacts, and are essential for promoting sustainable development. They encompass technological practices and advances to drive the economic objectives of companies and to cause less harm to the environment, for example, by reducing water and energy consumption, polluting less, increasing recycling opportunities, etc.

To date, very little research has been conducted on the link between the service sector and eco-innovation, even though in 2025 the service sector in the European Union accounted for 70% of GDP and employment. To address this shortfall, the EHU researchers Josu Santos-Larrazabal and Jorge Gutiérrez-Goiria analysed how cooperatives in the service sector in the ACBC promote eco-innovation and what their limitations are. They examined the ACBC’s cooperatives. They include those of the Mondragon Corporation (it is one of the world's largest cooperative groups, bringing together 81 cooperatives from various sectors, and with over 70,000 employees). “Although cooperatives are less common than conventional businesses, their economic and social contribution is significant, particularly in key service sectors, such as in finance and distribution,” said the lecturers at the EHU’s Faculty of Economics and Business.

The Eustat (Basque Statistics Office) 2022 Innovation Survey provided the basis to find out what benefits eco-innovation brings to this type of company, what factors drive eco-innovations, and what their limitations are, and to compare these data with those of non-cooperative service companies. “In total, 2,468 service establishments completed the survey on innovation; 154 of them were cooperatives. 895 of them claimed to have achieved an eco-innovation, and 83 of them were cooperatives,” pointed out Gutierrez.

Steps to promote eco-innovation according to business organisation and sector

This research will provide policymakers with useful information to enhance policies designed to implement eco-innovation in companies. Indeed, the researchers found that companies in the industrial sector and those in the service sector have different tendencies when it comes to eco-innovation, as do cooperatives and non-cooperative companies. So they suggested that different incentive policies could be used.

According to the results, “cooperatives are more inclined to apply eco-innovation, particularly when it comes to reducing CO₂ and enabling the end user to recycle”, said Dr Gutierrez and Dr Santos. “Yet, they apply less innovation in areas where significant capital investment is required, such as eco-innovations related to biodiversity conservation or to extending product lifecycles.”

The data revealed that environmental taxes, subsidies and public procurement are the most effective drivers of eco-innovation, whereas current regulation has a limited impact. The researchers said that the internal motivations of cooperatives (e.g. voluntary commitments and cost savings) are not linked to eco-innovation: “We saw that steps taken voluntarily are not important. We had expected that the cooperatives, by virtue of their nature, would have a more marked willingness to apply eco-innovations, but we found that the drivers are not so much internal as external: technological advances, the markets and governments, generally speaking,” explained Santos.

Cooperatives can play an important role in promoting eco-innovations that are difficult for public bodies to encourage. This research provides valuable information to help promote sustainable innovation in service-based economies: “Cooperatives have a strategic function. Policy makers would need to implement adapted measures to harness the potential of cooperatives to reduce CO₂ and overcome obstacles; this is indeed the main weakness governments have in relation to eco-innovation.”

Additional information

Jorge Gutiérrez-Goiria is a lecturer in the EHU’s Department of Applied Economics and belongs to the Hegoa Institute; he lectures on the Master's in Social and Solidarity Economy.

Josu Santos-Larrazabal is a lecturer in the EHU’s Department of Financial Economics II (Business Economics and Marketing) and lectures on the Master's in Business Management from an Innovation and Internationalization Perspective.