Innovation

Aila.Earth, also known as just Aila, has an innovative new approach to encourage and support non-listed micro, small, and medium-sized enterprises (SMEs) to practice more sustainable behaviors by offering consultation and sustainability reporting tools crafted specifically to their needs. This addresses the current state of sustainability reporting and the increasing demand for sustainability data from SMEs, which are often part of large corporations' value chains. Most reporting tools are designed for larger companies, making them overly comprehensive and costly for SMEs, thereby creating barriers to adoption that hinder these smaller enterprises. Meliina Räty, Co-Founder and COO, points out that at the core of the innovation is the idea of not overcomplicating reporting, as it is still on a voluntary basis. Aila’s reporting tool is provided in the form of a web-based questionnaire format, while firmly aligned with the standards facilitated by The European Financial Reporting Advisory Group (EFRAG). This helps SMEs to know their sustainable status and stimulates them to act to reduce impacts and become truly sustainable.

As SMEs represent up to around 60% of current companies and contribute to almost 50% of CO2 emissions, Aila’s innovation takes direct action to contribute to the SDGs 12 – Responsible consumption, production and 13 – Climate action by lowering the barrier of sustainability reporting for SMEs, educate on the benefits of sustainability reporting, and encourage SMEs to set sustainability goals and achieve them successfully. This purpose of Aila is so strong that it also contributes to SDG 17 – Partnerships for the goals, leaning towards cooperation instead of competitiveness. As Meliina Räty puts it: “We all need to do this and the more we can help companies, the more companies that are offering this kind of services, the better it is of course.”

Inspiration

While sustainability remains a popular topic, talks about sustainability reporting for SMEs were still very new at the time Juulia Karjula, Co-Founder & CEO, had Aila in mind. After realizing the barriers SMEs face in sustainable reporting, she quickly realized how she could leverage her passion for technology to address the climate crisis. Furthermore, she had a background in corporate sustainability, giving her a natural path to use her expertise in the creation of something new.

Quickly after, she contacted Meliina Räty, who was immediately captured by the idea and saw it as an inspiring opportunity to use all her previous experiences and toolsets from the fintech industry in something that actually matters to her and that has a positive impact.

From there Aila was founded by Meliina Räty and Juulia Karjula in 2023, and being now fully operational while incorporating the perfect blend of the different backgrounds of the two co-founders.

Overall impact

In the short term, the sustainability reporting tools provided by Aila have already shown their effectiveness as it has proved useful for SMEs in gaining an understanding of their position on the sustainability scale, and what is needed from them to satisfy the new requirements of larger companies in order to attract new contracts and partnerships. Transparent data and Aila’s reporting tool help SMEs define the first step to take and start incorporating sustainability into their strategy, or as Meliina Räty, puts it: “map both the risks and opportunities and have an action plan on how to mitigate those and how to improve”, and realizing the win-win scenario between profits and sustainability. This realization has the potential to have positive long-term effects not just on SMEs but also on society and the environment. 

Business benefit

There are a variety of benefits for businesses using Aila’s solution. Aila offers non-listed SMEs a reporting tool that is cheaper and simpler to use than reporting tools made for large corporations, but still up to standards set by EFRAG. As the barriers of entry are removed, it allows the SMEs to transparent sustainability reporting, through which, they may gain a competitive advantage through reporting helping them to form new partnerships with large corporations. This makes the whole value chain more transparent.

Furthermore, after identifying their current status on a sustainability scale, these SMEs are enabled to make plans and perform actions, with intention, more efficiently to reach their sustainability goals. By tracking their progress, they may feel committed to sustainability goals and incorporate them into their vision and strategy, leading to long-term resilience. This will help them to differentiate themselves from competitors, as well as allow them to attract more funding, as sustainability performance is one of the evaluation metrics. Furthermore, by the usage of sustainability reporting SMEs have an easier time recruiting and retaining talents as people nowadays want to work for companies that are doing the right things. On top of that, their brand value and possible sales might grow as well, as new partnerships and possibilities are opened.

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Social and environmental benefit

By managing data on a reporting tool, Aila advocates information transparency. This allows customers to be more aware of how sustainable companies are, hopefully guiding their purchases. To investors, this transparency is important as well as enabling them to obtain standardized data to compare companies on and to make better choices in stakeholder selection. Transparency also reaches employment markets, as when enough transparent information is provided, potential employees can choose which companies to work for to make sure that they are devoting themselves to something that aligns with their values.

Additionally, when companies, especially SMEs, take actions towards sustainability including reporting and data transparency, the other SMEs, even if not mandatory by law, will be pressured to follow along to maintain their competitiveness and position in the market. This domino effect will finally reach large enterprises, who are motivated to incorporate more ambitious sustainability goals, in fear of being overshadowed by SMEs in terms of brand value and public image. This chain of actions will substantially raise the level of sustainability practices in whole industries or sectors, leading to enormous positive benefits for the environment.

Interview

Meliina Räty, COO