Zakona o ra\u010dunovodstvu<\/a>\u00a0The Republic of Serbia introduced sustainability reporting in 2019 through amendments to the\nLaw on Accounting (\u201cOfficial Gazette of RS\u201d, No. 73\/2019 and 44\/2021 \u2013 other law), requiring\n\ndisclosure of activities related to environmental protection, social issues, and corporate\ngovernance (ESG \u2013 Environmental, Social, and Governance).<\/p>\nSince 2019, all large companies with over 500 employees have been obligated to disclose certain\nnon-financial information.<\/p>\n
Specifically, under the law, legal entities subject to non-financial reporting are required to\ninclude a non-financial statement as part of their annual business report.<\/p>\n
This non-financial report must provide information necessary to understand the development,\nperformance, and position of the company, as well as the results of activities relating at minimum\nto environmental protection, social and labor issues, human rights, anti-corruption efforts, and\nbribery. A company lacking basic corporate governance structures and mechanisms will not be\nable to adequately address the demands of non-financial reporting.<\/p>\n
At the same time, changes in the European Union\u2019s regulatory landscape in 2025 further\ncomplicate the situation. The European Commission revised its key corporate reporting policies\n\u2013 most notably the Corporate Sustainability Reporting Directive (CSRD) and the Corporate\nSustainability Due Diligence Directive (CSDDD) \u2013 significantly easing requirements for the\nmajority of companies. The reporting threshold has been raised to firms with over 1,000\nemployees, effectively exempting around 80% of those previously covered. This regulatory\nrollback, presented as a simplification measure and a boost to competitiveness, has sparked\nconcern among experts and civil society organizations. It reduces the availability of ESG data\nand undermines efforts toward transparency and accountability. For EU candidate countries like\nSerbia, this shift raises important questions: should they follow Europe\u2019s path toward\nderegulation or maintain a stricter course as a strategic response to local sustainability\nchallenges? (Khan, Y. (2025). Europe Waters Down Flagship Climate Accounting Policy. Wall\nStreet Journal) Europe Waters Down Flagship Climate Accounting Policy.<\/em> Wall Street Journal)?<\/p>\nSustainable Development in Small and Medium Enterprises: A Path Toward Maturity<\/strong><\/h2>\nWhen it comes to small and medium-sized enterprises (SMEs) \u2013 the backbone of the Serbian\neconomy \u2013 the question often arises: are these businesses genuinely pursuing sustainability, or\nare they merely engaging in greenwashing or social-washing? The truth lies somewhere in\nbetween and reflects a broader process of maturation. More importantly \u2013 how do entrepreneurs\nand SMEs understand the concept of sustainability?<\/p>\n
For the purposes of this article, a poll was conducted on professional social networks with the\nquestion: \u201cWhat comes to mind when I say sustainability?\u201d<\/p>\n
The responses revealed that most SME owners in Serbia still associate sustainability with\nsurvival, high costs, or trends disconnected from the real challenges of the domestic market.\nHowever, the results also point to clear opportunities for education, tailored support, and\npractical approaches that present sustainability as a tool for long-term stability and\ncompetitiveness \u2013 not just another burden. The answers highlight the gap between entrepreneurs\u2019\neveryday struggles and the abstract language of development strategies: \n\u201cThat\u2019s for big companies.\u201d<\/em><\/p>\n\u201cIf the government offered some subsidy or incentive, maybe we\u2019d consider it.\u201d<\/em><\/p>\n\u201cJust another trend from the West, and we can\u2019t even cover basic expenses.\u201d<\/em><\/p>\n\u201cIf it means saving electricity and paper \u2013 we already do that, because it\u2019s expensive.\u201d
\n<\/em><\/p>\n\u201cWho has time for that with all the clients, paperwork, and running the business?\u201d<\/em><\/p>\n <\/p>\n
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Photo source (as selected by the author): canva.com<\/p><\/div>\n
Although they express skepticism and a sense of overload, these responses point to a clear need\nto present sustainability as concrete, practical support \u2013 not just another task. In the context of\nsmall businesses, sustainability must translate into simpler operations, resource savings, and\nlong-term stability to have a real chance of taking root.<\/p>\n
It is important to note that awareness of the relevance of sustainability and ESG principles does\nexist \u2013 and it is growing. Many companies are no longer in the phase of denial or resistance \u2013\nthey recognize that sustainable principles have become an unavoidable part of regulatory\nrequirements, and a prerequisite for applying to international donors, funds, and banks. And\nsince the Serbian economy is strongly bank-centric, ESG standards are becoming a tool not only\nfor financial survival but also for growth. Banks demand evidence of responsible business\npractices, investors expect transparency, and increasingly, clients and customers choose products\nbacked by strong values.<\/p>\n
That is the trajectory: from resistance, through formal alignment, to a stage of maturity in which\nsustainability is no longer just an obligation but a deeper business interest and a compass for\nlong-term development. The SME sector is moving in that direction, and the role of regulatory,\neducational, and expert support will be crucial to ensure this transition is not merely superficial.<\/p>\n
\u201cThe importance of small and medium enterprises (SMEs) in integrating ESG principles\n(environmental, social, and governance standards) is further highlighted in recent empirical\nresearch. Kurtanovi\u0107 and Kadu\u0161i\u0107 (2025), in their analysis of ESG adoption in EU candidate\ncountries, identify SMEs as \u2018catalysts of sustainability\u2019 \u2013 not because they lead in formal\ncompliance, but because they offer a scalable and socially embedded platform for ESG\ninnovation and localized sustainable impact. However, the study also points to systemic barriers\nlimiting the wider application of sustainable practices in the region \u2013 primarily regulatory\nuncertainty, underfunded public support programs, and a lack of ESG-specific training.<\/p>\n
A broader approach to ESG reporting is advocated \u2013 not merely as a compliance mechanism, but\nas a strategic tool for long-term value creation, resilience building, and legitimacy. Achieving\nthis vision requires regulatory harmonization, investment in digital transformation, and the\nprofessional repositioning of accountants as key actors in integrated, sustainability-oriented\nreporting.<\/p>\n
Empirical data collected in 2024 from 51 small and medium enterprises (SMEs) across five EU\ncandidate countries \u2013 Bosnia and Herzegovina, Serbia, Montenegro, Albania, and North\n\nMacedonia \u2013 offers critical insights into the real-world effects and limitations of ESG integration\nin transitioning economies. While 65% of surveyed firms reported perceived improvements in\noperational efficiency after adopting ESG principles, statistical analysis of these self-reports\nrevealed important nuances.<\/p>\n
Isolated ESG reporting \u2013 without corresponding practices \u2013 did not show a statistically\nsignificant correlation with measurable improvements in efficiency (p = 0.340), suggesting that\nmere formal or declarative compliance with ESG requirements does not automatically lead to\nenhanced business performance. In contrast, when ESG reporting was accompanied by practices\nthat increase transparency \u2013 such as structured stakeholder dialogue, third-party data verification,\nand public disclosure of sustainability performance \u2013 the effects became statistically significant.\nSpecifically, companies with a high \u201ctransparency index\u201d also demonstrated more successful\nimplementation of environmental management standards such as ISO 14001, with a p-value of\n0.015, indicating a strong correlation (Eccles, Ioannou & Serafeim, 2014).<\/p>\n
These findings support a growing body of research suggesting that transparency is the key\nmechanism through which ESG intent is translated into measurable value creation (Friede et al.,\n2015). In other words, ESG metrics become strategically relevant not when they are merely\nreported, but when they are validated and made available for public and stakeholder scrutiny.<\/p>\n
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Photo source (as selected by the author): canva.com<\/p><\/div>\n
Three key systemic barriers were consistently identified across all analyzed countries:<\/p>\n
\n- Lack of ESG-specific training (72%): Most SMEs cited insufficient internal knowledge\nand the absence of structured professional development programs as the main obstacles to\nESG implementation. This aligns with UNCTAD\u2019s (2020) findings, which emphasize that\nskill and knowledge gaps remain critical barriers in developing economies.<\/li>\n
- Technological limitations (59%): A significant portion of companies reported that their\ncurrent accounting systems were not capable of integrating ESG data. Most were unable\nto align with international frameworks such as GRI or SASB, let alone manage data in\nreal time.<\/li>\n
- Financial constraints (46%): Nearly half of respondents stated they lacked the resources\nto invest in ESG reporting tools, third-party audits, or sustainability consultants \u2013\nindicating a vicious cycle of regulatory pressure and limited means.<\/li>\n<\/ul>\n
The implications of these findings are far-reaching. Although ESG integration is increasingly\nrecognized as a driver of long-term competitiveness, SMEs remain structurally deprived of\naccess to the institutional and technological infrastructure necessary for a full transition to\nsustainable business. These vulnerabilities are further exacerbated in transitional economies,\nwhere regulatory capacity, market incentives, and institutional trust are still under development\n(World Bank, 2021; Kurtanovi\u0107 & Kadu\u0161i\u0107, 2025).\n\u2013 Merisa Kurtanovi\u0107, PhD Candidate, University of Sarajevo<\/p>\n
<\/p>\n
One of the key dilemmas facing Serbian companies is when sustainability becomes a strategic\nbusiness decision \u2013 and when it remains an ethical dilemma. Are there incentives, standards, or\npublic expectations that reward sustainable behavior?<\/p>\n
The answer is increasingly found in understanding ESG not as a bureaucratic framework but as a\ntool for innovation and business improvement. ESG approaches enable better risk management,\nopen access to responsible investors, and \u2013 critically \u2013 strengthen trust among internal and\nexternal stakeholders and communities. But to harness that potential, businesses must have the\nknowledge, capacity, and courage to question established practices.<\/p>\n
In recent years, ESG and sustainability have risen to the top of both national and corporate\nagendas. Today, it is nearly impossible to apply for public tenders, grants, or international\nfunding without encountering ESG questionnaires, environmental impact assessments, or\nevaluations of a project\u2019s social contribution. The Development Fund, the Serbian Development\nAgency, ministries, and local governments are increasingly subsidizing initiatives that\nincorporate sustainable practices.<\/p>\n
Beyond financial incentives, there is also growing access to educational and professional\nprograms: from short ESG marketing courses and ESG communication schools to the\nintroduction of dedicated academic courses and modules \u2013 such as ESG in Business, Responsible\nManagement, and Green Finance. New study programs and certifications are emerging in\nresponse to rising demand and shifting market needs.<\/p>\n
No sector remains untouched \u2013 from mining to IT, all industries and every part of an organization\n\u2013 from production, finance, and supply chain to marketing and communications \u2013 are being\ncalled upon to understand and implement sustainable practices. ESG criteria are now just as\nrelevant for private enterprises as they are in publicly funded or internationally supported\nprojects. A sustainable approach has become the new \u201coperational norm.\u201d<\/p>\n
Still, a critical question arises: does all this lead to meaningful understanding and transformation\nof business models? Or is sustainability still reduced to checking ESG boxes in documents and\nsubmitting the bare minimum in reports?<\/p>\n
It is concerning that, in many cases, ESG is perceived as an administrative obligation rather than\na strategic framework. This raises the risk of ESG becoming stuck in a loop of performative\nformalities \u2013 shifting from something \u201cnice to have\u201d to a \u201cmust have,\u201d but without a real\ncommitment to operational integration. The issue of maturity becomes even more important:\nwithout a proper understanding of what ESG truly represents \u2013 as a tool for better performance,\nsocial impact, and risk management \u2013 the entire system risks remaining locked in a cycle of\nsuperficial compliance.<\/p>\n
The path to maturity requires more than institutional use of ESG terminology \u2013 it requires a shift\nin mindset, capacity-building within companies, and the development of cross-sector knowledge\nand support infrastructure. Only then can ESG become the foundation of responsible and long-\nterm business success, rather than just a passing trend driven by forms and reporting obligations.<\/p>\n
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Photo source (as selected by the author): canva.com<\/p><\/div>\n
Collaboration with Academia and the Community: An Untapped Opportunity<\/strong><\/h2>\nWe arrive at perhaps the most critical turning point: is the business sector ready to recognize\ncollaboration as a driver of development? Through cooperation between businesses, academia,\n\nand civil society \u2013 via dialogue and mutual learning \u2013 new development models could emerge:\nmore sustainable, more inclusive, and more viable in the long run.<\/p>\n
There can be no truly sustainable business without cross-sector collaboration. This requires\nsharing knowledge, learning from other sectors, and moving away from the notion that every\ncompany must find solutions on its own.<\/p>\n
If we truly believe that sustainability is not a sector but an approach, then the question facing all\nof us \u2013 whether we come from business, academia, politics, or civil society \u2013 is: what are we\nwilling to share, and what are we ready to learn?<\/p>\n
Good intentions alone are not enough for sustainable development. We need tools, shared\nstandards, and above all \u2013 a willingness to take responsibility and collaborate. The businesses\nthat understand this are already building not only market success, but also trust, resilience, and\npurpose \u2013 the values that will make all the difference in the world of tomorrow.<\/p>\n
<\/p>\n
<\/p>\n
\"This material was published with the financial support of the European Union. The content is the sole responsibility of the Association for Cooperation and Sustainable Development and does not necessarily reflect the views of the European Union. The project is implemented within the project 'EU Resource Centre for Civil Society in Serbia,' led by the Belgrade Open School in partnership with the civil society organisations: Novi Sad School of Journalism, ENECA, U\u017eice Child Rights Centre, Nova Planning Practice, Safe Paths, Young Farmers of Serbia, and the international partner, Friedrich Ebert Stiftung. The project is supported by the European Union and will run from 2023 to 2026.\"<\/em><\/p>","protected":false},"excerpt":{"rendered":"U sve slo\u017eenijem i dinami\u010dnijem svetu, odr\u017eivost vi\u0161e nije pitanje izbora \u2013 postaje nova osnova konkurentnosti. Kompanije \u0161irom sveta, pa i u Srbiji, sve \u010de\u0161\u0107e prepoznaju da ulaganje u odr\u017eivost…<\/p>","protected":false},"author":4,"featured_media":580,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-576","post","type-post","status-publish","format-standard","has-post-thumbnail","category-publikacije"],"_links":{"self":[{"href":"https:\/\/asosor.org\/en\/wp-json\/wp\/v2\/posts\/576","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/asosor.org\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/asosor.org\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/asosor.org\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/asosor.org\/en\/wp-json\/wp\/v2\/comments?post=576"}],"version-history":[{"count":2,"href":"https:\/\/asosor.org\/en\/wp-json\/wp\/v2\/posts\/576\/revisions"}],"predecessor-version":[{"id":604,"href":"https:\/\/asosor.org\/en\/wp-json\/wp\/v2\/posts\/576\/revisions\/604"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/asosor.org\/en\/wp-json\/wp\/v2\/media\/580"}],"wp:attachment":[{"href":"https:\/\/asosor.org\/en\/wp-json\/wp\/v2\/media?parent=576"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/asosor.org\/en\/wp-json\/wp\/v2\/categories?post=576"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/asosor.org\/en\/wp-json\/wp\/v2\/tags?post=576"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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