Transition in the Western Balkans: Empowering SMEs for Net Zero Economy

Small and medium-sized enterprises (SMEs) are the central drivers of sustainable economic growth in the Western Balkans, constituting over 90% of all businesses. This event, co-hosted by Montenegro and Helvetas, gathered private sector, government, and development actors to explore how to recognize the role of SMEs in the green transition and to bridge the gap between climate policy aspirations and on-the-ground realities for SMEs in the Western Balkans region. It was moderated by Matthias Herr, Helvetas Switzerland.

Nenad Vitomirović, Ministry of Ecology, Sustainable Development and Northern Region Development, Montenegro, provided opening remarks. He stressed that SMEs are the backbone of Western Balkans commerce, yet face many difficulties in adopting green production methods due to a lack, primarily, of resources. Underscoring that SMEs must have fair access to adapting to market changes, he said governments must help them.

In an initial discussion on the role of governments, Dragana Radulović, Ministry of Environmental Protection, Serbia, described the opportunities for SMEs in Serbia’s transition to a green economy as both challenging and promising. With Serbia and other Western Balkans countries aligning their legislation with EU standards, she said this transition significantly impacts industries and energy sectors. Radulović emphasized the need to view these regulatory requirements as opportunities to enhance competitiveness and meet EU market standards. Establishing robust greenhouse gas monitoring and reporting systems remains demanding, she noted, given low climate awareness and historical focus on environmental protection. She added her Ministry supports stakeholders through capacity building and collaboration, while tackling challenges like the Carbon Border Adjustment Mechanism (CBAM).

Teodora Obradovikj Grncarovska, Ministry of Environment and Physical Planning, North Macedonia, highlighted the critical role of governments in supporting SMEs’ transition to low-carbon operations. She emphasized the importance of mainstreaming environmental considerations into SME and industry strategies, particularly within broader non-climate ministries and policies. While SMEs contribute to greenhouse gas emissions, investing in decarbonization offers them opportunities to become competitive in the EU market and adapt to climate risks, particularly in vulnerable sectors like agriculture. Obradovikj Grncarovska stressed the need for continuous dialogue with SMEs and recommended developing digital systems to simplify environmental reporting and addressing resource constraints faced by small businesses.

Asked how to ensure green finance reaches SMEs, Radulović said this is a challenging but vital topic, with Serbia implementing challenge calls for SMEs to propose decarbonization ideas. Selected proposals enter accelerators, she explained, developing into projects pitched to donors. Since 2017, with support from the Global Environment Facility (GEF) and others, 500 green investment proposals worth over USD 300 million have been mobilized. Obradovikj Grncarovska said North Macedonia’s reform programme merges decarbonization with SME development, integrating industry-focused measures into NDCs. North Macedonia’s upcoming NDC 3.0 will continue this approach, she added, aligning climate actions with economic reforms.

In a second discussion on the role of the private sector as well as of public-private partnerships, Elene Tkhlasidze, RECONOMY, Helvetas Georgia, underscored that green transition is a transformative process requiring collaboration among all stakeholders. She highlighted the role of NGOs in raising awareness and fostering information exchange for the private sector. In the Western Balkans, with its talented youth and SME-driven economy, Helvetas focuses on skills development, such as energy certification in Montenegro, to prepare a workforce for green jobs. Tkhlasidze stressed the region’s potential as a unified market of 70 million, ripe for investment, trade, and standardization.

Milena Rmuš, Chamber of Economy, Montenegro, emphasized the critical collaboration between the state and private sector for the green transition, noting that Montenegro, with its low-emissions profile, faces unique advantages and challenges. She highlighted the EU Green Deal and the Green Agenda for the Balkans as vital guidelines for the region’s transition. Rmuš stressed the need for private sector leadership, especially in navigating policies like the CBAM, and called for tailored support, financial incentives, and stronger involvement of financial institutions to overcome hurdles faced by SMEs. Skills development, she noted, will follow as awareness grows.

Nayoka Martinez Bäckström, Embassy of Sweden in Dhaka, Bangladesh, outlined Sweden’s approach, focusing on capacity building and knowledge transfer through partnerships with local governments and businesses. Green finance initiatives, such as guarantee facilities and challenge funds, aim to reduce lending risks for SMEs and foster innovation, she explained. She also stressed cooperation in policy advocacy to align climate objectives with enterprise needs, alongside promoting digital solutions, including tools for supply chain transparency and collaboration with Swedish firms on green innovations.

Key themes discussed in the Q&A session involved ways to build the awareness of SMEs on climate-related risks and enhance cooperation among civil society and the private sector. Obradovikj Grncarovska stated that showing a company’s climate resilience to get credit will now be the new standard for the banking sector. Bäckström emphasized the importance of developing business plans and practices that anticipate these risks and making capacity building a part of it. On civil society and private sector cooperation, Bäckström cited the example of Bangladesh, where civil society worked with companies to improve the ready-made garment industry’s labor standards.

In closing the event, Herr emphasized the importance of economic opportunities in green transition, citing scaling up successful initiatives and creating an enabling, inclusive environment where civil society, government, and the private sector can work together. In the Western Balkans, in particular, he added, cross country cooperation is crucial and joint efforts are needed to understand how SMEs can be supported in the green transition.

Organizer: Helvetas

Contact: Anastasia Bekish | Anastasia.Bekish@helvetas.org

Website: https://www.helvetas.org/