Manufacturing companies in the Western Balkans are beginning to respond to the pressures of the green transition, but progress is uneven. A new Bruegel analysis by Nina Vujanović finds that firms are increasingly taking steps to reduce their environmental impact, driven both by energy and cost considerations and by their close integration into European supply chains. This matters because the EU is by far the region’s most important economic partner, and access to the Single Market will increasingly depend on companies being able to demonstrate that their products and production processes meet European environmental and climate requirements.
The challenge is particularly significant for smaller, domestically owned companies. Larger and foreign-owned firms tend to have greater financial resources, technical expertise and links to European customers that can help them invest in cleaner technologies. SMEs, by contrast, can struggle with the cost and complexity of complying with a growing body of EU requirements. These include the Carbon Border Adjustment Mechanism (CBAM), sustainability reporting and due-diligence requirements, alongside existing technical and environmental standards. Without adequate assistance, these requirements risk becoming additional barriers to participation in EU supply chains rather than catalysts for modernisation.
The policy message is therefore that regulation needs to be accompanied by support for investment and implementation. Western Balkan governments and the EU can use the accession and economic-integration process to help companies obtain finance, technical expertise and information needed to decarbonise production and comply with EU standards. Rather than treating climate policy simply as another regulatory burden, it can become part of a broader industrial-modernisation strategy: improving energy and resource efficiency, stimulating investment in cleaner technologies and strengthening the ability of Western Balkan manufacturers—particularly SMEs—to remain competitive in increasingly low-carbon European supply chains.
You can download the report here.
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