SERBIA Trends and Developments Contributed by: Vera Davidović, Dušan Jablan, Uroš Rajić and Marko Jović, Gecić Law
and acquisitions without liquidation procedures streamlines expansion into EU markets. Simi - larly, establishing European corporate forms provides Serbian companies with familiar struc - tures when operating across the EU, potentially reducing administrative burdens and enhancing their competitiveness in the European market. However, these benefits come with increased compliance requirements and administrative adjustments. Companies must balance the opportunities for European expansion with the costs of adapting to new governance frame - Environmental, Social, and Governance (ESG) criteria have gained increasing importance in the Serbian business landscape, driven primar - ily by European regulations and global sustain - ability trends. The EU’s Corporate Sustainability Reporting Directive (CSRD) is transforming the ESG reporting landscape, with 12 sector-agnos - tic European Sustainability Reporting Standards (ESRSs) requiring disclosures on hundreds of metrics and targets. works and reporting obligations. ESG Governance and Compliance The rise of ESG requirements Although Serbia is not yet a member of the Euro - pean Union, EU requirements significantly affect Serbian businesses – especially those involved in European supply chains or trying to access EU markets and financing. The concept of “Due Diligence” has become particularly important for Serbian companies, especially small and medi - um-sized enterprises, that want to become sup - pliers to major European corporations. Non-financial reporting framework Serbia has implemented non-financial reporting requirements through its Accounting Act, which obliges companies with over 500 employees to
publish non-financial reports. In 2021, Smart Kolektiv and the Responsible Business Forum Serbia published a handbook titled “Step by Step to the Non-Financial Report” to guide com - panies through this process, providing insights into the context, requirements, and best prac - tices for non-financial reporting. The handbook addresses the challenges com - panies face when navigating various reporting requirements and methodologies. It aims to sup - port both legal compliance with the Accounting Act and broader business sustainability efforts. This resource has been particularly valuable as Serbian companies adjust to more comprehen - sive ESG reporting standards. ESG criteria and their impact on Serbian businesses Since 2024, ESG regulations have mandated that Serbian companies seeking access to the European market and opportunities as suppliers for major corporations must embrace compre - hensive sustainability analysis. These regulations delineate over 20 specific criteria addressing human rights violations, environmental impacts, child and forced labour, workplace safety, free - dom of workers’ associations, and the right to a healthy natural environment. Failure to comply with these rigorous ESG requirements can lead to substantial setbacks for Serbian businesses, including: • diminished competitiveness; • tarnished reputation; • reduced added value; and • increased energy and resource consumption. The directive defines more than 20 human rights requirements and more than 10 environmental impact criteria that companies must address.
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