Serbia

The overarching policy document that guides Serbias transition to a green or circular economy is the National Sustainable Development Strategy approved in 2008. The document is based on three main pillars, achieving a knowledge-based economy, attaining social solidarity and caring for the economy. However, the document lacks a clear sectoral strategy, has modest targets and is missing specific initiatives and activities. As such, in the transition towards a green economy, Serbia is significantly lagging behind its European peers. This is not surprising given the nations starting point following the economic collapse in the early 1990s after the breakup of Yugoslavia and the bloody conflict that ensued. The government has understandably stressed economic and structural reforms in an attempt to modernize its economy and improve its deep economic and social challenges. Despite these challenges, Serbia committed to and signed the Paris Agreement on Climate Change in April 2016 and ratified it in July 2017, pledging to cut its CO2 emissions by a modest 9.8% by 2030 (Serbia has developing, non-Annex I country status). In addition, Serbia has a National Renewable Energy Action Plan that establishes targets for the use of renewable energy sources until 2020. The Plan calls for the country to reach 27% of gross final energy consumption form renewables in 2020, a modest target not in line with advances needed to limit temperature rises due to climate change to 1.5 degrees compared to pre-industrial levels. The country is currently heavily reliant on fossil fuels (mainly coal) for its electricity production (67%), while its use of renewable energy is still in an early stage. There is currently a new National Climate and Energy Plan under development, but it has not been released thus far. Much of the modest recent advances achieved by Serbia in the greening of its economy is due to its having initiated the process to become part of the European Union. However, the country has not yet initiated the chapter in membership negotiations that deals with environmental protection.

In preparation for Serbia`s participation in the Rio +10 Conference and as part of its review process in terms of advances in promoting a green economy and sustainable development, the government commissioned a participatory review process that involved the youth sector (in conjunction with Unicef), some civil society groups and local governments. The government has also opened a public consultation process for Serbias National Climate and Energy Plan which is currently under development. However, it appears that these participatory process are not comprehensive to all policy areas and occur at the latter stages of policy development. Serbia has adopted a National Gender Equality Strategy for the period 2016-2020 intended to correct some of the most pressing gender related issues such as gender-based violence, employment, educational access, and an equitable distribution of domestic work of child care duties. However, the document does not touch upon gender inequality in cooperate governance structures. Interestingly, the strategy includes measures to implement gender responsive budgeting, which implies the introduction of gender equality principles in the governmental budgeting process and requires a gender analysis and restructuring of revenues and expenditures in order to improve gender equality. In addition, local self-government units have the obligation to achieve the participation of women of at least 30% in these local authorities. According to the 2019 EU Report on Serbia, the process of amending the 2009 Gender Law, aiming to improve intra-governmental coordination, has been "seriously delayed". .

There are few examples of government sponsored initiatives in Serbia that seek to involve private enterprises in the achievement of the Sustainable Development Goals. In terms of economic development policy, the government is mainly concerned in achieving the much needed modernization of Serbias private enterprises and building up the export market. The private sector is in need of significant investments to replace outmoded facilities and production techniques and sustainability issues tend to be a secondary consideration for businesses. However, there have been some preliminary advances in recent years. For instance, the United Nations Development Program (UNDP) in Serbia recently launched the initiative, Together for Sustainable Business, which aims to encourage businesses integrate one or more sustainable development goals into their business strategy and monitoring efforts.

Although Serbia is far from incorporating the concept of wealth accounting measures in its national economic reporting and monitoring system, the government has participated in some preliminary developments in this area, particularly in terms of natural capital accounting and ecosystem valuation. Although Serbia is not a core implementation country in the World Banks WAVES initiative (Wealth Accounting and the Valuation of Ecosystem Services), some wealth accounting indicators have been incorporated into the multilateral financial institutions Systematic Country Diagnostic process in Serbia. However, these advances have not been formally adopted by the government nor incorporated into national accounting systems.

Serbia National Sustainable Development Strategy makes no mention of reforms or incentives in the financial system to increase the volume of loans and investments with an environmental or sustainability focus. It is not surprising, therefore, that green financing remains of very limited volume in Serbia and has been mostly initiated by international multilateral financial institutions. For instance, the European Bank for Reconstruction and Development has in place the Western Balkans Sustainable Energy Financing Facility, a programme that provides credit lines to partner banks in the Western Balkans, including Serbia, lending to energy efficiency projects. and small-scale renewable energy projects. On the government side, there has been direct funding schemes for energy efficiency and renewable energy projects via a competitive bidding process created through the Law on Fund for Environmental Protection (2009), but the amounts are relatively modest and the initiative does not attempt to restructure the countrys finance system in favour of sustainability goals.

There is no clear evidence that the government of Serbia has incorporated environmental and sustainability concerns in its fiscal, monetary or spending policies, several statements and text in key documents hint at a possible future advancement in this arena. For instance, recent statements by Serbia's Minister of Finance indicate the interest in Serbia in launching a green sovereign bond in the market and Serbia's Voluntary National Review document on implementation of the 2030 Agenda calls for the establishing a long-term institutional and financial framework in support of sustainable development which includes a mandatory budget line for sustainable development in every key public institution. However, there is no evidence of concrete steps taken for the implementation of either of these initiatives at present.

The National Bank of Serbia administers stress tests on financial institutions to assess the resilience and vulnerability of the financial system and the impact of changes in certain macroeconomic variables on the systems overall stability, as well as on individual financial institutions bottom line. However, the central bank has not incorporated climate related or other environmental factors in the stress testing procedure, with no indication of intent to do so in future. In 2019, however, it should be noted that COVID-19 related issues were incorporated into the analysis process, suggesting that social dimensions may be incorporated into the analysis on an ad hoc basis.

Thus far Serbia had not initiated any programs or initiatives to establish a price on carbon via taxation or other mechanism and it is not integrated into any regionally based emissions trading schemes. In terms of their energy market, Serbia is integrated into the Energy Community, an international organisation which brings together the European Union and several countries in the accession track in order to create an integrated pan-European energy market. The organisation was founded by the Treaty establishing the Energy Community (2005) with the objective to extend the EU internal energy market rules and principles to countries in South East Europe. The secretariat of the Energy Community recently commissioned a scoping study to analyse he feasibility of implementing a carbon pricing scheme in the countries that integrate the group. The report from 2021 reveals the very initial steps taken in terms of carbon pricing that affect the Serbian energy market. The scoping study has been commissioned as news emerges of a possible UE initiative to impose a carbon border tax on West Balkan countries and as Serbia prepares to be integrated into the EU Emissions Trading Scheme once it completes the accession process to the European Union.

As part of its accession bid to join the European Union, Serbia has prepared plans to fundamentally reconfigure the economic structure of the country in line with its Western European peers. This includes deep structure reforms in key economic sectors such as energy, transport telecommunications, agriculture and industry. For example, the recently released Economic Reform Program 2021-2023 details a reform package to improve the economys efficiency and fight against the significant black economy and improve the nations innovation and development infrastructure, labour market and skills training. In this sense, the country is starting from a disadvantaged position after the strife and economic collapse that followed the breakup of Yugoslavia and its outdated and inefficient industrial base. While the plan focusses on important structural reforms, environmental and sustainability concerns are not the main driver. However, the countrys National Renewable Action Plan details renewable energy targets for key economic sectors, although the targets are lacking in ambition needed to avoid a catastrophic climate change. Arising from the EU accession process, the circular economy is one of five key national goals (Industrial Policy Strategy 2021-2030) with several new draft laws in the area of energy passed in March 2021.

Serbian legislation allows social purpose enterprises to adopt several forms including cooperatives, work integration social enterprises and non-profit organizations, which are allowed to generate income from economic activities up to an upper threshold. In addition, the law on cooperatives specifically mentions social cooperatives, which are obligated to reinvest at least 50% of profits to achieve social goals. However, these types of social purposes are relatively new to Serbia and are very limited in number. Despite these modest advancements in terms of giving a legal structure to social enterprises, Serbia lacks a comprehensive legislation to regulate social and green businesses. The Ministry of Labour, Employment and Social Policy established a working group in 2012 and again in 2015 to draft an Act on Social Enterprises, but the effort met resistance from citizen's groups as the effort was narrowly focussed on businesses that hire socially vulnerable groups. Governmental support, including financial aid, for the development and growth of social enterprises is generally insufficient. This void is being somewhat filled by foreign donor institutions, but additional assistance is needed for the social enterprise ecosystem to flourish in Serbia.

There is currently no planning in place from the government of Serbia to implement comprehensive carbon budgeting on the national level. In fact, the countrys plans for carbon emissions reductions are far from putting it on a course to achieve the Paris Agreement's goal to reduce temperature increases to 1.5% above pre-industrial levels. On the local level, there are examples of very modest initiatives in Serbian cities. For instance, the web-based tool Futureproofed, which helps cities track and reduce CO2 emissions of each action undertaken in the city is being tested in Serbia.

Serbia has a National Renewable Energy Action Plan that establishes targets for the use of renewable energy sources until 2020. The Plan calls for the country to reach 27% of gross final energy consumption form renewables in 2020, a modest target not in line with advances needed to limit temperature rises due to climate change to 1.5 degrees compared to pre-industrial levels. The Plan sets national goals for the share of energy from renewable sources in four key sectors: transport, electricity and heating and cooling. The country is currently heavily reliant on fossil fuels (mainly coal) for its electricity production (67%), while its use of renewable energy is still in an early stage and is dominated by hydro electrical generating stations. There is currently a new National Climate and Energy Plan under development, but it has not been released thus far. Much of the modest recent advances achieved by Serbia in the greening of its economy is due to its having initiated the process to become part of the European Union. However, the country has not yet initiated the chapter in membership negotiations that deals with environmental protection, suggesting that the country remains far from harmonising its energy strategy and targets to the EU level. However, there has been some movement in a positive direction in the last few months. For instance, arising from the EU accession process, the circular economy is one of five key national goals (Industrial Policy Strategy 2021-2030) with several new draft laws in the area of energy passed in March 2021. These have not been passed into law yet.

While employment issues are a central focus of the government of Serbia due to the high level of joblessness and social exclusion that has been endemic to the economy since the transition from communism and post break-up of Yugoslavia, there is not a strategic focus nor concrete plans in relation to the promotion of Green jobs. For instance, Serbia's National Sustainable Strategy makes no mention of green or environmental jobs, while the National Employment Action Plan for 2020 does not include provisions for the promotion of green or environmental employment niches or opportunities. In this sense, there is not an official categorisation and monitoring of green jobs in the country and only recently in 2019 has the government, through the Ministry of Trade, Tourism, and Telecommunication sponsored a project to create methodology for data collection on green jobs.

Serbia suffers from relatively high levels of unemployment, poverty and social exclusion resulting from the difficult transition from a post-communist economy as well as the recovery from the war and strife that characterized the immediate period after the break-up of Yugoslavia. While policies intended to pave the wave for Serbia's eventual accession to the European Union are serving to improve the situation, the government's focus remains on increasing employment and reducing social exclusion. In this sense, few linkages are made with sustainability of environmental policies. On a small scale, the International Labour Organization sponsored a project to support the creation of jobs for socially disadvantaged groups, particularly the Roma, access jobs in the growing recycling industry. However, these pilot projects have not translated into a comprehensive policy, strategy or plan to leverage linkages between sustainability policies and anti-poverty initiatives. A hint of policy developing in this direction can be noted in the national sustainable urban development strategy, discussing potential discrimination arising from limited resources in cities.

Serbia is a signatory of the Open Government Partnership, a voluntary initiative that strives to, among other things, improve governments cooperation with civil society organizations, strengthen citizen participation in governance, and facilitate access to government information. As part of this membership, Serbia is obligated to draft periodic Action Plans, detailing achievements and steps to be taken to achieve the group's goals. Spurred on by requirements linked to Serbias bid to join the EU, in recent years the Serbian government has achieved some improvements in the area of the participation of citizens in decision-making processes. For instance, in January 2019, the Regulation on the Methodology of Public Policy Management, Policy and Regulatory Impact Assessment, and Content of Individual Public Policy Documents was adopted which prescribes the mandatory realization of consultations at all stages of preparation of regulations and public documents. Similarly, the Government adopted Guidelines in 2020 for the Inclusion of civil society organisations in Working Groups for Drafting Public Policy Documents Proposals and Drafts. However, impact assessments processes need further development and the regulations lack specific measures for assessments or impacts to socially excluded or marginalised groups.

Serbia suffers from important levels of poverty and social exclusion, making this a policy priority for the government. However, given the relative needs, the government has focussed efforts on increasing overall employment opportunities and building up its insufficient social safety net. There is no serious policy or legislative efforts to link poverty reduction efforts with environmental or sustainability initiatives.

As a landlocked country, Serbia's National Sustainable Development Strategy makes no mention of commitments to protect ocean and marine resources. In addition, the more recent "Progress Report on the Implementation of Sustainable Development Goals by 2030", skips over SDG 14,failing to mention specific commitments in this area. The National Sustainable Development Strategy also lacks a comprehensive plan for a sustainable use of terrestrial ecosystems although the national monitoring system for SDG implementation includes several indicators related to SDG 25.

Serbia remains in the very initial stages of incorporating natural capital accounting methodologies and indicators in its national reporting and monitoring system. The government has participated in some preliminary developments in this area, particularly in terms of natural capital accounting and ecosystem valuation. Although Serbia is not a core implementation country in the World Banks WAVES initiative (Wealth Accounting and the Valuation of Ecosystem Services), some wealth accounting indicators have been incorporated into the multilateral financial institutions Systematic Country Diagnostic process in Serbia. However, these advances have not been formally adopted by the government nor incorporated into national accounting systems.

While Serbia has participated in very initial initiatives to quantify and monetize the nation's natural capital and ecosystem services, these efforts have not been incorporated in any meaningful sense into the national accounting system. Nor has a formal, independent body been established to develop these issue more deeply in Serbia.

Serbia energy network continues to rely heavily on fossil fuels (primarily coal) for energy production and there remains in place specific subsidies for producers of fossil fuel based energy. There are no realistic short term plans in place to significantly alter the nation's fiscal and/or monetary policies to incorporate important environmental based taxation proposals. Of note in this area, the government operates a modest direct funding schemes for energy efficiency and renewable energy projects via a competitive bidding process created through the Law on Fund for Environmental Protection (2009), but the initiative does little to restructure the countrys fiscal system in favour of environmental goals.