ESG Adoption in the Banking Sector of the Western Balkan Countries

Abstract

Environmental, Social and Governance criteria (ESG) have been raising attention from all the stakeholders – governments, supervisors, businesses, financial institutions, investors etc. ESG has become mainstream in business strategy. Today, ECG criteria are an important and even obligatory part of the corporate strategy and sustainable development of a business. Those criteria are being used to evaluate business practice and performance. Studies have shown that applying ESG criteria properly could create higher value for the business. Western Balkan countries need sustainable financing and investments. In that regard, the banking sector in this region starts introducing ESG criteria in their metrics when approving financing for the companies. Sustainable financing is dedicated now to those companies that apply ESG framework in their business strategies. This paper aims to describe the current level of ESG adoption in the banking sector of the Western Balkan countries using SWOT analysis. Analysis has shown that the banking sector in Western Balkan countries has a good starting point to use strengths and opportunities for stronger development of ESG criteria for themselves and to support business in ESG reporting. In that regard, this paper contributes to the Western Balkans banks to remind them to further use and enhance their strengths and opportunities, but, on the other hand, to pay special attention and to focus more on those ESG criteria that are currently weak and represent threats for the ESG implementation in the Western Balkan’s banking sector.