Greening is widespread but remains concentrated in relatively low-effort measures. Around three quarters of surveyed SMEs have adopted at least one greening measure, but uptake is dominated by lower-cost actions such as reducing resource use (44%). Meanwhile, over one fifth of firms (23%), report taking no action at all.
Cost savings, rather than regulation, are the main driver of greening. Cost savings were the most frequently cited motivation for greening, selected by nearly half of respondents (49%), ahead of both positive impacts on business reputation (41%) and regulatory compliance (36%). Despite this cost-driven engagement, only 15% of surveyed firms have invested in renewable energy.
Few firms are prepared for the compliance demands the EU's Carbon Border Adjustment Mechanism (CBAM) will bring. The recent introduction of CBAM is expected to elevate regulatory compliance as a driver of greening considerably. Yet just 6% of enterprises currently track their carbon footprint, leaving the large majority underprepared to meet the emissions-reporting requirements increasingly tied to EU market access.
Low uptake of public support reflects weak awareness and access. Only 10% of SMEs report being aware of any government greening programme, and of those, just 2.5% had received support. The existence of support measures does not guarantee high uptake in many of the region’s economies.
Green offerings are concentrated among manufacturers and exporters but remain marginal to revenue for most firms. Around 42% of surveyed SMEs offer green products or services, rising to 48% in manufacturing and 81% among export-intensive firms. For most, however, these remain a complement rather than a core business, with 54% deriving less than 30% of revenue from them.
Western Balkans Enterprise Survey
For small and medium-sized enterprises (SMEs), environmental performance has increasingly become a direct determinant of cost competitiveness and market access. Rising input costs are sharpening the commercial case for resource efficiency: business electricity prices in several Western Balkan economies rose sharply between 2021 and 2025, with mid-range industrial consumers facing increases of 77% in Serbia, 68% in North Macedonia and 47% in Bosnia and Herzegovina, all exceeding the EU average of 45% (Eurostat, 2025[10]; OECD, 2025[4]). At the same time, environmental credentials are increasingly a condition for accessing EU markets. The Carbon Border Adjustment Mechanism (CBAM), whose application began in January 2026, progressively prices the carbon in exports to the EU1, while the Corporate Sustainability Reporting Directive cascades reporting requirements through value chains, reaching SMEs as suppliers of larger EU firms. Given the economic significance of SMEs across the Western Balkans, their environmental trajectory carries significant implications, shaping the region's progress under the Green Agenda for the Western Balkans.
Whether SMEs progress beyond surface-level environmental practices is the central question this chapter addresses. Basic measures (e.g. switching off unused equipment, separating waste, occasional recycling) have been spreading broadly across the region. However, deeper integration of environmental performance into business operations could unlock meaningful gains: environmentally engaged firms tend to outperform peers on productivity, wages and sales growth, though these gains tend to accrue to firms that pair practical measures with monitoring, reporting and process redesign, rather than those that confine greening to isolated actions (OECD, 2024[11]). Digitalisation can support this transition, helping firms increase energy efficiency and optimise resource flows, though the spread of ICT itself introduces new layers of energy use and electronic waste (OECD, 2024[12]).
In this context, this chapter examines patterns of greening among surveyed SMEs in the Western Balkans across five themes: adoption of greening practices; environmental monitoring and reporting; constraints to environmental sustainability; digitalisation and environmental performance; and green products and services. It concludes with high-level policy implications, intended as entry points to the more detailed economy-level analysis in the SME Policy Index 2026.
Between 2020 and 2023, the Western Balkans recorded average carbon emissions intensity more than twice the EU average, underscoring the scale of the transformation required (OECD, 2025[4]). Closing this gap will depend significantly on SMEs moving beyond general awareness toward the adoption of concrete measures, supported by clear motivations and, where possible, a structured plan for implementation.
3.2.1. Greening engagement among SMEs is broad but shallow, with deeper integration concentrated among larger, older and export-oriented firms
About three-quarters of surveyed SMEs report implementing at least one greening measure, with limiting resource use (44%), improving energy efficiency (38%) and adopting circular practices such as waste reduction and recycling (38%) the most commonly reported (Figure 18). These categories cover a wide spectrum of effort: the most prevalent practices within them are likely to be low-effort measures such as not printing on paper, switching off lights or separating waste, rather than more substantive interventions. Energy efficiency, for instance, can range from switching to LED lighting to investing in new production equipment, and circular practices from basic recycling to systematic eco-design. On the other end of the spectrum, renewable energy adoption (e.g. installing solar panels, replacing fossil fuel-based heating systems with electric heat pumps), which requires higher upfront investment and reliable infrastructure access, is reported by only 17% of firms.
Notes: As a percentage of respondent businesses (n=326). Respondents could select multiple options.
Firm size shapes the degree of greening engagement, though the pattern is not uniform across all measures. Medium-sized enterprises report higher adoption across most categories (i.e. 53% limit resource use, 51% are improving energy efficiency, 47% have adopted circular practices and 33% use renewable energy), while self-entrepreneurs present a markedly different profile, with 52% reporting no greening measures at all. Among those engaged enterprises, practices are concentrated in resource limitation (30%) and circular approaches (30%), with the adoption of renewable energy remaining negligible. Cloud and virtual service adoption runs counter to this pattern, with micro-enterprises (30%) and small firms (28%) reporting slightly higher rates than medium-sized enterprises (25%). Two complementary factors likely explain this. First, smaller firms often lack the capacity to establish on-premise servers or invest in local data infrastructure, making outsourced cloud services a structural necessity, consistent with the broader pattern of higher ICT tool uptake among smaller firms documented in the previous chapter. Second, smaller businesses tend to adapt internal procedures more readily, allowing faster transitions to new systems, while larger firms often move more cautiously, partly reflecting a preference for in-house data security and the operational continuity of existing infrastructure.
Sectoral patterns shape the type and depth of greening measures. Manufacturing firms lead in circular practices (49%), consistent with the material-intensive nature of their production processes, and they show above-average energy efficiency adoption (42%). Business and professional services are the most likely to have transitioned to cloud computing or virtual services (51%), reflecting both their digital intensity and less resource-intensive operational models. Hospitality and public services show the weakest overall engagement, with 40% reporting no greening measures at all. Among those that do act, practices are concentrated in resource limitation (42%). Given the resource intensity of tourism and hospitality activities (e.g. energy use, water consumption, food waste), the limited depth of engagement signals an area of increased policy focus and support.2
Export-oriented firms display consistently stronger greening engagement. Firms deriving more than 80% of sales from exports outperform those with sporadic export activity on resource limitation (59% versus 41%, respectively), energy efficiency (49% versus 35%) and circular practices (54% versus 35%). They also tend to report a markedly lower share with no measures at all (14% versus 28%).3 Compliance and reporting demands of international supply chains and EU buyer requirements are likely to drive this pattern.
Firm age differentiates both the level and composition of greening activity. Firms established before 2015 report the broadest engagement: 46% seek to improve energy efficiency, 46% adopt circular practices and 23% use renewable energy. Post-2020 firms are considerably less engaged, with 33% having implemented no measures and energy efficiency adoption rates at roughly half of their peers (24%). This weaker greening engagement of younger firms may reflect their earlier stage of organisational development and more limited resources It may also suggest that environmental practices are not systematically embedded in business planning from the outset—an interpretation consistent with the finding that only one-quarter of SMEs have a formal environmental strategy in place.
3.2.2. SME greening is driven by cost pressures and market expectations rather than solely domestic regulation, though the latter is set to become more prominent
Cost savings are the strongest motivator for greening, cited by nearly half of surveyed SMEs (Figure 19). Business electricity prices in the Western Balkans averaged around 30% above EU levels in purchasing power parity terms during 2020-2023, while elevated inflation through 2025 dampened consumption and squeezed operating margins (OECD, 2025[4]; World Bank, 2025[13]). Ongoing electricity market liberalisation, while necessary for long-term competitiveness, is adding further upward pressure on input costs in the short term.4 Looking ahead, decarbonisation reforms set out in the region's Reform Agendas—such as the introduction of domestic carbon pricing instruments and progressive alignment with the EU Emissions Trading System—are expected to intensify this pressure further as energy subsidies are gradually phased out and prices converge toward EU market levels (OECD, 2026[6]). The prominence of cost savings as a motivation varies across economies in ways that reflect these underlying energy market conditions: Montenegro (64%), Serbia (61%) and North Macedonia (59%) report the highest rates of cost-driven greening, while Albania stands as an exception, with a smaller manufacturing base and a power sector dominated by hydropower reducing the immediacy of energy cost pressures, reflected in a lower emphasis on cost savings (35%) as a greening motivation.
Note: As a percentage of respondent businesses (n=326). Respondents could select multiple options, including 'My company has not put in place any greening measures' (17%).
Market expectations are also shaping greening decisions, with 41% of firms citing reputation as a key motivation. While domestic environmental regulations across the Western Balkans remain unevenly enforced, the market-driven case for greening is growing due to the strong trade linkages with the EU. Under the Corporate Sustainability Reporting Directive5, EU-based companies are increasingly required to report on the environmental performance of their supply chains, which in practice means requesting data from the Western Balkan SMEs that supply them. For firms in a region where the EU accounts for around 62% of total trade in goods and exports to the EU exceed two-thirds of total exports in Albania, Bosnia and Herzegovina, North Macedonia and Serbia (European Commission, 2025[14]), this pressure is becoming an increasingly tangible commercial reality, even where formal regulatory compliance has yet to be triggered domestically.
Regulatory compliance, by contrast, currently carries relatively limited weight as a greening motivation, cited by 36% of respondents, consistent with the uneven transposition and enforcement of domestic environmental requirements across the region. However, this is likely to change: the financial application of the CBAM, together with the broader EU Green Deal framework, This includes the Corporate Sustainability Due Diligence Directive and the Ecodesign for Sustainable Products Regulation, is expected to make regulatory compliance a considerably more prominent driver in the coming years.
The motivational profile varies with firm size and age, reflecting different exposure to the pressure channels described above. Among medium-sized enterprises, cost savings dominate (71%), consistent with larger absolute energy bills and deeper integration into supply chains where buyer expectations are most directly felt. Regulatory compliance is also notably prominent (47%) as a motivator for these businesses. Self-entrepreneurs report weaker levels of motivation for greening: 37% report no greening measures, and among those that do act, consumer demands and cost savings are cited most often (26% each). Among older firms established before 2015, cost savings (57%) and regulatory compliance (42%) are the leading motivations, reflecting operational maturity and accumulated regulatory exposure. Post-2020 firms show a different pattern, with reputation as the most cited motivation (41%), ahead of cost savings (33%), suggesting that younger firms approach environmental engagement more as a market positioning consideration than an operational efficiency one.
3.2.3. Most SMEs lack a formal environmental strategy, though widespread planning intentions represent a policy opportunity
Formal environmental planning remains limited among surveyed SMEs, with only around one quarter having a specific strategy or action plan in place (Figure 20). A large share (53%) report planning to develop one, suggesting broad recognition of the importance of structured environmental management even where it has not yet translated into action. While 7% of firms claim to have already achieved carbon neutrality, this figure should be interpreted with caution: the limited level of greening engagement observed among this group raises questions about the capacity to measure and verify such claims in practice.6
Note: As a percentage of respondent businesses (n=318). Single-choice question.
Where formal strategies are in place, they are associated with meaningfully broader greening activity. Firms with a strategy implement an average of 2.3 greening measures, and only 13% report no measures at all, compared to just 1.0 measure and 44% with no engagement among firms with neither a strategy nor plans to develop one. The direction of causality cannot be clearly defined, as more active firms may simply be more inclined to formalise their approach, but the gradient is consistent with structured planning functioning as an organisational anchor for environmental commitment rather than a documentation exercise.
For SMEs, environmental monitoring and reporting serve a dual function: internally, they enable informed management of resource use and emissions; externally, they underpin the credibility of sustainability claims and are increasingly required by EU buyers and regulatory frameworks.
3.3.1. Environmental tracking centres on cost-related operational metrics, while structured carbon measurement remains marginal
Around 55% of surveyed SMEs track at least one dimension of their environmental footprint, with monitoring concentrated in energy consumption (40%), energy efficiency (31%) and water usage (21%) (Figure 21). Carbon footprint is the least tracked dimension of environmental performance, monitored by only 6% of respondents. More than one-quarter of respondent businesses (28%) report no tracking at all, leaving them without the baseline data needed to manage or demonstrate their environmental performance.
Notes: As a percentage of respondent businesses (n=326). Respondents could select multiple options.
When disaggregated, tracking practices largely reflect what firms can readily derive from existing operational data rather than dedicated environmental measurement. Energy consumption and water usage figures are in principle directly available from utility bills, and energy efficiency tracking builds on the same data sources. Carbon footprint measurement, in contrast, requires methodological frameworks for emission accounting, data on supplier and value chain emissions and the in-house or external capacity to apply these methods.
Tracking extent varies systematically by firm size and sector. Medium-sized enterprises track an average of 1.5 dimensions, with only 15% reporting no tracking, while micro-enterprises average 0.9 dimensions and 35% report none. Sectoral variation reflects operational logic: manufacturing firms track energy consumption (51%) and water usage (23%) at above-average rates, consistent with the resource intensity of their production processes. Business and professional services report the highest no-tracking rate (50%), which likely reflects their lower direct environmental footprint rather than weaker sustainability engagement. More striking is the high no-tracking rate among hospitality and public services (40%): given the water and energy intensity of these activities, the limited monitoring points to unrealised potential for cost-saving environmental management in a sector where such gains could be meaningful.
The degree of tracking is also closely tied to the presence of a formal environmental strategy, reinforcing the broader pattern in which environmental practices tend to cluster rather than develop in isolation. Firms with a strategy in place track an average of 1.5 metrics and only 12% report no tracking at all, while firms with neither a strategy nor plans to develop one track an average of just 0.6 dimensions and 49% report no monitoring whatsoever. A similar gradient holds for greening measures: firms implementing three or more measures track an average of 1.6 dimensions, against 0.4 among those with no measures in place.
Carbon footprint tracking, though limited overall, is most prevalent among export-oriented firms: 17-18% of firms deriving more than one-third of sales from exports track their carbon foodprint, compared to 2-6% among those with limited export activity. While subsample sizes for the most export-intensive categories warrant cautious interpretation, the pattern aligns with the growing carbon accounting demands that EU-based corporate buyers embed in their supply chain due diligence and reporting obligations.
3.3.2. Carbon disclosure awareness is low overall, with export-oriented firms standing out as a distinct exception
More than half of surveyed SMEs are unaware of carbon disclosure as a practice (Figure 22). Although carbon disclosure is not a legal requirement for SMEs, neither in the Western Balkans nor in the EU, it is increasingly expected as a voluntary market practice that supports access to EU value chains, buyer relationships and certain financing channels. Its relevance varies by sector: direct emissions are limited in much of services and finance, where the relevant footprint is typically indirect through clients and operations. However, the cascading effect of EU reporting obligations on larger corporate clients means that disclosure demands reach SMEs across sectors irrespective of their own emissions profile. Thus, the low awareness documented here points to the limited penetration of carbon accounting practices among SMEs in the region, for whom disclosure represents a considerably more demanding undertaking than environmental tracking.7
Note: As a percentage of respondent businesses (n=319). Single-choice question.
Export orientation is a notable predictor of carbon disclosure awareness, though the relationship with active application is less straightforward. Among firms deriving more than 80% of sales from exports, 54%8 are aware of carbon disclosure, compared to 36%9 among those with limited export activity (i.e. less than 10% of sales from exports). The gap likely reflects the role of commercial relationships with EU-based buyers in transmitting disclosure expectations to Western Balkan SMEs, a channel likely to broaden as sustainability reporting obligations expand.
For the small group of firms already conducting carbon disclosure, motivations differ markedly from those driving general greening activity. Regulatory and market compliance is the most cited reason (57%), followed by cost savings (51%) (Figure 23). The prominence of compliance as a motivation, well above the 36% reported for general greening practices, suggests that carbon disclosure is currently undertaken primarily by firms responding to specific external pressures rather than as part of a broader strategic orientation.
Notes: As a percentage of respondent businesses already engaged in carbon disclosure (n=37). Respondents could select multiple options. Given the small subsample size, results should be interpreted as indicative.
Against a backdrop of greening engagement concentrated in basic measures and limited structured environmental monitoring or carbon disclosure, understanding the constraints that hold back SMEs’ deeper engagement is critical.
3.4.1. Carbon disclosure challenges span internal capacity, technical complexity and value chain co-ordination
Of those firms aware of carbon disclosure, several key barriers to action are cited. Lack of expertise in collecting, tracking and reporting emissions data is the most cited challenge (38%), followed by insufficient resources in terms of people, time and money (35%), limited access to supplier and customer data (29%) and the complexity of disclosure standards (26%) (Figure 24). Notably, 29% indicate these challenges are not applicable, reflecting the fact that for a significant share of even aware firms, operational engagement with disclosure has not yet begun.
Notes: As a percentage of respondent businesses aware of carbon disclosure (n=136). Respondents could select multiple options.
These obstacles reflect structural gaps at multiple levels. At the firm level, even firms aware of carbon disclosure often lack the staff time, financial resources and methodological expertise to undertake the work. Technical complexity compounds the challenge: carbon accounting requires defining organisational boundaries, categorising emissions across operational scopes, applying conversion factors and structuring documentation for external validation, tasks that presuppose expertise most SMEs do not have in-house and that advisory markets in the region are not yet well-positioned to provide. At the value chain level, firms cannot fully account for their emissions without information from upstream and downstream partners who are often not yet collecting it themselves. The constraints are mutually reinforcing: limited internal capacity makes external frameworks harder to navigate, while gaps in value chain data leave even better-resourced firms unable to produce complete disclosures.
The profile of constraints varies with firms' position in international markets. Highly export-oriented firms face the broadest set of obstacles: among those deriving more than 80% of sales from exports, all four major challenges are reported by around 45% of respondents. Firms with sporadic export activity present a narrower constraint profile, most often citing lack of resources (40%), with value chain co-ordination issues less prominent, potentially reflecting their more limited integration into the international supply chains.
Firm size introduces further differentiation. Resource limitations dominate among medium-sized enterprises (43%), possibly reflecting the greater organisational demands associated with managing and reporting environmental performance. Technical barriers are more binding for small firms, which most frequently cite lack of expertise (44%) and complexity of standards (37%), reflecting the difficulty of interpreting and applying disclosure frameworks without specialist support.
These findings echo the broader trends identified in other regional surveys. Drawing on a separate sample of 1 200 firms, one such survey found that among businesses aware of the circular economy, 49% cite added costs as the main barrier to adoption, 30% identify a lack of skills and expertise, 29% point to insufficient government subsidies, and 28% to the absence of a regulatory framework (RCC, 2024[15]). Similar findings across surveys with different methodologies and sample compositions suggest cost and capacity constraints indeed reflect a structural pattern rather than an artefact of any single methodology and lends additional weight to the present analysis.
3.4.2. Awareness of public greening support is low and rarely translates into uptake
Only 10% of surveyed SMEs report being aware of any government programmes supporting business greening. This rate is notably lower than the 17% recorded for government digitalisation programmes documented in the preceding chapter, even though the green transition is a central element of both the EU accession agenda and regional co-operation frameworks.
Among those few firms aware of government greening programmes, awareness rarely translates into actual support received (Figure 25). Of the firms reporting awareness, roughly two-thirds indicated they had not received any support, and among the sample that responded regarding awareness, just 2.5% report having received any form of public support for greening activities.
Notes: As a percentage of firms aware of programmes. Multi-choice question.
Source: OECD Western Balkans Digital and Green SMEs Survey, 2025.
No firm size category reports meaningful awareness of greening support programmes, though rates differ modestly across groups. Self-entrepreneurs report the highest rate (19%), somewhat counterintuitive given their generally lower greening engagement overall, possibly reflecting that the few self-entrepreneurs active in the green space have actively sought out information. Awareness ranges from 7% among medium-sized enterprises to 11% among small firms.
Economy-level variation in awareness bears no clear relationship to the existence or scale of public support programmes. Awareness ranges from 24% in Montenegro and 18% in North Macedonia to 7% in Serbia and 2% in Kosovo, yet low rates do not indicate an absence of support. For instance, Serbia, which sits at the lower end of the spectrum, has the region's highest implementation rate of SME-related greening measures (60% between 2023-24), while Kosovo offers one of the broader sustainable finance offerings in the region, including green credit lines, grants and credit guarantees (OECD, 2026[6]). Thus, the gap between programme availability and firm-level awareness points to outreach and visibility as binding constraints.
The relationship between digitalisation and environmental performance is mutually reinforcing, with progress in one area often supporting advances in the other. While digital tools offer significant potential to support environmental monitoring, operational optimisation and resource efficiency, the infrastructure underpinning digitalisation itself generates environmental costs (in the form of energy consumption and electronic waste) that require active management alongside the efficiency gains it enables.
3.5.1. Digital maturity is associated with environmental engagement across multiple dimensions
Across nearly every dimension of environmental engagement examined in this chapter, more digitally mature firms exhibit systematically higher levels of activity. Firms using four or more digital tools implement an average of 2.2 greening measures (compared to 1.0 among those using no more than one) and track an average of 1.3 environmental dimensions (against 0.7 among less digitally engaged peers). The share reporting no environmental tracking varies only marginally across digital tool categories, suggesting that digital maturity helps firms expand and structure their monitoring once it begins, but does not in itself determine whether monitoring takes place. While the survey cannot fully disentangle the underlying drivers, the consistent direction of these associations across multiple dimensions suggests that digital capability often served as a meaningful contributor to environmental engagement.
3.5.2. Most firms consider environmental impact when procuring ICT, though the depth of this consideration is not directly observable
Approximately seven in ten of the surveyed SMEs report considering the environmental impact of ICT services and equipment when making procurement decisions (Figure 26). The high stated rate of environmental consideration likely reflects growing awareness of the related cost of ICT goods and services, as well as market signals from vendors increasingly emphasising sustainability features. Caution is warranted, however, as the depth of consideration is not directly observable from the survey: the 70.5% could encompass anything from occasionally favouring energy-efficient devices to formally embedding sustainability criteria in procurement specifications.
Consideration rates fluctuate across firm types. Small and medium-sized firms report substantially higher rates (76% and 71%, respectively) than self-entrepreneurs (46%), and business and professional services lead among sectors at 80%, reflecting their higher dependence on ICT equipment for core operations. Businesses established before 2015 report higher consideration (74%) than those established post-2020 (63%), contrasting with the higher cloud and virtual service adoption documented among younger firms and suggesting that environmental procurement criteria tend to be embedded through accumulated organisational practice rather than at firm formation.
Notes: As a percentage of respondent businesses (n=319). Single-choice question.
3.5.3. Infrastructure and operational barriers limiting responsible end-of-life management of ICT equipment even among environmentally engaged firms
While most surveyed SMEs report environmental consideration at the procurement stage, far fewer manage ICT equipment responsibly at end of life. Indeed, only 36% dispose through dedicated electronic waste collection or vendor take-back schemes (Figure 27), pointing to a significant gap between stated procurement intent and actual end-of-life practice. Infrastructure availability and operational practices likely play a meaningful role: the survey does not ask firms directly for the reasons behind their disposal choices, but access to collection points and vendor take-back programmes varies considerably across the region and is often more limited outside major urban centres. Data security concerns can lead firms to retain retired devices rather than hand them to third parties, and the cost of proper disposal, including secure data wiping, can deter smaller firms with tight budgets.
Notes: As a percentage of respondent businesses (n=321). Single-choice question.
Environmental awareness at the procurement stage does correlate with better disposal practices, though the link is weaker than might be expected. Among firms that consider environmental impact during ICT procurement, 41% dispose responsibly, compared to 27% among those that do not, and disposal with general non-recyclable waste is twice as common among the latter group (10% versus 4%, respectively). Even so, the fact that only 41% of environmentally aware buyers dispose responsibly points to practical and infrastructure-related barriers that exist independently of firm-level intent. Namely, across the region, systematic separate collection of recyclables has yet to be introduced at scale, with most initiatives still limited to small pilot programmes, and sorting, collection and recycling infrastructure remains underdeveloped more broadly (OECD, 2025[2]).
Moreover, the variation in disposal practices across economies reflects differences in both infrastructure and awareness. Serbia reports the highest rate of responsible disposal (52%) and the lowest uncertainty (9%), suggesting both better access to e-waste channels and clearer institutional awareness. Montenegro (36%) and North Macedonia (35%) report moderate rates of responsible disposal but considerably higher uncertainty (28% and 41%, respectively), which may be a product of awareness of responsible channels without consistent access to them. At the other end of the spectrum, Kosovo records both low responsible disposal (24%) and high uncertainty (40%), alongside the highest rate of general waste disposal (11%). Bosnia and Herzegovina shows a distinctive pattern, with the highest rate of equipment retention within the company (47%), which may reflect concerns about data security or limited access to disposal channels.
Beyond managing their own environmental footprint, firms can contribute to the green transition through the commercial side of their operations by developing and offering products and services whose predominant function is to reduce environmental risk or minimise pollution and resource use.
3.6.1. Green product and service offerings are most prevalent among manufacturing and export-oriented firms, reflecting the pull of EU market requirements
Around 42% of surveyed SMEs report offering green products or services. However, it is important to note that this figure should be interpreted carefully, as it relies on self-identification against a broad definition whose understanding may vary across respondents.
Sectoral patterns reflect the natural alignment between business activity and the scope for green offerings. Manufacturing reports the highest rate among the main sectors examined (48%), reflecting opportunities in resource-efficient production, eco-design and circular materials, and is also the sector most directly exposed to EU greening legislation via value chain requirements. Business and professional services (36%), trade and logistics (34%) and hospitality and public services (35%) are clustered at broadly similar rates, with green offerings in these sectors typically taking the form of advisory services, certified products or green-labelled experiences.
Export orientation is a particularly strong determinant. Among firms deriving 50-80% of sales from exports, 81% offer green products or services—well above the 34% reported among firms with less export activity. The gradient points to the role of EU and international market exposure in driving green product development, as buyers in these markets increasingly require or prefer environmentally differentiated offerings.
3.6.2. Green products and services contribute marginally to revenue for most firms, with a smaller group for whom they constitute the core business
Among firms offering green products and services, revenue contribution varies widely (Figure 28). The majority (54%) derive less than 30% of revenue from green offerings, while roughly one in five (23%) report green products accounting for more than half of total revenue. The distribution points to two distinct groups: firms for which green offerings complement a broader conventional portfolio, and a smaller group for whom green products and services constitute the core of their commercial activity.
Note: As a percentage of respondent businesses offering green products and services (n=133). Single-choice question.
Source: OECD Western Balkans Digital and Green SMEs Survey, 2025.
Sectoral patterns reveal distinct approaches to green commercial engagement. Manufacturing combines a substantial share of firms with marginal green revenue (32% below 10%) and a notable group for whom green products account for the majority of sales (29% above 50%), reflecting a bimodal distribution within the sector. Business and professional services show a similar pattern, with 29% reporting majority green revenue alongside 25% for whom green offerings are not applicable, suggesting substantial heterogeneity within the sector, with some firms deriving most of their revenue from green activities while others report no green offerings. Hospitality and public services predominantly report marginal green revenue (47% below 10%), consistent with green offerings typically taking the form of selected eco-friendly elements within otherwise conventional operations.
The survey findings presented in this chapter point to a number of high-level priority areas for policy attention. These are intended as entry points for further analysis and economy-specific action and should be read in conjunction with the more detailed, tailored recommendations provided in the OECD SME Policy Index 2026.
Build SME readiness for evolving EU regulatory and market pressures, particularly around sustainability data disclosure. Efforts should prioritise developing instruments such as accessible guidance on emissions accounting methodologies suited to SME scale, sector-specific information on value chain exposure through EU buyers and practical reporting templates. In the near term, targeting these instruments at firms supplying EU buyers in CBAM-covered sectors would maximise impact, while broader information campaigns can prepare the wider SME population for the indirect effects of the Corporate Sustainability Reporting Directive as it cascades through value chains. Moreover, aligning regional guidance with European Financial Reporting Advisory Group’s Voluntary Standard for non-listed SMEs (VSME) would provide a ready-made reference for governments, reducing the need to develop frameworks from scratch.
Move firms from intent to structured practice through tailored advisory and methodological support. Non-financial support needs to be calibrated to firms' different positions on the greening trajectory: SME-tailored strategy templates and methodological guidance for firms taking initial steps; advisory services through established business support institutions for firms moving toward more structured practice; and e-waste collection infrastructure and certified vendor take-back schemes that address the data security and access concerns visible in the survey findings.
Strengthen and diversify financial support for green investments, particularly for capital-intensive measures. De-risking instruments such as partial credit guarantees and dedicated green credit lines through development banks can mobilise private capital toward SME green investments. The instrument mix should cover the full greening trajectory, from grants and vouchers for early-stage adoption to equity and risk-sharing instruments for higher-risk green ventures. Anchoring such instruments in domestically managed, predictable schemes rather than discontinuous donor-funded pilots will be particularly important given the multi-year horizons typically required for green investments to deliver returns.
Anchor SME green transition support in value chain and network-based approaches. Cluster development programmes, supplier development initiatives linked to large EU buyers and foreign direct investment in green sectors, green public procurement, and platforms connecting SMEs with research institutions and larger anchor firms can each contribute to building the collaborative infrastructure SMEs need to participate in greener value chains.
Close the awareness and access gap in public support for SME greening. Low awareness of available programmes is as much a visibility and navigation problem as a supply problem. Existing SME support platforms, chambers of commerce networks and online portals can centralise greening support information and integrate green opportunity filters alongside other support categories, reducing the navigation burden on firms. Eligibility criteria and application procedures should be simplified to avoid de facto exclusion of less digitally engaged firms. Programme design should also better reflect how SMEs pursue productivity and cost competitiveness through greening and be calibrated to the different stages of green maturity at which firms operate.
← 1. The Carbon Border Adjustment Mechanism (CBAM) is an EU policy instrument designed to apply a carbon price to imports of certain carbon-intensive goods, with the aim of preventing carbon leakage and incentivising cleaner industrial production outside the EU. It currently applies to imports of cement, iron and steel, aluminium, fertilisers, electricity and hydrogen – sectors selected for their carbon intensity and high risk of carbon leakage. Under the mechanism, EU importers exceeding a 50-tonne threshold of CBAM goods must obtain authorised declarant status and purchase CBAM certificates, with the price linked to the auction price of EU Emissions Trading System allowances. Importers must declare the embedded emissions in their imports and surrender the corresponding certificates annually, though amounts can be deducted where a carbon price has already been paid during production. For more information, see: https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en.
← 2. For this question, the sample size was n=43.
← 3. The exception arises with renewable energy, where the two groups show broadly similar adoption rates.
← 4. Recent steps include Albania's transfer of medium-voltage industrial customers to the deregulated market between 2018 and 2022, and North Macedonia's reduction of the share of demand met by regulated supply from 100% to 85% over the course of 2024.
← 5. The directive obliges large and listed companies to disclose, on a regular basis, the social and environmental risks to which they are exposed, as well as the impact of their operations on people and the environment. For more information, see: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32022L2464.
← 6. Firms claiming carbon neutrality implement an average of only 1.7 greening measures, with 23% having none in place at all, which is difficult to reconcile with a credible claim of carbon neutrality. This likely reflects limited awareness of what carbon neutrality entails and limited capacity to measure and verify environmental performance.
← 7. This practice is considered more demanding as it requires structured reporting against external frameworks rather than measurement alone.
← 8. This figure represents the sum of those firms who are already doing carbon disclosure (5%) and those who reported being aware but not yet doing it (49%).
← 9. This figure represents the sum of those firms who are already doing carbon disclosure (14%) and those who reported being aware but not yet doing it (22%).