In today’s business landscape, the implementation of Environmental, Social, and Governance (ESG) standards has become crucial for the long-term sustainability and competitiveness of companies in various industries. ESG standards increasingly shape the business strategies of companies from various sectors. The implementation of ESG standards in the transport and logistics sector brings with it various difficulties, but also considerable benefits. However, given that it is widely known how much the logistics and transport sector affects the environment (primarily due to the greenhouse effect), and how important this sector is for the global economy, the application of ESG standards in this sector becomes a conditio sine qua non.
According to the latest reports from the Serbian Institute for Statistics, trade in goods between Serbia and EU member states represents approximately 60 % of Serbia’s total foreign‑goods trade. In these circumstances, it is important to point out that many companies operating within the EU require their partners to comply with ESG principles, which include reporting on carbon dioxide emissions, working conditions, and transparent management. For Serbian companies, the lack of an ESG strategy can result in the loss of business opportunities and investments.
Freight transport has long been labeled a significant contributor to pollution, as it accounts for approximately 25-30% of greenhouse gas emissions in European cities. The environmental aspect of ESG in logistics is focused precisely on reducing the carbon footprint through route optimization, the use of vehicles with lower emissions, more efficient fuel consumption, and the transition to electric or hybrid solutions. Serbian companies, although smaller than their Western European counterparts, feel the pressure to reduce the consumption of unclean sources and to focus on greener technologies. The regulations on environmental protection in Serbia (the Law on Environmental Protection, the Law on Air Protection, the Law on Waste Management, etc.) only partially match ESG principles. However, the biggest challenge lies in the consistent application and compliance with increasingly strict EU standards.
Requirements regarding the improvement of working conditions, protection of employees’ rights, and the sustainability of business practices are the conditions that the social aspect of ESG standards places before the logistics sector in Serbia. However, Serbia faces significant challenges that make it difficult to achieve these goals. One of the most pressing issues is the shortage of professional drivers. The Serbian Road Traffic Safety Agency estimates that around 10,000 driver positions are currently vacant, which is a significant figure for Serbia. This shortfall negatively impacts the quality of services and traffic safety due to driver fatigue. High employee turnover, along with the low rate of employment of young people and the influx of foreign labor with limited education, further complicates the situation. These factors negatively affect the stability and competitiveness of logistics companies. In light of these challenges, companies striving for ESG compliance must recognize and address these social issues, which means investing in employee training and development, improving working conditions, and respecting labor rights.
The management aspect of ESG standards in logistics in Serbia demands a strong focus on ethical business practices, transparency, and responsible corporate governance. For Serbian logistics companies, this means that it is necessary to establish well-defined internal procedures, resilient control mechanism, and a zero-tolerance policy toward corruption.
The biggest legal challenges in applying ESG standards in Serbian logistics stem from the complexity and fragmentation of global supply chains. Serbian companies, often part of international business networks, face growing demands of their EU clients subject to stricter ESG regulations, like the upcoming Corporate Due Diligence Directive. This directive requires large EU companies to ensure respecting human rights and environmental standards across their supply chain. As a result, Serbian logistics companies will have to prove compliance, even if domestic legislation is less demanding. EU companies cooperating with domestic partners already include in their contracts emissions reporting obligations, guarantees on working conditions, and provisions for client audits. Breaches may lead to contract termination, penalties, and reputational harm.
Adopting ESG standards offers Serbian companies visibility and a competitive advantage, attracts new customers, and offers cost-savings through resource efficiency (for example, by reducing carbon dioxide emissions and optimizing transportation routes). ESG is not a passing trend; it’s becoming a business cornerstone. For Serbian logistics, proactively addressing ESG legal obligations is not only a matter of compliance, but also a key factor for competitiveness, attracting investments, and long-term sustainable growth in the regional and global logistics network. Companies that succeed will be seen as reliable and responsible partners in the evolving logistics landscape.
By Marina Gligorijevic, Partner, Djokic+Partners
This article was originally published in Issue 12.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
