Reporting obligations around environmental, social, and governance (ESG) issues must not be reduced to ticking boxes. Companies in South-Eastern Europe must view ESG not just as a regulatory issue, but as an opportunity.
Implementation of ESG could be a bulwark against corruption, brain drain, and climate change—factors that are becoming increasingly critical for the Southeast Europe’s economic development.
We explored the potential of ESG in this context—and its global outlook—with Katja Bechtel, Senior Advisor, Business Integrity amongst others for Transparency International; Dejan Valentinčič from the American-Slovenian Educational Foundation; and Dr. Sebastian Dunnett, Senior Program Officer at the United Nations Environment Programme.
The three recently spoke at the regional ESG conference held in Skopje under the theme “Building Resilience in a Changing World.”
Social Conditions Are Driving Young People Away
Brain drain is a major challenge across the region—and it remains largely unaddressed in international law, even though it falls under the “Governance” pillar of ESG.
According to Valentinčič, it is very clear why this issue has been left out of international regulations:
“What’s a loss for some countries is a gain for others. Interests in this are divergent. That’s why every country must work independently to create conditions that encourage young, educated, and skilled people to stay—or return if they’ve already left. Research on brain drain, including my own studies, shows that social conditions—like the rule of law, zero tolerance for corruption, and a clean environment that ensures a high quality of life—are among the most important factors, alongside working conditions, in influencing whether young people stay or leave.”
“When a country loses its most talented, educated, and ambitious citizens, it’s not just losing people—it’s losing its future,” Valentinčič adds.
“That’s a compelling reason to view ESG not only as regulation but as a driver of long-term business value. ESG is about building societies where people want to live and work. It’s more than social progress—it’s good business strategy” explains Valentinčič.
Corruption Undermines Both Environmental and Social Goals
Companies should pursue ESG not to produce a better report, but to see it as a strategic opportunity to create long-term value and resilience, says Katja Bechtel, an expert in anti-corruption.
She recalls the introduction of major legal frameworks like the UK Bribery Act and Brazil’s Clean Companies Act. These laws spurred companies to invest heavily in compliance, strengthening anti-corruption programs. Yet, major corruption scandals continued to emerge.
“Often, it’s not the programs or processes that fail—it’s the culture: the unwritten rules and behaviors that shape daily decisions,” Bechtel says. “Regulation, compliance, and reporting are all crucial—but they’ve never been enough. If ESG isn’t deeply integrated into the business model—if it isn’t the business model, grounded in ethics, values, and a mission—then it risks becoming just another bureaucratic task instead of a genuine path to sustainability.”
Bechtel urges companies to use today’s uncertain times to ask the essential question: Why are we doing this?
“The answer must be: for the people, for the planet, and, especially, to stop corruption from consistently eroding our environmental and social gains. With agile governance and risk management, strong boards, and ethical leadership, companies can better face uncertainty and build true resilience.” she says.
Climate Change Threatens Profitability
Dr. Sebastian Dunnett of the UN Environment Programme notes that ESG is still largely treated as a regulatory burden in the Western Balkans. He believes the region’s private sector must better understand not just its environmental impact, but also its dependence on nature.
“ESG is a clear driver of long-term business value. Climate change and biodiversity loss can disrupt supply chains, raise insurance premiums, and ultimately reduce profitability,” says Dunnett.
Even in emerging markets, ESG performance increasingly influences investment decisions. In the Western Balkans, companies with strong ESG profiles enjoy better employee retention—especially among younger workers, who expect more from employers, even without regulation.
“ESG can also spark innovation and new partnerships, such as nature-based solutions or investments in the circular economy. Robust ESG processes make companies more resilient to shocks—because healthy ecosystems are better able to respond to external pressures.”
What Is the Future of ESG?
After the election of Donald Trump as US president, the US is turning its back on the green agenda. The largest European economies are demanding a postponement of new ESG obligations, arguing that they are costly in times of such an economic crisis. However, according to our interlocutors, companies should remain committed to ESG principles regardless of the politics.
“The US picture is mixed,” says Bechtel. “California, for instance, continues to lead on ESG at the state level, even as federal momentum stalls. In addition, it is important to note that regulation isn’t the only force behind sustainable practices. Consumers, employees, banks, credit agencies, and—finally—investors are all demanding strong ESG strategies and adequate implementation.”
Valentinčič says the current political moment brings both challenges and hope. Global inconsistency in ESG can create confusion and slow progress, especially in smaller economies where ESG is still gaining ground. But there are also reasons for optimism. One, companies that embrace ESG consistently outperform over time. Two, pressing issues like youth migration and environmental degradation make ESG more urgent than ever, considering that it provides a framework for a systemic response. And most importantly, young people in the Western Balkans are more aware and more demanding. This bottom-up pressure may ultimately matter more than top-down regulation.
Companies Can Lead the Way
One standout example is the Maritime Anti-Corruption Network (MACN). About 15 years ago, a handful of major shipping companies banded together to reduce bribery at Lagos port in Nigeria.
Their efforts dramatically cut corruption costs and transformed the port by involving every stakeholder in the maritime chain. Today, MACN includes over 220 companies and works in 11 countries. This—and many similar cases—shows that businesses can be powerful drivers of long-term change when they act collectively and in partnership with civil society, international bodies, and other stakeholders.
Where public policy falls short, businesses can still act, says Valentinčič.
“Employee-centered policies shouldn’t be seen as a cost—they’re key to sustainable growth. With the right mix of vision, policies, and openness, companies of all sizes—and even whole countries—can reconnect with their people, welcome back talent, and thrive through repatriation, remote work, or investment.”
Dunnett agrees. According to him, despite the weakening of ESG policies in the US, many US-linked companies see increasing ESG competencies as necessary.
“Globally, we are seeing biodiversity and nature move up the financial agenda. Market interest in environmental initiatives (e.g. Taskforce on Nature-related Financial Disclosures, Science-Based Targets for Nature) shows that companies are increasingly acknowledging their dependence on a healthy biosphere – regardless of short-term political changes. However, there are also valid concerns. Changing priorities could stall momentum, and economic pressures could push ESG lower on the agenda. However, I believe the region has an opportunity to embed ESG into its economic development before more rigid systems are introduced,” says Dunnett.