The ESG Summit will be held in Tivat again this year. What novelty is it brining compared to the last year's edition?
Biljana Braithwaite: The ESG Adria Summit will take place in Porto Montenegro from April 24th to April 26th, 2024. We will bring together distinguished guests from the region and the world, presidents, government leaders, globally recognized experts, numerous regional companies, and international partners again. The ESG Adria Summit is organized by Sustineri Partners and Porto Montenegro, in partnership with the Government of Montenegro, under the auspices of the President of Montenegro, Jakov Milatović.
A major innovation this year is the expansion of the ESG Summit to the Adria region. Last year, ESG Summit, the first regional event dedicated to sustainable development and dialogue on the business sector's responsibility regarding environmental, social, and governance standards, attracted significant interest that transcended the borders of the Western Balkans. Expanding to the Adria region, including Croatia and Slovenia, was a natural step forward.
Considering our commitment to attracting responsible investors, enhancing collaboration, and stimulating economic development in the region, this decision has great strategic importance. Slovenia and Croatia, as EU members, align their regulations and standards with EU norms, offering valuable lessons for Western Balkan countries, especially in the areas of sustainable development, the environment, and the protection of human rights, responsible corporate governance, as well as greater inclusive decision-making at the company level and the economic empowerment of women.
The Summit has become a place where partnerships are built, and it fosters regional initiatives in the field of green transition, sustainable finance, and the circular economy, significant for Montenegro and all countries in the region. For example, last year, within the Western Balkans ESG Summit, we have launched officially the "Women on Boards Adria" (WOBA) regional initiative, aiming to contribute to the rise in representation of women in leadership positions and corporate boards in companies in the Adria region.
The WOBA initiative continues to grow and build momentum, and this year, we want to focus on the areas of sustainable finance, innovation, artificial intelligence, and the development of startups. I believe that in these areas, we will achieve great progress this year.
How many participants do you expect at the Summit? Do you have someone you would particularly highlight?
Biljana Braithwaite: We expect that more than 500 participants from Europe and the world will attend this year's ESG Adria Summit. Under the slogan "Act Now for a Sustainable Tomorrow," we will gather numerous high officials, representatives of financial institutions, leaders from the business sector, international organizations, as well as global experts, representatives of regional media, civil society, and the academic community. Our goal is to discuss innovations, solutions in the field of sustainable development, renewable energy sources, artificial intelligence, new platforms, initiatives, and investments that can accelerate the transition towards a more sustainable future and the ESG agenda in the Adria region and beyond.
The ESG Adria Summit is realized in partnership with the Government of Montenegro and under the auspices of the President of Montenegro. In this regard, we are proud that the Montenegrin highest ranking officials, namely the President Jakov Milatović, Prime Minister Milojko Spajić, and numerous high officials from the governments of the region, will attend this year's Summit.
This year's Summit will also host Tim Reid, the Chief Executive of the UK Export Finance agency, marking the first visit of a representative of this institution to the Western Balkans region. We are pleased to announce important partnerships with key international financial institutions, including the International Finance Corporation (IFC, part of the World Bank Group), and the attendance of regional representatives from the European Bank for Reconstruction and Development (EBRD). Additionally, I am proud to announce the participation of Governor Irena Radović, the first woman at the helm of the Central Bank of Montenegro. This year, we will have chance to host Anino Emuwa, the founder of the internationally renowned organization 100 Women@Davos, the globally recognized architect Yasmine Mahmoudieh, Ramona Liberoff, the CEO of the PACE Circular Economy Platform, Rikard Scoufias, the President of HEREMA - Hellenic Hydrocarbons and Energy Resources Management Company, Artur Lorkowski, the Director of the Secretariat of the Energy Community, as well as representatives from numerous regional companies in Montenegro.
We are confident that such a rich and diverse group of participants will contribute to the quality of the dialogue, both on the panels and in its margins. We hope that the Summit has already been marked as a hub for innovative ideas that are subsequently realised. In this way, the spirit and mission of our event live on far beyond its closure.
What does such a Summit mean for Montenegro and the entire region?
Biljana Braithwaite: The ESG Adria Summit contributes to the development of three key, mutually complementary, goals for the long-term economic stability and prosperity of Montenegro and the region: strengthening regional cooperation, attracting investments that are in the long-term interest of the region, and accession to the EU.
Firstly, the regional nature of this event provides a significant opportunity for the heads of states and company representatives to discuss collaboration opportunities that go beyond the boundaries of industries or state borders. Moreover, this event presents the region in a positive light, further positioning it globally and provides access to investment opportunities that become more attractive if we consider the region as a larger market. On top of that, it is demonstrating readiness to meet the demands of our most important economic partners.
The European Union is not only the region's most significant economic partner but, thanks to their substantial investments in achieving sustainable development and socio-economic growth, the region's countries have significant investment opportunities to address key issues. These include energy security, green transition, environmental protection, and natural resource conservation, combating corruption, and strengthening the rule of law, as well as protecting the rights of workers and vulnerable groups. Currently, there are more funds for financing sustainable development and green transition than the region has quality projects to access them, and cooperation in this area will be a crucial topic of discussion at this year's Summit.
The ESG Adria Summit will provide a platform for constructive dialogue on important challenges hindering foreign direct investment in the region, especially those in the long-term interest of the region and its citizens. Corruption and a lack of legal security are at the top of the list of problems discouraging investors from entrusting their capital and business operations to the countries of the region. The investment climate in the region still receives poor ratings in key international reports. For instance, the U.S. State Department pointed out that the investment climate in Serbia has improved, but there is still concerningly large political influence on the economy. Corruption in Montenegro is most prevalent in the public procurement sector, while in Bosnia and Herzegovina, complex institutional, political, and territorial structures discourage serious investments. Political influence and weak rule of law are obstacles to foreign direct investments in Kosovo, while North Macedonia generally enforces laws, but there are numerous reports of corrupt officials.
To attract investors and change the region's image, concrete steps are necessary. This includes strengthening institutions responsible for combating corruption and the more efficient judiciary activities for faster and more effective resolution of serious criminal acts of corruption. However, criminal justice systems often fail to effectively investigate, prosecute, and sanction cases of high-level corruption. Since the Western Balkan countries began the EU accession process, significant progress has been made in legislation and improving transparency and accountability of institutions. However, most serious cases of corruption have not yet reached a judicial conclusion or resulted in systemic changes.
The main theme of the Summit is sustainable development. In your opinion, how committed are Montenegro and the region to sustainable development?
Biljana Braithwaite: In 2015, Montenegro, along with other regional countries, joined the UN 2030 Agenda for Sustainable Development and adopted 17 sustainable development goals. Montenegro and the region have to put in enormous efforts now to harmonize the legislative framework and establish sustainable financing methods to achieve the goals of this demanding but necessary path.
The green economy (based on low carbon emissions, resource efficiency, and social inclusion) has been recognized as one of the key directions to achieve strategic goals in areas such as climate change mitigation, resource efficiency, the introduction of circular economy principles, as well as overall competitiveness of Montenegro and the economies of the region.
The region must address its dependence on fossil fuels to respond to the issues of energy insecurity and pollution. This is also necessary to align with increasingly stringent environmental standards and EU legislation. It is clear that renewable energy sources are the only sustainable alternative. However, countries in the region are often criticized that, while EU is slowly renouncing fosill fuels, they continue to use them and polute the environment.
To ensure that the transition to renewable energy is stable and feasible, countries in the region need to diversify their sources of renewable energy instead of relying on just one. In other words, greater investment in solar energy production projects, wind farms, and hydro energy will help the countries in the region ensure a more stable energy future. Therefore, an important focus of this year's Summit will be on new investments and infrastructure projects, adapting legislation, and increasing subsidies for the transition to renewable energy sources.
The countries in the region not only have an obligation to comply with European environmental standards and adhere to directives on the use of fossil fuels in energy production but also have a clear strategic and economic incentive to do so. The Green Agenda for the Western Balkans is a significant initiative jointly developed by the European Union and the Western Balkan states, adopted by all regional countries in 2020. The goal of this agenda is clear: addressing the environmental challenges of the region and aligning with the European Green Deal. It is designed to support economic growth through new green and digital sectors while promoting alignment with EU standards.
However, there is still a long way to go. Coal-fired power plants in the Western Balkans emit more sulfur dioxide into the air than all EU power plants combined. In addition to the impact on the lives and health of citizens in the Western Balkans, experts increasingly warn that standards adopted through European integration processes and the establishment of the Energy Community are not fully adhered to. If we do not improve energy security, including addressing pollution issues, we cannot expect significant investments in the industry, nor an increase in employment and economic development, and ultimately, no energy transition.
Has there been any progress in recent years?
Biljana Braithwaite: Yes, I definitely see positive progress in the recent period. In the case of Montenegro, the establishment of the Eco Fund and the Montenegro Acceleration Fund further attests to the government's commitment to this strategic direction.
Especially, the Acceleration Fund represents a crucial platform for financing and implementing sustainable development goals through collaboration with private, public sectors, and international partners. In my opinion, this is one of the main steps that must be taken for the region to move towards accelerated and sustainable development.
Even though reports show progress, we are aware that the region has a long way to go to align with and achieve sustainable development goals. It is crucial that Adria region countries align activities and regulations with EU standards, embrace innovative solutions, build regional cooperation not only at the state level but also with businesses, international organizations, and financial institutions. Only in this way can we guarantee that sustainable development will be accepted as the only path by 2030.
Progress is also evident in energy efficiency and the development of renewable energy sources. Trends in Southeast European countries, including those in our region, show significant progress, especially in the areas of energy transition, the use of renewable energy sources, and solar energy production. Among Adria region countries, Albania and Montenegro are at the forefront of European countries in the proportion of renewable energy use in total electricity production.
Almost the entire electricity production in Albania relies on renewable energy sources, while in the case of Montenegro, the percentage is over 61%. In addition to Albania and Montenegro, Croatia holds a high position among regional countries, with over 53% of renewable energy use, and Bosnia and Herzegovina with 43%. This significantly surpasses the average percentage of EU countries, which stands at 41%.
According to the Energy Community's 2023 report, Serbia has progressed and become a leader in decarbonization activities in the last year, thanks in part to amendments to the Energy Act. Following Serbia is Montenegro, which has been a leader for years in implementing electricity regulations and ranks high among the best reformers. Additionally, in Montenegro, several projects related to solar energy are underway, including the construction of solar power plants and programs aimed at encouraging innovations in energy efficiency, creating significant potential for numerous companies and innovative startups to participate in the energy transition.
Events like the ESG Adria Summit serve as a platform for dialogue on numerous positive examples, best practices, solutions, progress, as well as challenges in the field of sustainable development. This is crucial as summit participants are policymakers, decision-makers in institutions, companies, and organizations—those who will truly be the generators of change.
Where do you see the main problems in the implementation of modern standards of sustainable development?
Biljana Braithwaite: The main problems in implementing modern standards of sustainable development mostly stem from insufficient awareness of the benefits and the non-alignment of legislation with EU, or global standards. Also, we often encounter cases where companies or numerous organizations lack the knowledge to recognize and define activities and goals they need to fulfill to achieve greater sustainability. It is becoming increasingly clear, however, that those who do not keep pace with these changes and global demands will not be competitive in today's market.
Companies in the region can achieve or lose a lot, depending on how successfully they apply ESG (Environmental, Social, and Governance) standards and practices. Over 80% of investors take into account the ESG standards of companies when considering potential investments, as through them, they see a clear picture of the overall sustainability of the company and how successfully it will be able to cope with growing environmental, social, and governance risks. A growing number of studies show that sustainability investment funds, on average, achieve comparable or even better financial returns in the long term than conventional investments. In addition, companies that take into account ESG standards are more likely to identify and mitigate risks related to environmental, social, and corporate governance issues. It is also more likely that they will innovate and develop new products and services to address these issues. Finally, consumers, employees, and other stakeholders also expect companies to contribute to overall sustainability due to the increasing awareness of pressing issues affecting our society and the environment.
Do you see readiness in the Montenegrin authorities to implement modern standards?
Biljana Braithwaite: Certainly, I have seen a clear readiness from the Montenegrin authorities to implement modern standards, especially regarding environmental, social, and corporate governance (ESG) issues. We have seen this through several practical examples. Firstly, over the past years, Montenegro has taken significant steps to align with international standards and rules, particularly in the areas of ecology, energy, and social responsibility. Joining the UN Agenda for Sustainable Development until 2030, as mentioned earlier, is just one example, along with various other initiatives that Montenegrin institutions have embraced or implemented to promote sustainable development. Among other initiatives, there is currently ongoing preparation for the drafting of a law on the use of energy from renewable sources. The aim is to align the regulatory framework with the EU Directive on the promotion of the use of energy from renewable sources, adapted at the level of the Energy Community. If adopted soon, by 2025, we might witness the first auction for renewable energy in Montenegro, which would rank it among progressive European countries. A crucial indicator of the Montenegrin authorities' readiness to follow the highest standards in this area is that a professional team from the European Bank for Reconstruction and Development is engaged as expert consultants for the work on amending the law.
Another initiative that speaks to Montenegro's striving to adhere to the latest sustainability standards is the announcement of the ban on the import of vehicles with Euro 4 standards, resulting in a reduction of harmful gas emissions. It is encouraging that at the end of 2023, the Government of Montenegro adopted the draft of the Law on Waste Management, placing significant emphasis on the circular economy, recycling, selective waste collection, and waste reduction. This places Montenegro in line with developed countries in terms of waste management and, consequently, environmental protection. We hope that this law will be adopted in the Montenegrin Parliament soon, which is crucial for fulfilling obligations from Chapter 27 in the EU accession process.
Lastly, participation in last year's ESG Western Balkans Summit, as well as support in organizing the ESG Adria Summit in April 2024, speaks of significant political will and the importance of the ESG agenda for Montenegro on the path to European integration, both for the President of Montenegro and the Montenegrin Government. In this way, Montenegro will once again host a major regional ESG event with numerous distinguished guests, initiating crucial initiatives for the development of both Montenegro and all countries in the Adria region on the path to further developing the ESG agenda.
Full interview for Forbes is available here.
