In early June, the Republic of Serbia successfully launched its second issuance of ten-year dollar-denominated “sustainable” Eurobonds on the international financial market. These bonds are earmarked to fund sustainable projects aligned with the green agenda and socially responsible activities. The issuance amounted to $1.5 billion, yet investor demand soared to over $6.5 billion throughout the day, as reported by the Cabinet of the Governor of the National Bank of Serbia.
Following Serbia’s inaugural issuance of “green” Eurobonds in 2021, this latest issuance marks the country’s second issuance labeled with ESG (Environmental, Social, and Governance) criteria. The adoption of ESG standards and reporting has profoundly influenced European companies, reflecting the broader impact of the Corporate Sustainability Reporting Directive (CSRD) within the European Union. This directive aims to enhance transparency regarding companies’ environmental, social, and governance impacts.
At the recent annual conference of the Association of Financial Directors of Serbia, it was emphasized that while the CSRD presents complexities, its significance in advancing EU climate goals cannot be overstated.
Automobile manufacturers are notably affected by these regulations. With the EU striving for continent-wide carbon neutrality by 2050 and a 55% reduction in emissions by 2030, the “Fit for 55” initiative mandates that all new vehicles sold from 2035 be zero-emission. This requirement poses challenges for German car manufacturers, prompting a reassessment of carbon-intensive production models in light of rising CO2 emission permit prices. Currently priced at approximately 75 euros per ton, these permits are expected to reach 150 euros by 2030 and 700 euros by 2050, significantly impacting business strategies.
To prevent production relocation outside the EU to evade carbon-related costs, the Carbon Border Adjustment Mechanism (CBAM) has been introduced. This mechanism mandates that companies importing goods into the EU pay equivalent CO2 emission fees as domestic producers, affecting enterprises globally, including those in China and Asia.
Navigating these regulations presents a substantial challenge for companies, necessitating substantial investments in technology and processes to comply with new standards. For instance, Germany has secured EU approval for a support package aimed at subsidizing the costs of producing lower-carbon footprint products, thereby enabling firms to maintain competitiveness while transitioning towards more sustainable practices, as highlighted by ESG expert Milena Milosavljević.
