Resources for the Western Balkans Green Growth Alliance

Essential insights and resources to support companies on their green transition journeys.

Calculating Scope 1 and Scope 2 emissions is the foundational step for any company aiming to develop a comprehensive decarbonization strategy. Scope 1 covers direct greenhouse gas (GHG) emissions from a company’s own operations, while Scope 2 refers to emissions from purchased electricity, steam, heating, and cooling. These calculations are vital for understanding a company’s carbon footprint and laying the groundwork for a successful green transition.

However, Scope 3 footprinting, which includes indirect emissions such as those from the supply chain and the use of sold products, is more complex but equally important. Footprinting is a technical process that must adhere to the GHG Protocol standards, requiring specialized expertise. For companies in the Western Balkans, improving proficiency in footprinting is essential as they embark on their green transition journeys.

Having an accurate GHG footprint is critical for crafting a decarbonization strategy and mitigating financial risks linked to policy compliance. To help businesses, especially in hard-to-abate industries such as steel and cement, better understand emission reduction pathways, the following Transformation Calculators can be used:

The following Decarbonization Roadmap documents prepared by Energy Community is a powerful resource to support energy and climate targets of companies.

In 2023, the Corporate Sustainability Reporting Directive (CSRD) came into effect in the EU, enhancing regulations  on the social and environmental information that companies must disclose. A wider range of large companies and listed SMEs will now be required to report on their sustainability practices. Additionally, certain non-EU companies will also need to comply if they generate over EUR 150 million in the EU market. These new regulations ensure that investors and other stakeholders have the necessary information to evaluate  companies’ impact on people and the environment, as well as to assess financial risks and opportunities arising from climate change and other sustainability issues. The first set of companies will apply these rules starting in the 2024 financial year, with reports published in 2025.

Companies subject to the CSRD  mustreport according to the European Sustainability Reporting Standards (ESRS), developed in draft form by the European Financial Reporting Advisory Group (EFRAG), an independent body comprising various stakeholders. While the CSRD does not yet apply to Western Balkans countries, it establishes a new benchmark for sustainability reporting. The Directive of the European Parliament on Corporate Sustainability is a comprehensive resource on CSRD. More information to answer questions regarding CSRD can be found here:

•       Q&A on Corporate Sustainability Reporting Directive from CDP

Emissions trading (EU ETS) is a market instrument used by the EU to reduce greenhouse gas emissions cost-effectively and achieve its targets. . The EU Emissions Trading Scheme (EU ETS) is one of the largest CO2 markets in the world and the EU's most important instrument for reducing greenhouse gas emissions, covering around 40% of total EU emissions. Since its introduction in 2005, emissions in the covered sectors have been reduced by 41%. The ETS Directive Document and the report on the functioning of the European carbon market of the European Commission serve as comprehensive resources resources on ETS.

In October 2023, the EU introduced the Carbon Border Adjustment Mechanism (CBAM) to mitigate the risk of carbon leakage within the EU ETS. The CBAM places a carbon price on emissions generated during the production of certain imported goods with high emissions intensity. By ensuring these goods face the same carbon price as those produced within the ETS, CBAM establishes consistency in carbon pricing and fosters a level playing field between foreign and domestic producers.

The CBAM applies to imports of cement, iron and steel, aluminum, fertilizers, hydrogen, and electricity. Since October 2023, companies have been required to report their emissions, but significant uncertainty remains outside the EU regarding reporting obligations and GHG accounting methods. The European Commission’s CBAM regulation will significantly impact Western Balkan economies. For a deeper understanding and detailed information on CBAM, the following documents can be used as resources:

Innovative technologies are essential to fully decarbonize certain sectors, especially energy intensive industries such as steel, chemicals, cement, glass, and aluminum. The technical possibilities to make the currently CO₂-intensive basic materials industry almost entirely climate-neutral already exist. They are either close to market readiness (such as water electrolysis) or can be brought to market readiness within a few years. Examples of low-CO₂ key technologies include the direct reduction of iron ore with hydrogen (instead of the conventional blast furnace route) in the steel industry, chemical recycling of plastics (instead of thermal recycling) in the chemical industry, and CO₂ capture in cement production.