Circular transition and responsible business conduct in Montenegro

Montenegro's circular transition is hindered by limited industrial symbiosis frameworks, low private sector engagement, weak policy incentives, fragmented governance, and inadequate digitalization in waste tracking and resource efficiency, further exacerbated by economic reliance on linear consumption models, workforce skill gaps, and social exclusion, particularly among informal waste workers and women.

MSMEs face growing challenges in international trade due to increasing regulations and buyer expectations related to responsible business conduct (RBC), including human rights due diligence in supply chains and circular transition as a mean to safeguard the environment. While they are integral to global supply chains, many MSMEs lack the necessary capacity to comply with evolving international standards, making them vulnerable to market exclusion, reputational risks, and reduced access to financing. Limited resources, insufficient gender-sensitive training, and a lack of structured support further hinder their ability to align with RBC frameworks, weakening their competitiveness and ability to participate in sustainable and inclusive economic growth. These gaps leave them vulnerable to market shifts and regulatory changes while limiting their potential to contribute to sustainable economic growth.

The ILO will lead efforts to build the capacity of MSMEs to align with responsible business conduct standards, ensuring their application, improving working conditions and enhancing their productivity in global supply chains and therefore ensuring their compliance with EU market requirements. Together, these efforts will strengthen MSMEs, enhancing their competitiveness, productivity, resilience, and ability to integrate into global supply chains while meeting RBC standards. By equipping MSMEs with the tools and knowledge to adopt sustainable practices, as well as access to finance for demonstration projects, the initiative will drive awareness change, knowledge generation and collaboration among businesses leading to reduced costs, enhanced efficiency and brand reputation, increased customer loyalty, and opening of new market opportunities, leading to improved profitability and competitiveness. This approach will contribute to inclusive and sustainable growth, positioning Montenegro as a leader in circular economy practices in the Western Balkans.