As the global shift toward Environmental, Social, and Governance (ESG) practices accelerates, businesses worldwide are adapting to heightened expectations around sustainability, ethical governance, and social responsibility. At the core of this transformation is the energy transition, with renewable energy sources playing a pivotal role. The year 2025 is anticipated to be a critical milestone in shaping energy legislation and aligning it with ESG standards.
ESG Developments in 2024
The Corporate Sustainability Reporting Directive (CSRD), effective January 1, 2024, mandates companies to integrate ESG criteria into their operations. Over 80 countries have implemented ESG reporting regulations, with more than 2,000 specific rules requiring transparency across ESG factors.
In Bosnia and Herzegovina (BiH), ESG reporting regulations are not yet adopted. However, ESG-related changes are influencing energy legislation, reflecting global trends. BiH remains heavily reliant on coal, which accounts for approximately 60% of electricity production. Nevertheless, the country is increasingly recognizing the potential of renewable energy, driven by its natural resources and the EU agenda for energy transition and ESG implementation. Hydropower represents 35% of the energy mix, and solar and wind energy are gaining traction.
Renewable Energy Potential in BiH
Bosnia and Herzegovina possesses significant untapped renewable energy potential, particularly in solar power. Southern regions receive over 2,400 hours of sunlight annually, making them ideal for large-scale solar projects.
Recent years have seen notable steps toward expanding renewable energy capacity. BiH is considering numerous projects to diversify its energy sources, including over 390 planned hydropower plants. Wind farms are also under development, and the overall capacity of renewables is expected to grow substantially in the coming decades.
In alignment with the EU’s goal of achieving a 42.5% renewable energy share by 2030, BiH’s energy laws increasingly reflect these objectives. Transitioning to cleaner energy is crucial not only for environmental sustainability but also for meeting EU accession criteria and attracting foreign investment. Energy legislation plays a key role in facilitating this transformation, ensuring companies comply with local and international standards while capitalizing on new opportunities in the renewable sector.
Looking Ahead to 2025
“Greenwashing” and ESG Compliance
In 2025, ESG transitions will present both challenges and opportunities. The concept of “greenwashing”—false claims about environmental friendliness—is gaining attention in Europe. Notable cases include FIFA’s claim that the 2022 World Cup was carbon-neutral and IKEA’s use of green labels despite sourcing wood from questionable origins.
For BiH’s energy sector, greenwashing poses a significant risk. Increasing EU investigations into oil and gas companies promoting “clean energy initiatives” while continuing fossil fuel extraction underscore the scrutiny surrounding such claims. Penalties for misleading statements are likely to impact all companies making unverified green claims.
While existing consumer protection laws in BiH could address greenwashing, future amendments may further align local regulations with EU standards. Until then, export-oriented companies will face stricter oversight of their green claims, indirectly pressuring the adoption of renewable energy initiatives.
Sustainable Finance and Energy Transition
The revision of the Sustainable Finance Disclosure Regulation (SFDR) adds another layer of complexity for the energy sector. Companies must reduce CO₂ emissions to meet the EU’s goal of climate neutrality by 2050. These trends are particularly significant for BiH, presenting both challenges and immense opportunities for development.
The energy sector’s transition is inevitable, driven by EU requirements. For BiH companies, understanding changes in energy policy legislation is critical to successfully integrating ESG principles into their operations.
Key Takeaways
The increasing emphasis on renewable energy in the context of ESG highlights how businesses must navigate dual pressures—regulatory requirements and market demand for sustainable practices. By aligning strategies with these energy trends, companies not only ensure compliance but also position themselves as leaders in the transition toward a sustainable and prosperous future.
IA Law Firm, as a trusted advisor to the Green Hydrogen and Renewable Energy Association, supports local and international investors seeking opportunities in the renewable energy sector.
For more insights on energy sector developments in BiH, visit: IA Law Firm – Energy Sector Regulations.
For more information on ESG transitions during 2024-2025, please visit: https://www.dilitrust.com/esg-trends-2025/.
