ILO Study Finds Rising Interest in Responsible Business Practices among SMEs in Montenegro

Responsible business conduct is increasingly recognised as a cornerstone of sustainable development, inclusive economic growth and decent work.

Small and medium-sized enterprises (SMEs) in Montenegro are increasingly embracing responsible business conduct (RBC) as a strategic tool to strengthen competitiveness, enhance productivity and build trust with customers, workers and international partners, according to a new study published by the International Labour Organization (ILO).

The report, titled “The Promotion of Sustainable, Responsible and Inclusive Business Practices among SMEs in Montenegro,” shows that while many SMEs remain at an early stage of adopting responsible business practices, interest in sustainability standards and RBC principles is clearly growing. This momentum is being driven by expanding legislation on corporate responsibility—particularly within the European Union—as well as rising expectations from investors, buyers and global supply chains for stronger human rights due diligence (HRDD) and sustainability performance.

Responsible business conduct is increasingly recognised as a cornerstone of sustainable development, inclusive economic growth and decent work. Drawing on internationally recognised frameworks such as the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration), SMEs in Montenegro have the opportunity to contribute positively to economic and social progress while addressing labour, human rights and environmental risks linked to their operations.

This shift is especially significant for Montenegro, where SMEs account for more than 90% of all businesses and play a central role in employment and value creation. Strengthening RBC among SMEs aligns closely with the country’s EU accession process, particularly as EU directives on sustainability, corporate due diligence and social responsibility continue to evolve.

The study was carried out under the joint ILO–UNDP project “Circular Transition and Responsible Business Conduct in Montenegro”, funded by the European Union. It was formally endorsed by national tripartite constituents, including the Ministry of Labour, Employment and Social Dialogue, the Montenegrin Employers Federation (MEF), and the trade union confederations CTUM and UFTUM. The research combines an analysis of policy and legislative frameworks with interviews and focus groups involving SMEs, employers’ organisations, trade unions and other stakeholders, including women-led enterprises and firms employing vulnerable groups.

While interest in RBC is rising, the study identifies several key barriers limiting wider adoption among SMEs. These include low awareness of RBC and HRDD requirements, shortages in skills and institutional capacity, limited access to clear guidance, constrained financing options, and fragmented institutional support systems. Many SMEs reported uncertainty about how to translate international standards into practical, cost-effective actions.

At the same time, the study highlights a growing recognition among SMEs of the business opportunities linked to responsible practices, including:

• Improved productivity and competitiveness

• Greater ability to attract and retain skilled workers through better workplace practices

• Expanded opportunities for skills development

• Stronger risk management and resilience in volatile markets

• Improved access to new markets, buyers and financing by aligning with international standards

The report identifies clear entry points for progress, particularly through public policies on procurement, trade, investment, finance and vocational training. Stakeholders stressed the importance of integrating RBC principles into national economic and industrial strategies, strengthening policy coherence, and expanding tailored training and advisory services specifically designed for SMEs.

National institutions and social partners welcomed the study’s findings and reaffirmed their commitment to promoting responsible business conduct. The Ministry of Labour, Employment and Social Dialogue highlighted ongoing efforts to strengthen labour inspection systems and explore the development of a national action plan on human rights and RBC. Employers’ and workers’ organisations underscored the importance of stronger social dialogue, clearer guidance, sector-specific outreach and practical tools to help SMEs implement RBC effectively.

As Montenegro moves closer to EU membership, the study concludes that SMEs are well positioned to turn responsible and sustainable business practices into a competitive advantage—delivering tangible benefits for enterprises, workers and society, while supporting the country’s long-term economic transformation.