The circular economy is becoming an increasingly important concept in global efforts towards sustainable development, and its implementation in Serbia could bring numerous economic, environmental, and social benefits. To explore how the circular economy can enhance the competitiveness of the domestic economy, what its key challenges are, and how it can be successfully implemented, we spoke with Siniša Mitrović, head of the Centre for Circular Economy at the Serbian Chamber of Commerce.

Q: What is the essence of the circular economy, and what are its advantages compared to the linear model?

A: The topic of the circular economy is being discussed more and more each day. There are many definitions and interpretations of what it entails and how far its scope extends. Many people view the circular economy primarily through the lens of waste management, but that is only one aspect of circularity. The linear economy, which we have been living in for so long, has distanced us from nature and put us in conflict with it. Each new generation has taken more natural resources and depleted living spaces. Unfortunately, we may have started waking up too late – forced by climate change, which is altering our lives through extreme weather events affecting the Western Balkans as well. In 2024, for the first time, the Earth’s temperature exceeded 1.5 degrees Celsius above the pre-industrial average on anannual basis, putting the fulfillment of the Paris Agreement’s climate goals in jeopardy.

The circular economy is not some ‘new religion’ created by the European political elite; rather, it arises from the European industry’s struggle to survive without critical materials and remain competitive against the challenges posed by the US, China, and the BRICS economies. The EU must urgently address the long-standing obstacles and structural weaknesses holding it back. For over two decades, Europe has failed to keep pace with other major economies due to a persistent productivity growth gap, lagging particularly in innovation. The European industry is under pressure today due to high energy prices and complex regulatory frameworks.

Interestingly, the circular economy existed in this region two hundred years ago. Our ancestors lived sustainably, producing zero waste, protecting water sources and streams from pollution, and practicing regenerative agriculture. However, then came socialism, industrialization, a command economy, and eventually liberal capitalism, leading to the emergence of a consumer society. Today, Serbia depletes its natural resources by mid-year, and beyond that point, we overexploit nature, which ‘invoices’ us through droughts, floods, erosion, supercell storms, and other hazards. Ultimately, the easiest way to define these economic models is that the linear economy follows a produce–use–discard model, while the circular economy follows a produce–use–reproduce model.

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Q: How do you assess the current implementation of the circular economy in Serbia, and what are the biggest challenges in this process?

A: The circular economy in Serbia is not far behind the EU; in fact, some of our companies are already highly circular, not due to populism but because they have made sound business decisions prioritizing community progress over profit alone. The challenge these companies face is that the state lacks mechanisms to reward them, such as tax reductions on profits or exemptions from environmental levies. To be fair, the EU has not fully resolved this issue either, but it is actively working on it.

Circular products are generally more expensive, making them uncompetitive against similar non-circular products. Currently, significant efforts are being made to develop a system for measuring circularity so that each product will eventually have something akin to a passport, recording details such as energy consumption and type, raw materials used, whether recycled materials were incorporated, and how recyclable the final product is. This passport will contain additional data, but ultimately, consumers will have much more information at their disposal.

At the Serbian Chamber of Commerce, our primary mission is knowledge transfer to companies, particularly in the area of business decarbonization. We must encourage companies to think ahead and transform their business models. Otherwise, competitiveness will increasingly depend on how green production processes become. Serbia has strategic documents on circular economy policy, but implementing the proposed measures is the most significant and challenging step. Green transformation in Serbia could enable GDP growth of one percent annually. However, from mid-2024 onwards, the green agenda seems to be losing momentum, as small and medium-sized enterprises are not seeing the benefits of green regulations – only increased bureaucracy and rising production costs. Criticism of the European Green Deal is mounting, and there is growing pressure to delay taxonomy measures, particularly the carbon tax. In Serbia today, the most expensive word is business predictability. Many risk factors are at play – trade tariffs, sanctions against NIS, decarbonization of the energy sector, resource prices, supply chain disruptions, and the broader influence of shifting global politics, including Trumpism. All of this pushes us to develop strategic policies that will steer Serbia towards a more advanced economic future and integration into international economic blocs.

Q: How does implementing the circular economy contribute to reducing industrial waste and improving the recycling system in Serbia?

A: When we have five billion euros in foreign direct investment and an annual economic growth of four percent, the industry must have ready-made solutions for the waste it generates. Serbia currently has the most expensive industrial waste management solutions in Europe, poor infrastructure for collection and treatment, insufficient knowledge and best practices, and, of course, a lack of financial resources to organize everything.

In addition, there is public resistance, which is justified if negotiations with citizens and the civil sector about the best environmental solutions are not conducted in time. We must be brave, especially at the local level, transparent, and confident that investments in industrial waste infrastructure (storage and treatment) are much better solutions than dumping waste in nature, watercourses, or burying it.

Industrial waste can become a resource for other industries, which is why we at the Serbian Chamber of Commerce advocate for industrial symbiosis—where waste from one industry becomes raw material for small and medium-sized enterprises, particularly in cases involving plastic, used tires, ferrous and non-ferrous metals, cables, and other materials.

Interview by Milena Maglovski