SMEs generate more than 50 percent of the EU’s gross domestic product (GDP), and over 63 percent of enterprise related greenhouse gas emissions. This positions them at the centre of Europe’s green transition and exposes them to growing expectations from buyers and value chain partners, even under the mitigated Omnibus thresholds. (Moro, 2025). Increasingly, SMEs are required to provide sustainability data because their larger value chain partners must comply with the Corporate Sustainability Reporting Directive (CSRD). This pressure flows downstream, underscoring the urgent need for standardisation and automation to reduce administrative burdens and support the competitiveness of Nordic SMEs (TemaNord, 2025).
According to a research by OP Pohjola (2026) 40 percent of Finnish major corporations anticipate having to replace subcontractors or suppliers soon. Due to tighten sustainability obligations for large companies and their value chains. This trajectory has persisted for several years. According to Finnish large corporations, the Finnish SMEs currently embedded in their subcontracting chains are the most common targets of such scrutiny. Among large Finnish corporations reviewing their value chains, 50 percent expect that forthcoming adjustments within their subcontractor networks will primarily affect Finnish SMEs directly. Subcontractor changes are anticipated most frequently within the broader category of other outsourced services (61 %), the sourcing of raw materials (48 %), and in other areas of industrial subcontracting (48 %).
Beyond surveys – Interviews of the Sustainable SMEs project
Jamk University of Applied Sciences (Jamk) acts as a leading partner in The Sustainable SMEs project, which aims to support SMEs in the bioeconomy and manufacturing industries by developing, piloting, and sharing sustainability reporting solutions (Jamk, n.d.). Project partners support the sustainability transition of SMEs in their regions. Icelandic partner focus on fisheries (University of Iceland), Irish partners aim is to support digital transformation (AIM Centre) and promotion of wood-based products (Irish Wood and Interiors Network CLG). Swedish partner works to accelerate the transition to a fossil‑free northern Sweden (BioFuel Region). Our common task was to investigate the maturity level of sustainability reporting in bioeconomy and industrial SMEs by interviewing companies (n=29) and their stakeholders (n=32) in Finland, Sweden, Ireland, and Iceland. Our interview study, conducted together with all partners and reported by Nordberg (2026) reveals both shared trends and notable cross-country differences in how SMEs and stakeholders’ approach and implement sustainability reporting. Finnish and Swedish SMEs appear to be the most advanced, often integrating sustainability into their strategies and daily operations and, in some cases, going beyond existing legal requirements. Across all four countries, SMEs face similar challenges: fragmented and time-consuming data collection, limited ICT system integration, and uncertainty about evolving regulations.
Resource constraints are particularly acute for SMEs, which often postpone sustainability work until legally mandated. The administrative burden and lack of clarity about what should be reported, and how, remain major obstacles. The challenges faced by SMEs in sustainability reporting are also broadly consistent with the findings from our regional workshops. Wider surveys similarly highlight the constraints posed by limited resources (time, personnel and expertise) as well as the fragmented nature of data collection (Ortiz-Martínez & Marín-Hernández, 2024; Setyaningsih et al., 2024; Vastuu Group, 2025). Limited communication about sustainability efforts prevents sustainability from becoming a genuine competitive advantage.
Collaboration and peer learning are needed
External consultants, industry associations and peer networks serve as important sources of support, as many SMEs lack their own resources for sustainability development work. Stakeholders (business networks and consultants) play a critical role in offering tools and services. Despite resource limitations of SMEs, engagement of business owners and stakeholders helps to produce meaningful, transparent sustainability reports (Setyaningsih et al., 2024). Still, a clear need remains for more practical, accessible and harmonised guidance tailored specifically to SME needs. To support sustainability reporting, SMEs employ a mix of digital tools, including Excel, Power BI, ERP systems and specialised reporting platforms, combined with various manual processes (Nordberg, 2026).
According to Nordberg (2026) several opportunities for progress are emerging. Collaboration with consultants and industry partners, participation in networks, and engagement in workshops and seminars are important drivers of sustainability development work. Increased automation and digitalisation can streamline reporting processes, while the exchange of best practices and clearer regulatory guidance can raise maturity levels, especially in countries currently lagging. Our findings highlight the importance of systematic data collection, adequate internal resourcing and well-defined procedures to enhance reporting quality. Properly designed, standard-based tools, could help ensure that sustainability reporting does not become an excessive burden for resource‑constrained SMEs (Ortiz-Martínez & Marín-Hernández, 2024). In the long term, SMEs stand to benefit from improved traceability, data standardisation and stronger links between sustainability performance and business value.
Both SMEs and stakeholders acknowledge the need for clearer regulations, accessible tools and stronger collaboration to perform sustainability practices (Nordberg, 2026). Setyaningsih’s (2024) summarises the barriers identified in 37 influential sustainability report papers and recognised some barriers more: knowledge caps, lack of expertise, and limited capasity to measure sustainability indicators. By addressing existing barriers and embracing digital solutions, best practices and collaborative networks, SMEs can strengthen their sustainability work and better meet future expectations from customers, regulators and society. In this context, forward-looking SMEs are not reporting because the law requires it – they are reporting because their future business depends on it. Sustainability reporting will become central to SMEs competitiveness (Setyaningsih et al., 2024).
Sustainability work is nothing special or hypocritical. Companies aim to solve customer problems with products or services. Customers also make purchasing decisions based on values. In an increasingly competitive environment, companies must also openly communicate their practices and company values. SMEs play a key role in Europe’s green transition, but their sustainability reporting is still hampered by fragmented data, manual processes and limited resources. The sustainability report is not a silver bullet for business success, but part of a broader effort to strengthen business development and risk management. Our results show that the increasing expectations of larger value chain partners are putting increasing pressure also on SMEs, especially in Finland. Sustainability work can be achieved when SMEs have clear guidelines, consistent metrics and practical digital tools. SMEs will do sustainability report because their future competitiveness, resilience and stakeholder trust increasingly depend on their ability to integrate sustainability work into their core business, and make informed and risk-aware decisions.
Sustainable SMEs: Sustainability reporting enhancing SMEs’ market reach, competitiveness, and sustainable growth
The Sustainable SMEs project enhances SMEs’ understanding about sustainability reporting and the sustainability transition. It encourages SMEs to test and develop sustainability reporting solutions in collaboration with other SMEs. The project also disseminates sustainability reporting knowledge and solutions across the northern periphery and arctic area covered by the funding organization of our project, the Interreg NPA programme.
