Are listed <scp>SMEs</scp> ready for the corporate sustainability reporting directive? Evidence from Italy

Abstract This paper explores the sustainability reporting practices of listed small‐ and medium‐sized enterprises (SMEs) in the context of the Corporate Sustainability Reporting Directive (CSRD). Utilizing institutional theory as a framework, this study employs dynamic panel data and logistic regressions to investigate how these SMEs respond to isomorphic pressures. The findings reveal a significant presence of mimetic isomorphism, where these companies tend to imitate the sustainability reporting behaviours of all listed companies, not just those of their direct SME competitors. Interestingly, the study also finds that geographical factors do not significantly influence the sustainability reporting practices of these SMEs. This research makes a notable contribution to the ongoing discussion about mandatory sustainability reporting in Europe, being one of the first in‐depth analyses of how European‐listed SMEs are adapting to new sustainability reporting regulations.