Catalysts of Sustainability: The Transformative Role of Small and Medium Enterprises in ESG Practices of EU Candidate Countries

Abstract Environmental, Social, and Governance (ESG) criteria have emerged as pivotal benchmarks for assessing corporate sustainability and ethical business practices. This study investigates the transformative role of small and medium-sized enterprises (SMEs) in advancing ESG practices, with a particular emphasis on countries aspiring to European Union membership. Employing a quantitative methodology through a survey questionnaire the research analyzes the challenges and opportunities associated with ESG implementation. Data collected from 51 SMEs across the Balkan region reveal substantial benefits of ESG integration, notably in enhancing operational efficiency and market reputation, with transparency and strategic planning identified as critical drivers. However, SMEs face significant obstacles such as complex regulatory frameworks, limited access to financing, and inadequate training resources. The article proposes targeted strategies to strengthen SME capacity, emphasizing investment in education, technological solutions, and partnerships with key stakeholders. By adopting ESG standards, SMEs not only contribute to sustainable development but also bolster their competitiveness and resilience in a rapidly evolving global market.