Sustainability reporting in SMEs: an examination of challenges

Purpose The integration of sustainability practices into corporate operations is gaining increased significance, driven in part by regulatory pressures such as the European Union’s (EU) Corporate Sustainability Reporting Directive (CSRD), which currently is heavily debated. Nevertheless, the directive will expand the scope of mandatory sustainability reporting. Small and medium-sized enterprises (SMEs), despite their resource constraints, are increasingly impacted, either directly through reporting obligations or indirectly via their relationships with larger reporting entities or financial institutions. This study aims to investigate the key challenges SMEs face in implementing and operating sustainability reporting. Design/methodology/approach A qualitative research approach is applied in this research. Semistructured interviews were conducted with ten SMEs that have initiated sustainability reporting practices. Thematic coding is used to analyze the data. Findings The findings shed light on the unique obstacles SMEs encounter, including limited financial, human and technical resources, as well as the complexities of adapting to evolving regulatory standards. Originality/value This study contributes to the understanding of these challenges, offering insights into how SMEs can navigate the growing demands of sustainability reporting. By addressing this gap, this research provides a foundation for developing practical solutions to enhance the sustainability reporting processes for SMEs.