As expectations around Environmental, Social, and Governance (ESG) practices continue to grow, small and medium-sized enterprises (SMEs) are increasingly asked to provide sustainability information. While many SMEs already apply responsible business practices in their daily operations, turning these practices into structured ESG information often presents significant challenges.
Limited Resources
One of the most common difficulties is the limited availability of resources. SMEs typically operate with smaller teams, tighter budgets, and fewer specialized roles compared to larger corporations. As a result, dedicating time and expertise to sustainability data collection, analysis, and reporting can be difficult while managing everyday operational priorities.
Complex Frameworks
Another challenge relates to the complexity of existing ESG tools and frameworks. Many sustainability reporting systems were originally developed for large organizations with dedicated sustainability departments. For SMEs, these tools may appear overly technical, time-consuming, or disproportionate to their operational scale. This can create uncertainty about where to begin and how to approach ESG reporting in a practical way.
Data Challenges
Data availability and organization remain key obstacles. ESG information often exists within a company but is spread across different internal processes, documents, and operational systems. Environmental data, supplier information, governance policies, and workforce practices may not be centrally recorded or structured for reporting purposes. This makes it difficult for SMEs to translate everyday business activities into consistent ESG metrics.
Growing Expectations
At the same time, expectations around ESG transparency are gradually increasing. Financial institutions, corporate clients, and supply chain partners increasingly request ESG-related information when assessing partnerships, procurement decisions, or financing opportunities. Even when SMEs are not directly subject to regulatory reporting obligations, these indirect pressures mean that sustainability information is becoming increasingly relevant for market participation.
These challenges highlight the need for simpler, more proportionate approaches to ESG reporting that reflect the realities of SMEs. Rather than introducing additional administrative burdens, new tools and methodologies must focus on making existing information easier to organize, interpret, and communicate.
How TRUST-ESG Helps
This is one of the motivations behind the TRUST-ESG project, which explores how ESG reporting processes can be designed to balance accuracy, transparency, and practicality for smaller businesses. By focusing on structured data collection and clear reporting approaches, TRUST-ESG aims to help SMEs transform existing operational information into meaningful sustainability insights.
Understanding these challenges is an important first step. Addressing them effectively will require tools, frameworks, and research initiatives that recognize the specific needs and capabilities of SMEs while supporting their participation in the evolving sustainability landscape.