Sustainability reporting has often been regarded as a matter reserved for listed companies and multinationals. Yet the world of business is changing fast, and the expectations placed on small and medium-sized enterprises (SMEs) are growing just as rapidly.
SMEs are the backbone of the global economy. In the EU, they account for 99% of all businesses and employ around 100 million people. Their role in achieving sustainability targets is undeniable, even though most SMEs are not directly under binding legislation such as the Corporate Sustainability Reporting Directive (CSRD).
The reality is that SMEs face increasing indirect pressure from stakeholders. Larger companies must report on their environmental, social and governance (ESG) performance and so need reliable information from their subcontractors and value chain partners. Banks and other financial institutions are increasingly asking for accurate ESG data when evaluating loan or funding applications. Consumers, too, expect transparency from the companies they buy from.
In this shifting landscape, accountancies are emerging as crucial guides. Having built trust with SMEs over decades through financial reporting and compliance, accountants are in a unique position to extend that trust to sustainability.
The complexity challenge for SMEs
For most SMEs, sustainability compliance feels like entering a regulatory jungle. Regulations, voluntary standards and stakeholder expectations create a maze that is difficult to navigate without expert guidance. Acronyms such as CSRD, ESRS (European Sustainability Reporting Standards), EU Taxonomy and TNFD (Taskforce on Nature-related Financial Disclosures) appear overwhelming, especially for business owners who are already stretched thin managing operations, finances and people.
Unlike large corporations, SMEs rarely have in-house sustainability officers. They may not even have a dedicated finance department. As a result, when new compliance questions arise, their first instinct is to turn to their accountant.
Accountants already translate financial legislation, tax rules and auditing standards into actionable steps for their clients. Extending this role into sustainability is a natural progression. Just as accountants help SMEs to stay compliant with financial obligations, they can now help them simplify sustainability compliance, making it understandable and manageable.
Why accountancies are key actors
Trust is the cornerstone of the accountant-SME relationship. SMEs often see their accountant not just as a service provider but as a trusted advisor who knows their business inside out.
Sustainability reporting shares many similarities with financial reporting, and the latest frameworks are increasingly designed to integrate the two, strengthening the link between financial and sustainability disclosures. Both require structured and verifiable data, transparency and accuracy, as well as regular updates and comparability over time. This alignment means that accountants are well placed to incorporate ESG considerations alongside financial statements.
For SMEs, this means they can respond more effectively to requests from clients, banks and regulators, thereby strengthening their competitiveness. For accountancies, the expansion into sustainability creates opportunities to broaden their service offering, build stronger client relationships and position themselves as frontrunners in a changing market.
For the wider economy, a greater flow of reliable ESG data from SMEs improves the quality of reporting by larger companies and enables financial institutions to make better-informed decisions.
How technology can simplify sustainability compliance
One of the main barriers for SMEs is complexity. Without technical knowledge, ESG reporting feels like a task that only consultants or large corporations can manage. Collecting data across invoices, suppliers and operations is often time‑consuming and confusing.
This is where technology becomes a game‑changer. Just as cloud-based platforms have transformed bookkeeping, payroll and tax filing, sustainability reporting is entering its own digital era. For accountancies, technology makes sustainability services scalable. One professional can support dozens of SME clients without becoming a sustainability expert themselves. It ensures consistent outputs, since each ESG report is generated according to the same methodology, which strengthens comparability across clients.
Most importantly, it creates value by turning sustainability reporting from a compliance headache into a competitive advantage and a new service line. The digitalisation of sustainability compliance mirrors the evolution of financial compliance: what was once manual and error-prone can now be streamlined and automated.
Future outlook: from optional to essential
At present, most SMEs are not legally obliged to produce sustainability reports. However, the direction of travel is clear. Sustainability information is rapidly shifting from optional to business critical.
Large companies are increasingly requiring ESG data from their suppliers in order to complete their own mandatory reporting. Banks and financiers are making sustainability disclosures a standard part of loan and investment processes. Public procurement increasingly favours suppliers who can demonstrate ESG performance. Meanwhile, consumers are becoming more informed and are rewarding transparency while punishing greenwashing.
For SMEs, sustainability reporting is therefore no longer only about compliance. It is becoming a gateway to access markets, finance and growth opportunities. Accountancies that prepare their clients today will give them a competitive edge tomorrow. In many ways, sustainability is becoming as fundamental to business health as financial stability. Just as ignoring accounting obligations is unthinkable, neglecting ESG transparency will soon carry tangible risks.
Conclusion
SMEs form the backbone of our economies, and their contribution to sustainability cannot be overlooked. While most are not directly bound by legislation, the expectations from value chains, financiers and consumers are rapidly increasing.
Accountancies are in a unique position to help SMEs navigate this new era. By integrating sustainability reporting into the trusted processes they already manage for financial reporting, accountants can make ESG compliance both practical and valuable. With technology simplifying complexity, the future of accountancy is no longer only financial – it is sustainable. Firms that embrace this shift will not only strengthen their own business but also empower SMEs to thrive in a changing economy.
Aila has developed a tool built on the Voluntary SME Sustainability Reporting Standard that translates complex frameworks into a solution for SMEs and their accountants. Aila’s tool guides companies through clear questionnaires, provides automated hints and benchmarking to give context, and produces ready-made templates aligned with international standards but simplified for small businesses.
The EC’s Voluntary Standard for SMEs
On 30 July 2025, the European Commission adopted a recommendation on voluntary sustainability reporting for SMEs. The standard adopted in the recommendation will reduce the administrative burden on SMEs by making it easier for them to respond to requests for sustainability information from large companies and financial institutions which are subject to mandatory reporting under the Corporate Sustainability Reporting Directive (CSRD) and which have such SMEs in their value chains.
The Commission encourages large companies and financial institutions that seek sustainability information from SMEs to base their requests on the voluntary standard as far as possible. SMEs may also wish to voluntarily report sustainability information to improve their access to sustainable finance and better understand and monitor their own sustainability performance, thereby improving their resilience and competitiveness.
Although the Voluntary SME Sustainability Reporting Standard (VSME) framework was originally designed in the EU and was approved by the EU Commission, frameworks like this set a global precedent. The VSME framework is already being considered as a basis for national sustainability legislation in other countries.
Author bio
Martta Ääri is the Co‑Founder of Aila, a company developing digital tools that make sustainability reporting accessible for SMEs.
With technology simplifying complexity, the future of accountancy is no longer only financial – it is sustainable. Firms that embrace this shift will not only strengthen their own business but also empower SMEs to thrive in a changing economy.
Martta Ääri, COO & Co-Founder, Aila
