Knowledge about ESG

ESG for SMEs

The ESG requirements that are currently affecting large companies are having an impact on the SMEs they interact with. Therefore, it makes sense to get started with ESG work – legal requirement or not.

Omnibus proposal

The article is continuously updated based on the EU Commission's omnibus proposal, which may change deadlines and rules for sustainability reporting.

Why it makes sense

Small and medium-sized enterprises (SMEs) that are not listed on a stock exchange are not required to report on their ESG efforts. But that does not mean that they can just as well not do it. More and more of the SME’s primary stakeholders (investors, banks and customers) will be affected by the ESG agenda and therefore make different demands on the reporting from the SME.

We can already see that there is a demand for SME ESG work. Therefore, SMEs now have a need to get a handle on data and be able to report on it.

What's in this article

Who is covered?
The indirect impact of CSRD on SMEs
ESG reporting: What SMEs should expect
The challenges of ESG reporting for SMEs
How to get started as an SME

1. Who is covered?

There are almost 300,000 SMEs in Denmark, employing over 1 million full-time equivalents. They are therefore a cornerstone of the Danish economy, and 2/3 of all jobs in the private sector are in an SME.

The vast majority will not be subject to the new reporting requirements in CSRD, as they do not fall under the EU definition of companies. However, many will be indirectly affected because they are part of the value chain of the companies that are or will be subject to the new requirements.

See when large companies will be subject to CSRD requirements (in Danish)

The EU has developed a voluntary standard for SMEs that are not required to report under the CSRD. It is intended to enable them and their partners to ask and answer questions in a uniform and efficient way when sharing ESG data between companies.

The voluntary standard has not yet been adopted, but is expected to be adopted in the course of 2025. However, SMEs can already start working with the data points recommended in the draft standard.

2. The indirect impact of CSRD on SMEs

Typisk værdikæde for produktionsvirksomhed

GRAPHIC ONLY IN DANISH FOR NOW

At the same time, consumers are increasingly looking towards companies that produce and sell products and services with sustainability in mind. The increasing public attention is causing banks and investors to integrate ESG risks into their portfolio assessments so that they do not finance companies that cannot account for their sustainability efforts.

The public sector is also demanding sustainability efforts and reporting for companies that receive grants or subsidies.

Bo Heilskov, HEM Denmark

“We have assessed that this will be a deal breaker for whether we are allowed to operate in the market in the future. Then we are not on the train that is rumbling out there, we are just not allowed to bid, but instead are chosen out.”

3. What should SMEs expect in relation to ESG requirements?

4. The challenges of ESG for SMEs

5. How to get started as an SME

The B2B market and financial players will in the future prioritize sustainability, which can be supported by data and reporting. Therefore, as an SME, you might as well start exploring the opportunities rather than seeing the development as a problem.

The first step on the way is – if there is not already one in the company – to appoint a person responsible for sustainability work.

This person can start with the following steps:

ESG

ESG report

Customer: HEM Denmark

ESG report equips HEM Denmark for the future

Sustainability work was part of the company's DNA – but the outside world didn't know that. A new report strengthens HEM Denmark's ESG efforts and communication.

See case

We have now described our entire sustainability approach, put it into a system and linked it to the well-known ESG concepts and UN Global Goals. At the same time, we have become Science Based Targets certified, and this makes us sharper in particular in climate reporting, because we now have a clear objective.

Bo Heilskov, head of sales in HEM Denmark

Contact us

Gro Liva Kardel

Principal Advisor

Tel.: +45 26 17 69 67

gka@viegandmaagoe.dk

Over time, there will be a convergence and the framework for reporting will become more standardized, for example through the voluntary standard for SMEs. With it, SMEs and their partners will be able to ask and answer in a uniform and efficient way when sharing ESG data between companies.

In addition, the market is also starting to adapt, and more companies are specializing in assisting SMEs to navigate the new ESG reality, and various tools are being developed that can facilitate the work with reporting and dual materiality analyses. For example, we have developed ESG Navigator, an online tool for ESG Reporting.

The end result will be that more and more companies that are subject to CSRD requirements will start to prioritize doing business with suppliers who have control over their ESG work and can report on it, because in this way they also improve their own ESG efforts and
reporting.

This means that good management of ESG work indirectly becomes a license to operate, but for even more, targeted ESG efforts can translate into improved competitiveness and strengthened business.

ESG for SMEs

Omnibus proposal

Why it makes sense

What's in this article

1. Who is covered?

2. The indirect impact of CSRD on SMEs

3. What should SMEs expect in relation to ESG requirements?

4. The challenges of ESG for SMEs

5. How to get started as an SME

Contact us

Gro Liva Kardel

1. Who is covered?

2. The indirect impact of CSRD on SMEs

3. What should SMEs expect in relation to ESG requirements?

4. The challenges of ESG for SMEs

5. How to get started as an SME

Contact us

Gro Liva Kardel

Lack of motivation

Too few resources

Too little knowledge

Consider where your ESG work should take you

No data

Report!

Set the team and train them

Consider what is needed