Generali and SDA Bocconi’s White Paper, a guide to the sustainable transition of SMEs

The fourth edition of the White Paper “Fostering Sustainability in Small and Medium-Sized Enterprises”, developed by SDA Bocconi School of Management’s Sustainability Lab and promoted by Assicurazioni Generali’s SME EnterPRIZE project, presents an ongoing state-of-the-art analysis of the sustainable transition of European SMEs. Building upon five years of continuous research, this report offers fresh insights into how European SMEs are managing their transition toward more sustainable business practices.
This latest edition features an expanded focus on climate resilience and risk management as well as a broader scope of analysis to include ten European countries. This expansion marks the inclusion of Slovenia for the first time, alongside the previously studied nations, which were Austria, Croatia, the Czech Republic, France, Germany, Hungary, Italy, Portugal, and Spain.

Key highlights

How European SMEs Approach Sustainability and Recent Evolutions

• The research reveals a consolidation in ESG adoption, with combined implementation rates holding steady at 44% despite growing challenges, marking significant progress from 34% in 2020. This resilience is particularly noteworthy in the current complex economic environment.
• The data also shows a clear differentiation in adoption patterns, with company size emerging as a crucial determinant – larger SMEs demonstrate strong leadership with 65% adoption rates, while smaller enterprises maintain a solid foundation at 36% – indicating significant potential for growth through targeted support.

Shifting Obstacles: the Barriers to Sustainability Strategy Implementation in SMEs

• While SMEs demonstrate commitment to sustainability, they face increasing implementation challenges, with a lack of public incentives (54%), institutional support gaps (53%), and limited sustainable finance access (53%) emerging as key areas requiring attention.
• These barriers to implementation show notable regional variations, particularly between Eastern and Western European countries, suggesting opportunities for knowledge sharing and targeted policy interventions building on successful approaches.

The Advantages of a Sustainable Approach and the Development of the ESG Business Case for SMEs

• The business case for ESG remains robust, with environmental benefits as the leading advantage at 83% positive impact, followed by strong social benefits.
• Notably, financial advantages show the most significant improvements, particularly in credit and insurance conditions, suggesting increasing market recognition of ESG performance.

Climate Change Risks: Awareness Levels and Response Strategies Among European SMEs

• Climate risk awareness varies significantly across the SME landscape, with sustainability leaders showing 69% risk recognition compared to the 50% average.
• Price volatility emerges as the primary climate-related concern (47%), while companies prioritise operational responses such as local sourcing (33%) and renewable energy adoption (27%) over more complex strategic adaptations.

Listening to SMEs: the Support They Need to Aid Their Just Sustainable Transition

•  Support needs have consistently grown across all categories, with tax incentives (78%) and public funding (76%) leading priorities.
• This increasing demand for comprehensive support suggests a growing recognition of the complexity of sustainable transition, requiring coordinated action across policy, financial, and capacity-building dimensions.

A Roadmap to Foster the Just Sustainable Transition of European SMEs

The findings inform targeted recommendations for policymakers and financial institutions, emphasising the need for simplified regulatory frameworks, enhanced public incentives, tailored financial instruments, and proactive advisory support to accelerate the just sustainable transition of European SMEs.

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The third edition of the White Paper “Fostering Sustainability in Small and Medium-Sized Enterprises”, developed by SDA Bocconi School of Management’s Sustainability Lab and promoted by Assicurazioni Generali’s SME EnterPRIZE project, presents the evolving landscape of sustainability among European SMEs, by highlighting trends, assessing barriers and benefits, and delivering practical recommendations to contribute to the advancement of sustainable practices and policies in Europe.

In this latest edition, as anticipated with the first findings of the survey published on the UN’s Micro, Small, and Medium-Sized Enterprise Day, the scope of analysis broadened to include nine European countries. This expansion marks the inclusion of Portugal and Croatia for the first time, alongside the previously studied nations, which were Austria, the Czech Republic, France, Germany, Hungary, Italy, and Spain.

Key highlights

European SMEs’ Approach to Sustainability and How It Changed in Recent Years

• Our analysis underscores the resilience of European SMEs during challenging times, while also confirming a noticeable polarisation in their approach to the sustainable transition.
• In our sample, 44% of the SMEs declare that they have already embraced, or are in the process of embracing, a more formalised sustainability approach (Heroes and Soon-to-be) – up 3% from the 2022 survey, and up 10% from a similar pan-European survey carried out by the European Commission in 2020.
• On the other hand, the number of SMEs showing no interest in any ESG strategy (termed “Laggards”), has almost doubled since the 2020 report reaching 37%, with an interesting 6% reduction in 2023 compared to the previous year.

Existing and Emerging Barriers Preventing SMEs from Implementing Sustainability Strategies

• Barriers to the adoption of a formalised sustainability approach remain substantial and have intensified over the past year.
• Smaller SMEs perceive these barriers more acutely, with institutional challenges such as excessive regulations and bureaucracy being predominant.
• European SMEs’ sustainability ambitions have also been affected by rising energy prices, inflation, and the Ukraine conflict, with these factors impacting the Undecided and Laggards the most.

The Benefits of Adopting a Sound Sustainable Approach

• The ESG business case is stronger than ever, with SMEs that have adopted a more formalised sustainability approach reaping benefits across all domains, with enhanced resilience, competitiveness, and reputation.
• Our survey shows that the number of SMEs declaring “very positive” and “positive” benefits has increased since last year, even in challenging times.
• Among such benefits are improved environmental impact, better efficiency, reduced waste, better risk management, increased employees and customer satisfaction, better reputation and dialogue with stakeholders, market and competitive advantages.

The Support SMEs Want to Foster Their Just, Sustainable Transition

• Top priorities include tax incentives for sustainable products or services, as well as subsidised EU or national funds.
• Additionally, SMEs value favourable financial conditions linked to ESG goals and initiatives that boost demand for sustainable products.
• Clear regulations and reduction of bureaucracy, education, and partnerships with ESG-focused finance providers are also indicated, alongside tax measures to deter unsustainable practices.

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The second edition of the White Paper “Fostering sustainability In Small and Medium-sized Enterprises,” promoted by Generali and developed by SDA Bocconi – School of Management Sustainability Lab, explores the progress Europe’s SMEs have made in building out sustainable businesses, the challenges they face, and what the wider policy and financial communities can do to help.

The research publishes results from a wide-ranging survey of SME business owners on their approach to sustainability. It also analyses how the EU’s National Recovery and Resilience Plans may include initiatives that can provide SMEs with support, and how financial products are evolving that may also benefit SMEs in their sustainability efforts.

Key highlights

SME Survey

• There’s a “growing polarization” between companies with sustainability plans and those without
• 41 percent of SME owners surveyed said they have put in place a sustainability strategy or they will in the near future
• 43 percent said they had no plan at all to put in place green and social business practices, up from 20 percent two years ago
• A majority of survey respondents reported that having an environmental and social business strategy in place resulted in better customer satisfaction, better reputation, more efficiency and even increased market share.

National Recovery and Resilience Plans (NRRPs)

• Member states are exceeding the target set for initiatives geared towards a transition to a greener economy
• SMEs may benefit indirectly from infrastructure and sector-specific initiatives
• SMEs may benefit directly from initiatives intended to support individual companies in their transition.

Access to sustainable finance

• The world of finance is developing an unprecedented number of ESG products
• The number of SMEs involved is still limited, although there are examples of good practices
• Credit Guarantee Schemes, Basket Bonds, and insurance products have the potential to offer financing options for SMEs.

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The White Paper “Fostering sustainability In Small and Medium-sized Enterprises,” promoted by Generali and developed by SDA Bocconi – School of Management Sustainability Lab, examined the relationship between sustainability and SMEs in eight European countries (Austria, Czech Republic, France, Germany, Hungary, Italy, Spain, and Switzerland) in the three main areas of welfare, environment and community.

The research explored the main areas of action, the benefits and factors promoting the implementation of sustainability initiatives, as well as the barriers that hamper SMEs’ adoption of a sustainable behaviour.

In particular, the White Paper highlights that:

• SMEs are at the heart of the European economy. They account for nearly the total number of firms operating in the European Union and generate over half of total value added. SMEs are also key players in European and global value chains. For all these reasons, they are essential in the European sustainable transition
• Structured sustainability projects enable small and medium-sized enterprises to access certified supply chains and global markets, as well as dedicated funding and resources
• Although many European SMEs already put in place sustainability initiatives, especially in the areas of welfare, environment and community engagement, their approach to sustainability is still informal and not structured, with good space and margins for growth
• Education and capacity building, sustainable finance, policy framework, demand-side instruments, disclosure on materiality & assessment are the five key drivers to foster SMEs sustainable transition, concretely expressed in specific initiatives and tools
• It is essential to further develop the initiatives along the five key drivers, creating an “ecosystem” where policy makers, large companies, the financial system, academia and research are called to create public-private partnerships to support SMEs.

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