Majority of Small to Medium Enterprises Prefer Voluntary Sustainability Reporting, ESG Study Reveals (62%)
The Shifting Landscape of Sustainability in Germany's Upscale SME Sector
A growing number of medium-sized enterprises (SMEs) in Germany are recognising the strategic value of Environmental, Social, and Governance (ESG) criteria, as evidenced by a recent study. These companies are increasingly viewing ESG implementation as a means to enhance business resilience, competitiveness, and growth.
According to the B2B study "ESG and Sustainability in the SME Sector 2025," conducted by Grant Thornton AG Wirtschaftsprüfungsgesellschaft, 93% of surveyed SMEs see sustainability as either essential or rather important. Among these, one-third identify cost savings, reputation gains, or higher brand awareness as significant opportunities in the area of sustainability.
The study, which polled around 580 decision-makers in medium-sized companies in Germany, found that efficiency and cost savings (65%) are the primary drivers for sustainability efforts, followed by customers (54%) and reputation (54%). The focus areas for these companies include climate change and decarbonization, supply chain transparency, and biodiversity preservation, among others.
While many SMEs see the benefits of ESG implementation, challenges remain. The complexity of ESG criteria and standards (44%) and the lack of clear regulatory guidelines (39%) are the biggest barriers to implementing ESG projects. Furthermore, 36% of respondents report a lack of internal ESG expertise and specialists, while 41% have more than four employees dedicated to sustainability issues.
Dr. Claudia Schrimpf-Dörges, partner at Grant Thornton Germany and head of ESG, notes that many companies are overwhelmed by the regulations, structure, and tools related to ESG and often reach their limits with internal resources. She emphasises the importance of continuing to build expertise with external support to be better prepared for the future.
The study also highlighted the growing role of ESG at the C-level, with 48% of companies having the CEO responsible for ESG, 38% having a Chief Sustainability Officer (CSO), and 13% having the CFO overseeing it. Efficient sustainability reporting helps companies identify optimization opportunities and address risks to their business model in a timely manner.
In the next five years, 27% of respondents aim to significantly increase their ESG ambitions. The study also revealed that 34% of surveyed SMEs are in the "Base Case" stage regarding their sustainability ambitions, while 18% are "Front Runners."
In conclusion, the German upscale SME sector is proactively integrating ESG criteria into their corporate strategies, driven by regulatory mandates, market pressures, and opportunities for funding and competitive advantage. They recognise ESG as a vehicle for transformation, balancing the challenges of higher compliance costs and complexity against the benefits of innovation, resilience, and access to capital.
[1] Study: "ESG and Sustainability in the SME Sector 2025" [2] Corporate Sustainability Reporting Directive (CSRD) [3] Corporate Sustainability Due Diligence Directive (CSDDD) [4] EU and European Investment Bank’s (EIB) flexible guarantees to finance green and SME projects
- The strategic value of Environmental, Social, and Governance (ESG) criteria in Germany's upscale SME sector is being recognized, with 93% of surveyed SMEs seeing sustainability as crucial or rather important.
- Technology plays a significant role in sustainability efforts of these SMEs, as focus areas include climate change and decarbonization, supply chain transparency, and biodiversity preservation.
- Financial institutions, such as the European Investment Bank (EIB), offer flexible guarantees to help finance green and SME projects, further illustrating the intersection of finance, business, and environmental-science in the pursuit of sustainability.
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