Enabling SMEs: Beyond Reporting, Toward Real Impact

Introduction: A Turning Point for SMEs

Europe's 26.1 million SMEs represent the backbone of the EU economy (European Commission SME Performance Review, 2025), yet they face mounting pressure to demonstrate sustainability credentials. The Voluntary Sustainability Reporting Standard for SMEs (VSME), officially adopted by the European Commission on July 30, 2025 (EC Press Release IP/25/1843), marks a watershed moment for smaller businesses striving to integrate sustainability and ESG commitments without the compliance burdens faced by larger firms under CSRD.

Developed by EFRAG and released in December 2024, VSME addresses a critical gap: while 51% of global businesses have existing sustainable procurement practices in place (Stanford Business School Survey, 2024), SMEs have historically struggled to meet the diverse, often conflicting reporting demands from buyers, regulators, and financial institutions. The new standard provides a unified framework that reduces duplication and enhances credibility. 

The Promise and Power of VSME

VSME provides a unified, modular framework specifically tailored to micro, small, and medium businesses (those with fewer than 250 employees). Offering Basic and Comprehensive modules, it covers emissions, labor practices, anti-corruption measures, and governance structures. The voluntary standard delivers measurable benefits:

• Creates a credible ESG communication platform: Standardised reporting enables consistent communication across value chains

• Reduces reporting duplication: One disclosure can serve multiple stakeholders, reducing administrative burden (European Commission Recommendation, 2025)

• Unlocks sustainability-linked financing: Access to green finance becomes more feasible with credible ESG data

• Supports resilient supply chains: 58% of global organisations now monitor suppliers' sustainability performance (PR Newswire, 2024), making VSME compliance increasingly valuable

Real-World Impact: Austria's Unified Approach

In Austria, the Chamber of Commerce collaborated with banks to enable SMEs to submit a single ESG disclosure for both procurement and finance purposes. This initiative has significantly boosted credibility while reducing paperwork, a model that demonstrates the practical efficiency gains possible with standardized reporting.

The Scale of the Challenge

Despite growing momentum, significant barriers persist. Current data reveals:

• 70% of European employees remain unaware of their companies' sustainable purchasing guidelines (Amazon Business Report, 2023)

• Only 31% of EU SMEs demonstrate high digital intensity, compared to 37% in Germany (European Commission Digital Economy Index, 2024)

• 85% of procurement teams report that sourcing sustainable suppliers hinders achievement of strategic goals (Amazon Business Report, 2024)

• While SME value added declined 0.2% in 2024, projections show a 1.6% rebound in 2025, largely driven by micro-SMEs (European Commission Annual Report on European SMEs, 2024/2025)

These statistics underscore why enablement, not just compliance, must be the focus.

Overcoming Persistent Barriers

Many SMEs lack resources and sustainability expertise, facing data gaps and manual reporting burdens. Progressive cities and regional authorities are bridging this divide through targeted interventions.

Barcelona's Supplier Enablement Program

Barcelona has established supplier workshops coupled with a shared sustainability helpdesk, providing SMEs with accessible training and phased reporting deadlines. Such local government support is essential for SME capacity building, offering practical resources that reduce adoption friction.

The Critical Role of Local Support

Regional and local authorities play a pivotal role in the VSME ecosystem. The European Commission's Technical Support Instrument (TSI) 2025 Flagship program specifically aims to help EU regional authorities design structural reforms that build administrative capacity for sustainability reporting implementation (European Commission, 2025).

Digital Transformation as a Catalyst for ESG Impact

Digital infrastructure is not optional, it's foundational for scalable SME sustainability. Current trends demonstrate this urgency:

• 73% of European SMEs now use cloud-based financial dashboards for real-time decision-making (Eurostat Digital Economy Survey, 2024)

• 60% of organisations plan to utilise generative AI to develop sustainable transformation strategies by 2026 (IDC Predictions, 2025)

• By 2027, 80% of IT companies will only source from suppliers meeting ESG goals (IDC Survey, 2024)

France's UGAP Digital Pilot

France's UGAP (Union des Groupements d'Achats Publics) piloted digital reporting tools with SMEs, prioritizing usability testing before full rollout. This approach reduced adoption hurdles and ensured the platform met real-world needs, a critical success factor that other procurement organizations should emulate.

EFRAG's Digital Ecosystem

In September 2025, EFRAG released comprehensive mappings of digital tools, platforms, and initiatives specifically designed to support VSME implementation. These resources, AI-translated into 16 European languages, are democratizing access to sustainability reporting capabilities (EFRAG Digital Tools Repository, 2025). 

Strategic Imperatives for Procurement Leaders

Procurement leaders must move beyond transactional compliance to strategic enablement:

1. Co-investment programs: Share the cost burden of sustainability improvements with strategic suppliers

2. Sustainability-linked financing: Partner with financial institutions to offer preferential terms for ESG-advancing SMEs

3. Recognition programs: Publicly celebrate supplier progress to incentivize incremental advancement

4. Phased requirements: Implement tiered expectations that allow SMEs to progress gradually 

The Business Case for Sustainable Procurement

The financial benefits of sustainable procurement are now well-documented:

• Companies with strong ESG credentials reduce costs by 5-10% and grow 10-20% more in value than competitors (McKinsey & Company, 2024)

• Sustainable procurement practices increase brand value by 15-30% (Greenly Institute, 2024)

• Companies practicing sustainable procurement achieve 20% higher customer satisfaction and 25% higher customer loyalty (Wifi Talents Research, 2024)

• 94% of Chief Procurement Officers report that their CEOs and senior leadership teams have taken keen interest in sustainable procurement practices (Supplier Day Case Study, 2024)

These metrics demonstrate that sustainability is not merely a compliance exercise but a competitive differentiator and value creator.

Embedding Supplier Diversity and Leadership

Supplier diversity enhances supply chain resilience and delivers measurable social value. Research shows that: 

• Sustainable procurement increases supplier diversity by 12% and reduces supply chain risk by 25% (Industry Research Report, 2024)

• 81% of procurement teams now have mandates to buy only from sellers following sustainable practices (Amazon Business, 2024)

• Diverse supplier engagement, including women-owned, minority-owned, or disadvantaged SMEs, fosters innovation and risk mitigation

Developing Leadership Capacity

Leadership skills in sustainability change management are critical. 61% of procurement professionals identify supplier relationship management and engagement as the most valued skill developed over the past two years (Procurement Professionals Survey, 2024). Procurement teams must be equipped not just with technical knowledge but with change management capabilities to drive deep ESG integration across supply bases.

From Reporting to Real Impact: The Sustainable Procurement Maturity Tool

The SPMT framework provides organisations with a structured roadmap to ESG through five progressive levels.

Currently, 45% of public sector organizations include sustainability criteria in procurement policies (Spend Matters Report, 2023), a figure expected to grow significantly as VSME adoption accelerates.

Global Context: A Converging Sustainability Landscape

While VSME establishes Europe's benchmark, similar frameworks are emerging globally:

• Asia-Pacific regions are developing comparable SME ESG reporting standards

• North America is experiencing increased legislative activity around supply chain sustainability

• Global ESG assets are projected to surpass $50 trillion by 2025, assuming 15% annual growth (Bloomberg Intelligence, 2024)

However, awareness gaps remain troubling: 37% of North American procurement leaders are not aware of sustainability legislation impacting their businesses, and 40% of procurement leaders globally continue to ignore sustainability imperatives (Sedex Survey, 2024).

The Road Ahead: Building the VSME Ecosystem

The European Commission envisions a comprehensive "VSME ecosystem" launching between 2025-2026, comprising: 

• Digital reporting tools and platforms: Accessible technology solutions for data collection and disclosure

• Training resources: Multilingual materials supporting capacity building

• Peer learning forums: Communities of practice enabling knowledge sharing

• Technical support programs: Targeted assistance for regional and local authorities (European Commission Recommendation Annex, 2025)

This ecosystem approach recognizes that standards alone are insufficient, systemic enablement infrastructure is essential for widespread adoption and meaningful impact.

Critical Success Factors

For VSME to achieve its transformative potential, several conditions must be met:

1. Large company adoption: The Commission encourages large companies and financial institutions to base sustainability information requests on VSME, creating market pull (EC Press Release, 2025)

2. Financial institution alignment: Banks and investors must recognize VSME disclosures in lending and investment decisions

3. Procurement policy integration: Public and private procurement must embed VSME criteria into supplier qualification

4. Continuous improvement support: Beyond initial reporting, SMEs need ongoing guidance for performance enhancement

Looking Forward: Key Predictions

Based on current trends, the sustainability procurement landscape will likely evolve as follows:

• By 2026, 70% of technology procurement leaders will have environmental-sustainability-aligned performance objectives (Gartner, 2024)

• By 2027, 75% of customers will expect CO2 emissions data for all lifecycle stages of IT assets (IDC, 2024)

• Collaborative AI solutions for sustainable decision-making will drive a 15% decrease in resource consumption (IDC, 2025)

• Regulatory requirements and ESG factors will influence strategic sourcing decisions for 66% of procurement teams over the next 3-5 years (KPMG Future of Procurement Survey, 2024) 

Conclusion: Unleashing SME Potential Through Practical Enablement

Europe's 26.1 million SMEs are vital to the continent's economy and supply chains. While VSME provides an essential reporting foundation, meaningful transformation requires comprehensive enablement through:

• Digital infrastructure: Accessible, user-friendly platforms reducing reporting burden

• Targeted training: Practical skills development for SME staff

• Inclusive sourcing practices: Procurement strategies that support diverse supplier bases

• Maturity-based assessment: Frameworks recognizing incremental progress

• Financial support mechanisms: Co-investment and sustainability-linked financing

This multi-faceted approach builds resilient, innovative, and competitive supply chains ready to meet evolving regulatory and market challenges while contributing to measurable environmental and social progress. 

The opportunity is clear: procurement professionals who lead SME sustainability transformation effectively will not only ensure regulatory compliance but unlock competitive advantage, strengthen supply chain resilience, and drive meaningful impact toward Europe's sustainability objectives.

Fanny Ganti - Transformative Procurement Change® - Nice - France - October 2025