SMEs Lagged Behind on EU & UK Sustainability Reporting Readiness

A new survey revealed that most UK small and medium-sized enterprises (SMEs) were unprepared for upcoming EU and UK sustainability reporting rules. Despite showing genuine ambition to decarbonise, many lacked the knowledge, resources, and capital needed to meet disclosure requirements.

Polling of more than 1,000 SME leaders showed that almost two-thirds were unfamiliar with Scope 1, 2, and 3 greenhouse gas emissions-a fundamental part of the GHG Protocol. This gap posed challenges as the framework underpins the forthcoming UK Sustainability Reporting Standards (SRS) and Europe’s Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD).

Only 13% of SMEs had made public net-zero commitments for 2050 or sooner, supported by formal action plans. While unchanged from the previous year, this figure represented a threefold increase compared to 2023. Extrapolated across the UK, this meant around 715,000 SMEs had taken measurable steps toward net-zero.

With mandatory reporting frameworks set to roll out in 2026, experts stressed that urgent support from government, industry, and financial partners was critical. Without enhanced guidance and access to resources, SMEs risked being left behind in the global transition to transparent and accountable sustainability reporting.

Two-thirds SME unfamiliarity with Scope 1/2/3 emissions concepts represents a substantial capability gap ahead of 2026 mandatory reporting expansion. Even with Omnibus threshold increases, SMEs face growing pressure from larger customers to provide value-chain emissions data - the practical reporting burden on SMEs extends beyond direct regulatory obligation.

The 13 percent net-zero-committed SME share (roughly 715,000 firms extrapolated across the UK) is a threefold increase from 2023 but still leaves the majority unprepared. Financial-institution engagement, government-backed capacity-building programmes and simplified reporting frameworks like VSME will all need to combine to close the readiness gap at scale.

For SMEs preparing sustainability disclosures, larger corporates managing supplier engagement, and financial institutions serving SME sustainable-finance markets, Cognitud's ESG strategy and transformation, sustainability due diligence and impact assessment teams help clients evaluate emissions-baselining and disclosure preparation, structure supplier-engagement frameworks that respect SME capability while supporting value-chain data needs, and prepare disclosures aligned with UK SRS, CSRD, ISSB and VSME expectations.