95% of SMEs report environmental progress, but action gap remains

Vast majority of disclosing SMEs say they are making environmental progress

A recent survey of more than 11,000 SMEs found that over 95% of disclosing businesses have made progress against at least one key environmental indicator.

The new research, From Preparation to Progress: SME Disclosure Data Insights 2026, released by CDP (Climate Disclosure Project), found that just under 40% of SMEs meet most, or all, of the basic indicators assessed. It marks a positive step for the sector: with small and medium-sized businesses accounting for approximately 90% of businesses worldwide and 60% of global business-related emissions, their ability to decarbonise will be crucial[i].

Simon Fischweicher, CDP Chief Customer Success Officer, said:

‍“SMEs are indispensable to the transition to a net-zero, earth-positive economy. Our data shows that many are already doing the hard work of putting the foundations in place by understanding environmental risks, strengthening governance and preparing for transition. But foundations alone will not cut emissions”[ii].

Action not matching ambition

The findings suggest that many SMEs are still in the early stages of their sustainability journey. While environmental awareness and disclosure are increasing, relatively few businesses have translated this into formal emissions reduction commitments. Just 20% reported having an emissions reduction target in place, while only 32% have implemented emissions reduction initiatives. Similarly, while 63% say they either have a transition plan or expect to develop one within the next two years, only 15% already have a plan in place.

Geography also appears to play a role. European SMEs were among the strongest performers, with Spain, France and Sweden leading the countries assessed. By contrast, SMEs in Singapore and the United States show the least progress, with most meeting none or only a few of the indicators assessed. Europe’s stronger performance comes amid a rapidly evolving sustainability reporting landscape, with growing emphasis on standardised voluntary disclosures for SMEs (VSME).

CDP note that as transition planning becomes more widespread, this is expected to support more SMEs in setting emissions reduction targets and putting initiatives into action, helping close the gap between preparation and action.

Fischweicher adds: “The next step is helping SMEs turn preparation into progress: setting and achieving credible targets, investing in emissions reduction initiatives and embedding action throughout their businesses. Buyers, financial institutions and policymakers have an important role to play by making finance, incentives and practical support more accessible; helping SMEs strengthen their resilience and competitiveness while accelerating the transition.”[iii]

SME Climate Hub launched to support small businesses to go green

The findings help explain why practical support tools are becoming increasingly important for SMEs. While many businesses recognise the need for climate action, limited time, expertise and resources often present significant barriers to implementation. To help address this, earlier this year the SME Climate Hub, in partnership with Giki and supported by the UK Government’s Department for Energy Security and Net Zero, launched the Climate Action Planner. It is designed to help firms take practical steps in decarbonising by providing their own tailored climate plan.

Small businesses often lack the time or resources to develop detailed climate action plans. The SME Climate Action Hub hopes to change that by providing a simple, guided process that produces a customised action plan in around 60 minutes. The Climate Action Planner asks users to answer a short set of questions about their business before providing them with a step-by-step roadmap. The Climate Action Planner draws on a database of more than 750 actions, to provide users with a plan that is tailored to their industry and business goals, rather than a generic, one-size-fits-all approach.

At the time Pamela Jouven, Director of the SME Climate Hub, said: "For many small business owners, climate action can feel complicated and expensive. This tool focuses on what is practical - helping businesses lower bills and take action straight away. This isn't just about going green - it's about staying competitive. By cutting energy waste and improving efficiency, small businesses can reduce costs, protect themselves from volatile energy prices and keep up with growing expectations from customers and supply chains."[iv]