From Preparation to Progress: SME Disclosure Data Insights 2026
SMEs account for roughly 90% of all global businesses and 60% of global business-related emissions. However, environmental reporting and regulation often focus on larger businesses. As a result, capital markets and purchasers often lack sufficient insight into the risks, opportunities, and impacts across their wider portfolios and supply chains.
To help SMEs chart a course to a net-zero economy and meet the growing market demand for climate and nature-related data, CDP launched the SME questionnaire in 2024. The questionnaire offers a more streamlined structure and a tailored scoring approach designed to help SMEs address their environmental impacts.
Almost 11,000 companies made disclosures through CDP’s dedicated SME questionnaire in 2025.
Using this data, the findings below demonstrate the progress SMEs have made and the opportunity to build on this momentum.
Understanding SME performance and action
Method of assessment
CDP has selected a representative sample of indicators to assess SME Disclosers – from governance to transition planning – based on emerging best practice and market expectations. Companies are assessed on whether they meet the basic requirements of an indicator or its enhanced methodology, which represents more advanced progress and processes (see the full criteria).
Over 95% of SMEs have made progress against at least one indicator, suggesting some level of engagement with sustainability concerns. And nearly 40% have demonstrated that they are meeting most – or all – of the basic indicators.
While this is encouraging, the outlook is less positive at more advanced levels of the methodology. Only a fraction of SMEs demonstrate performance across all enhanced indicators, and less than 20% of SMEs meet “most” of the enhanced indicators.
The challenges become clearer when looking at the specific indicators:
SMEs are making significant progress to establish processes for governance and risk management, which indicates they are building strong foundations to drive sustainable behaviour and action throughout their business activities.
Risk and opportunity identification is also improving which suggests that SMEs are also increasingly grappling with the realities of global environmental change.
However, while good progress is being made across most indicators, just 20% of SMEs have set critical emissions reduction targets, and only 32% have emissions reduction initiatives in place. Without improvement, SMEs won’t be able to realise their sustainability ambitions and effectively manage environmental impacts.
Building on solid foundations: where SMEs need support
Despite the lack of a globally accepted and standardized framework for SME transition planning, many are already establishing transition plans. Over half (63%) of disclosing SMEs indicated that they either have a transition plan or will have one within two years.
While only 15% of SMEs currently have a transition plan in place, supporting indicators such as governance, risk processes, and stakeholder management demonstrate promising progress.
This progress has been most pronounced in areas such as governance and processes. While these provide a foundation for sustainable behaviour, they don’t inherently lead to action. Conversely, indicators such as target setting and emissions reduction initiatives, that are essential to sustainable practices, lag the furthest behind.
These action-oriented indicators are also some of the most complex elements of sustainability strategy to address. This suggests that greater capacity building and financial support for SMEs could be used to promote greater action. CDP and HSBC’s 2024 report, Strengthening the Chain, found that suppliers were 52% more likely to reduce their annual emissions when their buyers offered financial incentives compared to when only training was provided.
SMEs in Manufacturing, Materials, Transportation Services, and Power Generation are demonstrating the strongest progress toward more sustainable practices. This suggests that SMEs within these high impact sectors – which typically report high levels of emissions and nature-based dependencies – are adopting more sustainable practices which are critical for the global transition.
On the other hand, the Retail and Services sectors are falling behind. Given their importance within the value chains of other high-impact sectors, it is imperative that SMEs in these areas take greater measures to limit environmental impacts.
Performance by region
Europe as a region is making strong progress – with SMEs from Finland, France, and Spain leading the way. This regional performance is likely driven by the Corporate Sustainability Reporting Directive (CSRD) and the voluntary standard for SMEs (VSME). The EU's 2026 Omnibus reforms – which removed mandatory reporting for SMEs – instead place greater emphasis on standardized voluntary disclosure.
CDP remains well placed to support European SMEs navigating this shifting landscape, given the significant alignment between CDP's questionnaire and the ESRS/VSME frameworks.
Meanwhile, Singapore and the United States of America are making the least progress, with most SMEs meeting none or only a few of the indicators.
Who are CDP’s SME Disclosers?
Organizations with fewer than 1,000 total employees or an annual revenue of less than US$250m are eligible to disclose through the SME questionnaire, but can still opt in to the full corporate questionnaire. You can find a full explanation of these recommendations in our SME Questionnaire Overview.
The analysis in this insight report covers the 8,017 SMEs that responded through the SME questionnaire only. A further 2,886 SMEs completed the full corporate questionnaire.
Conclusion
The data indicates that SMEs are stepping up and playing their part in the transition to a more sustainable future. Most SMEs assessed demonstrate good progress by shifting business structures and processes to more sustainable ones. Meanwhile, many have begun implementing actions to reduce their impact.
Greater efforts to establish robust targets and associated emissions reduction initiatives are critical to translating ambition into action. However, we must also recognise that these activities pose challenges to SMEs. To support change, effective support streams – in the form of capacity building, training, or financial support – must be available to companies that need them.