Nearly all small and medium-sized businesses reporting environmental data now show progress on basic sustainability practices, yet only one in five has set concrete emissions reduction targets, according to fresh findings from CDP.
The disclosure platform’s new SME Data Insights 2026 report examines almost 11,000 companies using 2025 reporting data. The timing matters because SMEs represent roughly 90 percent of global businesses and contribute around 60 percent of business-related emissions. Their decarbonisation trajectory directly shapes whether corporate climate pledges succeed.
While 95 percent of assessed firms advanced on at least one environmental indicator, meaningful implementation gaps persist. Just 20 percent have emissions targets in place, and 32 percent run active reduction initiatives.
Meanwhile, appetite for formal transition planning continues to grow. About 63 percent of SMEs either hold a climate transition plan or intend to create one within two years. However, only 15 percent currently operate with one. The pattern suggests companies strengthen governance and risk management before committing capital to operational changes.
European SMEs lead the field. Spain, France and Sweden posted some of the strongest scores among countries evaluated, supported by emerging standardised reporting frameworks like the Voluntary Sustainability Reporting Standard for SMEs. In contrast, SMEs in Singapore and the United States recorded the weakest performance, with most meeting few or none of CDP’s basic indicators.
Industry differences also stand out. Manufacturing, materials, transportation services and power generation show the strongest progress against environmental indicators. Retail and services companies lag, complicating efforts by large buyers seeking full value chain emissions cuts.
Financial support could shift the trajectory. Prior CDP research conducted with HSBC found suppliers become 52 percent more likely to cut annual emissions when buyers offer financial incentives rather than training alone. As a result, procurement strategies and sustainability-linked financing may prove decisive in converting preparation into measurable reductions.
CDP Chief Customer Success Officer Simon Fischweicher emphasised that foundations alone cannot cut emissions. The path forward requires buyers, financial institutions, and policymakers to make finance and practical support more accessible to smaller firms. Closing the gap between disclosure and implementation now emerges as the central challenge for global decarbonisation.
