Small and medium-sized enterprises (SMEs) are integrating sustainability into their growth plans. However, a majority have not accessed green financing to support their efforts.
According to a new study from Sage and the International Chamber of Commerce (ICC), 70% of SMEs view sustainability as a key goal for their business, yet only 3% have accessed green finance—leaving an estimated $789 billion in untapped financing globally.
The report, SME Sustainable Finance Stocktake: Turning Ambition into Action, found that digital reporting tools distinguish SMEs that secure green financing from those that do not.
For example, medium-sized enterprises with more than 50 employees, particularly those in manufacturing or transportation, are more likely to have digital reporting systems, apply for green financing, and successfully obtain it.
As digital reporting tools become more accessible, SMEs focused on sustainability—whether to reflect their values or comply with ESG regulations—should consider investing in tools that simplify and improve their chances of securing green financing.
The Reporting Barrier Is a Financing Trap
Sage and the ICC surveyed 8,250 SMEs across 17 global markets to understand their views on sustainable finance and what prevented them from applying for green financing.
More than 60% of respondents claimed a lack of quality data and reporting tools held them back from engaging in formal sustainability reporting, which financial institutions require to assess green finance applications and award funding on favorable terms.
It’s a significant obstacle, given the size of investments SMEs need to make for eco-friendly packaging or low-carbon product lines.
It also introduces a financing trap: SMEs struggle to report the data needed to secure green financing, yet without that financing, they cannot invest in energy-efficient machinery or fleets that lower long-term costs and unlock incentives or tax breaks.
This example helps illustrate why nearly 30% of respondents told Sage and the ICC they remain interested in applying for green financing, while only 3% actually apply.
Elisa Moscolin, executive vice president of sustainability and foundation at Sage, said, “[SMEs] are on the frontline of climate action, but too many are still locked out of the finance they need to grow sustainably. The barrier isn’t intent; it’s access to the tools that can help them scale their businesses while building resilience.”
How Digital Tools Make a Difference
As digital sustainability and ESG tools proliferate, SMEs may find digital reporting more affordable. Low-cost carbon-tracking software and streamlined reporting templates are becoming more accessible for SMEs, a key step for securing green financing.
According to the Sage–ICC report, SMEs that adopt digital accounting, e-invoicing, and AI-powered carbon-tracking tools can leverage sustainability disclosures most effectively.
By automating data collection and providing clearer visibility into emissions and resource use, these firms are 2.4 times more likely to have formal reporting systems and 1.6 times more likely to apply for green finance than those without such tools.
Mature reporting systems that capture and analyze emissions data, invoices, and operational metrics remove the key barrier to applying for untapped green financing.
Lenders, meanwhile, value transparent and verifiable data.
Digital accounting combined with AI-driven reporting lowers SMEs’ risk profile for financial institutions. SMEs that can produce accurate information quickly gain a clearer pathway to capital for low-carbon investments and sustainable growth.
What This Means for ERP Insiders
Sustainability is no longer a peripheral concern. ESG reporting has evolved from a “nice-to-have” into a mandatory expectation across multiple industries and geographies. Companies that integrate ESG metrics into product development, supply chains, and operations reduce regulatory risk, while creating a platform for sustainable growth.
Digital and AI tools are strategic enablers. Organizations that capture sustainability data gain greater insight into their operational risks, supply chain gaps, and resource inefficiencies. This insight allows business leaders to better position their companies for sustainable growth based on credible information from across their organization.
Digital ESG reporting provides a gateway to capital. Companies with accurate ESG data provide lenders and investors the transparency they need for green investments. Green financing allows SMEs to invest in low-emissions initiatives or new products and processes, unlocking savings and incentives that fuel sustainable, long-term growth.
