Sustainability is winning over SMEs too, but regulations…

Sustainability among European SMEs has become a structural element of the way business is conducted. But the new White Paper Fostering Sustainability in Small and Medium-Sized Enterprises, produced by Manlio De Silvio, Francesco Perrini and Stefano Pogutz for the Generali SME EnterPRIZE project, also shows that the transition risks stalling halfway through.

On the one hand, a growing number of companies are gaining competitive, financial, and operational advantages from sustainable strategies. On the other, a very large share of SMEs remains excluded, held back less by a lack of financial resources than by a regulatory and bureaucratic environment perceived as overly complex.

In the past, the main obstacle to sustainability was identified as a shortage of financial, managerial, or time-related resources. Today, however, the bottleneck is institutional: regulations that are difficult to interpret, unclear incentives, and excessive administrative burdens. Meanwhile, the business case for sustainability continues to strengthen. Companies investing in this area report tangible benefits: greater competitiveness, easier access to credit, improved insurance conditions, and a stronger ability to anticipate regulatory changes.

Measuring momentum

The research fits into what has now become a central debate for the European economy: can small and medium-sized enterprises truly become protagonists of the sustainable transition? And what conditions are needed for this transformation to consolidate over time?

In recent years, sustainability has progressively entered the business strategies of European SMEs, driven by regulatory pressure, customer demands, investor expectations, and growing attention to environmental and social issues. Yet the overall picture has remained fragmented. Many analyses have focused on large corporations, while SMEs — which form the backbone of Europe’s productive system — have been observed less systematically.

The White Paper seeks to fill this gap by addressing several questions:

• Is the spread of sustainability strategies among SMEs continuing to grow, or has it reached a plateau?
• What are currently the main obstacles to the transition?
• Do companies investing in sustainability actually obtain measurable economic benefits?
• How much is climate change influencing risk perception and protection strategies among European small businesses?

Changing barriers

The fifth edition of the White Paper is based on a survey conducted between January and February 2026 on a sample of 1,100 SMEs across eleven European countries. It is one of the largest longitudinal studies dedicated to sustainability among small and medium-sized enterprises on the continent.

The findings first of all show remarkable stability in sustainable commitment. In 2026, 41% of companies say they have already implemented, or are implementing, a sustainability strategy: seven percentage points more than in 2020. However, this figure has fluctuated between 41% and 44% for four years now, suggesting a possible slowdown in growth. At the same time, 38% of European SMEs still fall into the “laggard” category — companies with no sustainability strategy and no intention of adopting one — while a further 15% remain undecided.

One of the most significant aspects concerns the shift in perceived barriers. For the first time since the launch of the research, institutional obstacles outweigh financial ones. Fifty-six percent of companies cite bureaucratic and regulatory complexity as the main barrier to sustainability; the same share complains about the lack of public incentives, while 53% point to the absence of a clear legislative framework. By contrast, the shortage of financial resources weighs less heavily than in the past.

A narrative that still fails to resonate

The research also documents with great clarity the benefits achieved by companies that have invested in sustainability. Sixty-eight percent report significant competitive advantages, up 18 percentage points from 2022. Sixty-two percent report improved insurance conditions, while 57% say they enjoy easier access to credit. On the operational side, 81% report improvements in environmental impact, 71% greater efficiency and productivity, and 70% stronger risk management. In addition, 62% say they are now better able to anticipate European regulations.

Despite this evidence, nearly half of lagging companies still fail to grasp the economic rationale behind sustainability. According to the authors, the problem is not the lack of evidence but a deficit in the narrative, which still struggles to present concrete and accessible examples for SMEs. This is also why the study discussed here is particularly important. It does not simply provide a snapshot of sustainability among European SMEs: it also tells the story of the tangible benefits achieved by companies that have already embarked on this path, offering undecided and lagging firms the narrative tools needed to understand the real value of the transition. In this sense, the study aligns with the logic of the Generali SME EnterPRIZE project, which, through awards given to dozens of SMEs distinguished by the sustainability of their actions — the so-called Sustainability Heroes — seeks to make best practices visible, encourage entrepreneurs to speak to their peers, and transform virtuous examples into replicable models.

Finally, the White Paper devotes considerable attention to climate risk. Awareness of the threats linked to extreme events rose from 50% to 55% in just one year. Yet the majority of European SMEs remain poorly protected: 59% lack insurance coverage against extreme climate events, 74% are uninsured against business interruption, and 88% do not use innovative risk-transfer instruments.

At the same time, signs of change are emerging. Traditional insurance coverage against extreme events rose from 31% to 41% in a single year, while peer-to-peer risk-sharing platforms, although still marginal, tripled their diffusion. According to the research, this growth is being driven both by direct experience of recent catastrophic events — floods in Italy and Spain or Storm Boris in Central and Eastern Europe — and by increasing pressure from the financial and banking system.

Beyond simplification

The research suggests that sustainability among European SMEs has now moved beyond its pioneering phase. The challenge now is to create the conditions for the transition to involve the large block of companies that remain stalled or undecided.

Simplifying reporting requirements is not enough. What is needed are rules better proportioned to the size of SMEs, more accessible incentives, and a concrete reduction in day-to-day administrative burdens. Commitments to simplification must translate into relief that companies can tangibly perceive.

The financial sector, too, is being called on to evolve its role. Banks and insurance companies must become partners in the transition, helping SMEs understand climate risks, adopt appropriate protection instruments, and recognize the economic benefits of sustainable strategies. So far, however, SMEs continue to perceive them mainly as product vendors.

For managers, the White Paper confirms that sustainability concerns operational efficiency, access to capital, and the ability to manage uncertainty. Companies capable of integrating these aspects into their strategies may find themselves in a position of advantage in an increasingly unstable economic environment.

Manlio De Silvio, Francesco Perrini, Stefano Pogutz. Fostering Sustainability in Small and Medium-Sized Enterprises, White Paper for Generali SME EnterPRIZE.