In an era where sustainable development is gaining prominence in both business and society, ESG (Environmental, Social, Governance) has become a critical component of corporate strategy, including for small and medium-sized enterprises (SMEs). A study conducted by GS1 Poland in collaboration with the Social Economy Support Center (OWES) reveals that Polish SMEs still exhibit a low level of awareness regarding ESG requirements, which could impact their ability to collaborate with larger companies.

Low ESG Awareness and CSRD Directive

The study indicates that 62% of SMEs are unfamiliar with current ESG regulations, and 49% are unaware of their obligations under the CSRD (Corporate Sustainability Reporting Directive). Starting in 2024, the CSRD will require companies to report on their sustainability efforts, such as carbon emissions and circular economy initiatives. Furthermore, 80.7% of SMEs are unaware of digital product passports (DPP), which will become mandatory for products like batteries and textiles by 2026. These passports aim to enhance transparency and provide accessible information about products in a circular economy framework.

The Role of SMEs in the Value Chain

SMEs account for 99% of all companies in Poland and contribute approximately 45% of the country's GDP. As key suppliers to large corporations, SMEs must acquire the knowledge and resources needed to meet ESG requirements, enabling their business partners to fulfill reporting obligations. Without the active participation of SMEs in the green transition, large companies may face challenges in implementing their sustainability plans.

Challenges and Educational Needs

The GS1 Poland study highlights significant challenges: 87.4% of surveyed SMEs do not calculate their carbon footprint, and 91.2% are unaware of the scope of such measurements. These gaps pose serious obstacles under regulations like the CSRD. Moreover, 88.1% of SMEs have never attended ESG-related training, and only 36.2% express willingness to invest in assistance for implementing these standards.

Despite these hurdles, 63.6% of SMEs recognize the need to deepen their understanding of ESG. Many are interested in support for grant applications, training, and legal and expert advice. However, financial constraints limit most companies to budgets of up to 1,000 PLN for ESG-related initiatives, and 62% seek funding to develop their ESG competencies.

Collaboration as the Key to Transformation

Large companies must actively support smaller business partners by providing knowledge and tools to facilitate ESG implementation. This approach will soon transition from a "nice-to-have" to a necessity. With the introduction of the Corporate Due Diligence Directive (CSDDD), EU-based companies with over 1,000 employees and global turnover exceeding €450 million, as well as non-EU companies with similar turnover in the EU market, will be required to mitigate their environmental and human rights impacts, including within their supply chains.

Conclusion: The Need for Support and Education

The study underscores a significant knowledge and preparedness gap among SMEs regarding ESG implementation. This low level of awareness about new regulations and standards poses challenges for both SMEs and their larger contractors, who will also feel the effects of their smaller partners’ lack of readiness. As regulatory demands and market expectations increasingly emphasize sustainability, SMEs must invest in acquiring the knowledge and tools needed to align with ESG requirements.

The full report is available here: GS1 Poland Report.

In an article published on (https://fleetmobility.pl/), we discussed the decarbonization of transport—a comprehensive effort to reduce the carbon footprint of vehicles, from individual cars to entire fleets. This initiative represents just one crucial element of a company’s broader strategy to address challenges such as climate change, social inequality, and the management of natural resources. Within a sustainability strategy, implementing actions aligned with climate policy has become a top priority.

Operating within the European Union means businesses must evaluate not only their financial profits but also how those profits are generated. This includes considering ESG (Environmental, Social, Governance) factors and their impact on company value. ESG-focused initiatives not only help businesses tackle sustainability challenges but also improve operational efficiency and reputation. As ESG advisory becomes a central element of corporate strategies, it addresses consumer and investor expectations while ensuring compliance with regulatory requirements.

Regulatory Context

The EU has established an ambitious climate policy aiming for climate neutrality by 2050. Legally binding commitments require member states to reduce net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels. Compliance is critical, with decarbonization plans playing a key role in avoiding penalties.

In recent years, the EU has introduced regulations to enhance transparency and accountability in sustainability, including:

• CSRD (Corporate Sustainability Reporting Directive): Expands non-financial reporting obligations to a growing number of companies, covering both financial and sustainability impacts.
• ESRS (European Sustainability Reporting Standards): Provides detailed guidelines for CSRD-compliant reporting, posing challenges, especially for smaller firms.
• EU Taxonomy: Defines environmentally sustainable investments, influencing access to financing.

EU Funding for Sustainability

The EU’s 2021–2027 budget, alongside the NextGenerationEU recovery instrument, totals €2.018 trillion. This historic funding package addresses the economic and social impacts of COVID-19 while supporting a transition to a greener, more sustainable Europe. ESG advisory can help businesses access these funds by aligning actions with sustainability requirements.

Funding priorities include:

• Research and innovation
• Fair climate and digital transitions
• Preparation for future crises

Substantial financial support from the EU enhances corporate competitiveness on European markets by driving social and environmental responsibility.

External Pressure and Stakeholder Expectations

Businesses face increasing pressure from stakeholders demanding responsible actions toward society and the environment. Key groups include:

• Investors: ESG performance increasingly influences investment decisions, with insufficient transparency or actions risking withdrawal of capital.
• Customers: Particularly younger generations prioritize ethical business practices, rewarding sustainable companies with loyalty.
• Business Partners: Expect collaboration with socially responsible companies adhering to ethical and sustainable standards.

ESG advisory has become indispensable for companies seeking to navigate sustainability challenges and regulatory demands, such as CSRD and ESRS. Organizations that invest in climate policy, social responsibility, and transparent governance not only reduce regulatory risks but also gain competitive advantages. Amid growing pressure from investors, customers, business partners, and employees, actions like transport decarbonization are pivotal to long-term success.