What Happens When SMEs Ignore Decarbonisation?

Micro, small and medium enterprises (SMEs) represent 99% of all businesses in Europe and two-thirds of total private sector employment, yet most of these enterprises remain without a structured plan for reducing their greenhouse gas emissions.

Standing still now comes at a cost — including higher energy bills, tougher financing, exclusion from tenders, and a growing reputational gap. Since SMEs form the backbone of supply chains, inaction doesn’t just put them at risk — it weakens the corporates that depend on them.

When SMEs stall on decarbonisation, supply chains stall with them. And when supply chains stall, entire industries lose credibility. Therefore, understanding what is at stake — and what practical steps SMEs can take today — is critical for resilience and competitiveness.

Why sustainability still matters

Political winds are shifting. Across Europe, right-wing parties are gaining ground, often campaigning against perceived “green overreach.” In the United States, the Trump administration has already signalled a reversal of many climate and sustainability initiatives. Even within the EU, once a global leader on climate policy, momentum has slowed.

For many SMEs, this creates confusion. If politics is turning away from sustainability, does it still make sense to invest? The answer is yes — but only if we see sustainability for what it really is: the capacity to endure over the long term.

Companies that dismiss it as a passing fashion risk missing the point: while labels may change, the underlying drivers remain. Energy efficiency, risk management, and resource optimisation are not political slogans; they are business fundamentals.

Why SMEs can’t afford inaction

While political headwinds may change the language, they aren’t going to change direction. Pressure to decarbonise now comes from all sides — clients, financiers, and the market itself. Companies that anticipate and manage these risks will continue to be rewarded, regardless of political trends.

This dynamic plays out most clearly in supply chains. With the Corporate Sustainability Reporting Directive (CSRD), large companies must disclose material impacts across their value chains. Under the recent Omnibus simplification proposal, this obligation is tempered by a so-called “value-chain cap”, limiting how far reporting companies can demand data from upstream and downstream partners.

While this adjustment may reduce the immediate burden on smaller firms, it does not eliminate it. SMEs remain central to corporate disclosures, and many will still be asked to provide emissions or energy data, particularly if they are tier-1 or tier-2 suppliers. Over time, these expectations are likely to deepen — meaning SMEs that delay action risk exclusion from procurement processes.

Finance is the second driver. Banks and investors are under pressure to align portfolios with the EU Taxonomy and Sustainable Finance Disclosure Regulation (SFDR). This translates into greater scrutiny of borrowers’ climate performance, and for SMEs, the absence of a decarbonisation plan may soon mean higher interest rates, restricted access to credit, or even exclusion from sustainability-linked financing.

The market itself is the third driver. Buyers, whether consumers or B2B clients, are increasingly choosing products and services with credible sustainability credentials. Reputation now plays a key role not only in attracting customers but also in retaining talent and securing partnerships.

Despite shifting political rhetoric, evidence shows that younger generations — both as consumers and employees — place greater value on climate and social responsibility. For SMEs, that means the demand for credible action will only intensify.

Taken together, these pressures form a reinforcing loop: supply chain requirements drive data requests, which influence financing conditions, which in turn shape market perception. Inaction by SMEs is therefore not a neutral choice: it is a direct risk to revenue, cost of capital, and competitiveness.

The financial consequences of inaction

For SMEs, the financial risks of ignoring decarbonisation are already materialising:

• Cost escalation: Reliance on fossil energy exposes SMEs to volatile prices, further amplified by the expansion of the EU ETS into ETS2.
• Revenue risk: Corporate buyers increasingly embed sustainability requirements into tenders. SMEs unable to comply risk losing contracts to more proactive competitors.
• Reputational risk: Companies that cannot demonstrate progress appear “behind the curve,” undermining their ability to retain customers and attract talent.
• Compliance risk: While most SMEs are not directly in CSRD scope, their exposure is indirect. Failing to provide data to corporate partners can strain relationships, trigger penalties, or lead to contract loss.

Practical entry points for SMEs

The good news: SMEs are not expected to decarbonise overnight. What matters most is to demonstrate credible first steps. These actions send a clear signal to clients, financiers, and employees that sustainability is being taken seriously.

1. Carbon footprinting – establish your emissions baseline

A basic carbon footprint assessment provides SMEs with a credible starting point. Even a high-level calculation demonstrates awareness and commitment.

2. Energy efficiency – cut waste and save costs

Simple measures — upgrading lighting, optimising HVAC systems, or improving fleet efficiency — deliver immediate savings while reducing emissions.

3. Energy Attribute Certificates (EACs) – address Scope 2 emissions

One of the most straightforward options for SMEs is the use of Energy Attribute Certificates (EACs) — including Guarantees of Origin (GOs) in Europe, I-RECs internationally, and RECs in North America.

By purchasing and cancelling these certificates, companies can credibly report renewable electricity use under the Greenhouse Gas Protocol (GHG Protocol). For SMEs facing supply chain pressure, EACs offer a fast, credible solution to reduce Scope 2 emissions and show commitment while preparing for long-term strategies.

4. Sustainability ratings and certifications – demonstrate credibility

Recognition through platforms such as EcoVadis, CDP, or local sustainability labels helps SMEs benchmark performance, prioritise actions, and unlock opportunities.

For corporate clients, these certifications provide confidence that SMEs are serious about progress. Even an entry-level score signals commitment and can unlock commercial advantages in tenders and partnerships.

Inaction is not neutral

For SMEs, ignoring decarbonisation carries economic and financial risks that will only grow — including supply chain exclusion, reduced financing options, higher energy costs, and reputational damage.

The solution does not need to be complex. By starting with carbon footprinting and adopting accessible tools such as Energy Attribute Certificates, SMEs can demonstrate credible progress, satisfy client expectations, and enhance competitiveness.

Nvalue will be hosting an upcoming session dedicated to SMEs and the importance of decarbonisation. We will unpack practical steps, show how energy certificates can be applied effectively, and share insights on how SMEs can future-proof their businesses in a rapidly changing market.

Join us to explore how SMEs can move from risk to resilience, and why ignoring decarbonisation is no longer an option.