Analysis of the Advantages and Disadvantages for Capital Market-Oriented SMES in the Disclosure of ESG Information
Analysis of the Advantages and Disadvantages for Capital Market-Oriented SMES in the Disclosure of ESG Information

Author(s): Luca Dickmeiß
Subject(s): Social Sciences, Economy, Business Economy / Management, Sociology, Evaluation research, Financial Markets
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: ESG; disclosure; SMEs
Summary/Abstract: The disclosure of Environmental, Social, and Governance (ESG) information presents both advantages and challenges for capital market-oriented small and medium-sized enterprises (SMEs). ESG transparency can enhance a company’s attractiveness to investors, improve access to capital, and boost financial stability by improving credit ratings and lowering financing costs. Additionally, proactive ESG reporting strengthens market reputation and long-term sustainability strategies, positioning SMEs as responsible and forward-thinking in a competitive market. However, the process is also resource-intensive, requiring significant investments in personnel, expertise, and bureaucratic systems. SMEs may struggle with the complexities of collecting and analyzing ESG data, especially related to emissions, and face high costs of reporting, which could strain their financial and operational capacities. While ESG disclosure can offer significant market benefits, companies must weigh these against the financial and administrative burdens, carefully considering their strategic priorities before adopting reporting practices, especially ahead of the mandatory deadline in 2026.

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