Walking the Tightrope of Sustainability Reporting Standardization: Insights From Italian Small and Medium-Sized Enterprises

This study investigates the challenges and support needs of small and medium-sized enterprises (SMEs) in adopting standardized sustainability reporting, taking the European Sustainability Reporting Standards (ESRS) as an empirical case of formal standardization. Based on qualitative data from semi-structured interviews with senior managers from Italian SMEs, the findings identify persistent structural limitations, including insufficient internal resources, lack of technical expertise, and high reliance on external consultants. The results highlight divergent motivations for reporting, ranging from the trickle-down effect to intrinsic strategic commitment, as well as concerns about reputational risks such as greenwashing. Despite emerging regulatory attention, SMEs have historically played a limited role in standard-setting processes, and existing sustainability reporting frameworks often lack guidance suited to their organizational scale and complexity. Our study suggests the need for inclusive, context-sensitive approaches to standardization and targeted capacity-building initiatives. It offers practical recommendations for policymakers and stakeholders seeking to enhance SMEs' participation and improve the effectiveness of sustainability reporting frameworks across diverse business environments.