04/04/25

EU: EU Proposes SME Sustainable Finance Standard to Boost ESG Funding Access

As published on: senecaesg.com, Friday 4 April, 2025.

The EU Platform on Sustainable Finance (PSF) has unveiled a new proposal to accelerate small and medium-sized enterprises’ (SMEs) transition toward sustainable practices. The proposed “SME sustainable finance standard” is designed to simplify ESG reporting and improve access to sustainable finance, especially for companies struggling with complex regulations and high compliance costs.

SMEs play a critical role in the EU economy, contributing more than 50% of GDP and accounting for over 63% of enterprise-level emissions. Yet, many faces steep barriers in securing green financing. The standard aims to break down those barriers by providing a voluntary, easy-to-use framework for sustainability disclosure, initially focusing on climate-related goals and laying the groundwork for broader environmental objectives in the future.

Helena Viñes Fiestas, Chair of the PSF, emphasized the importance of supporting SMEs through the green transition: “Our new report offers a practical solution for SMEs facing a triple challenge: maintaining competitiveness amid the ecological and digital transitions, decarbonizing their operations, and accessing the finance they need to make this shift.”

The standard will allow SMEs to self-disclose key ESG and climate metrics in a streamlined format, enabling banks and financial institutions to classify loans more easily as sustainable or transition finance. This will help direct capital to businesses aligned with the EU’s carbon neutral strategy while fostering trust and transparency across financial markets.

To enhance accessibility, the PSF proposes an online tool specifically tailored to SMEs, which will help assess and classify eligible investments. The standard also incorporates minimum environmental and social safeguards, aligned with the EU Benchmark Regulation for Paris-Aligned Benchmarks (PAB).

This initiative is a major step in ensuring Europe’s SMEs are not left behind in the transition to a carbon-neutral, ESG-driven economy.

Tags

EU Sustainable finance ESG