ESG Practices As Source Of Revenueand Profitability For Greek SMEs

A. Reassessment of ESG principles

As Europe simplifies its ESG framework through the recent reforms of the "Omnibus Package" and "Competitiveness Compass", reassessing the relationship between Greek businesses and ESG principles becomes critically significant. The Economic Analysis Division of the National Bank of Greece (NBG), has recently published (May 2025) an extended research, conducted on 600 SMEs¹ by which:

(i) It maps the current level of knowledge and implementation of ESG policies in Greece,

(ii) Explores how institutional changes will affect the degree and nature of their adoption.

B. Main findings of NBG research

The main findings of the study highlight the following points:

a. There is a remarkable gap between the strong interest of SMEs in ESG initiatives and their low practical adoption. In particular, although a high percentage of SMEs (over two-thirds, 67%) express active interest in ESG actions, only a small portion (just 22%) has received substantial information on ΕSG issues and an even smaller percentage has proceeded with adopting related actions (12% of the SME sector and only 4% among very small enterprises). The principal source of information are the mass media (67%), while almost one-third (28%) of SMEs have been informed by collaborators and only a small percentage (5%) through seminars.

b. Focusing on the types of ESG actions undertaken by SMEs, the findings reveal that:

1. lmost all businesses, that have implemented ESG actions, have taken some form of initiative in the environmental (E) dimension, such as recycling (91%) energy efficiency upgrades (63%) environmentally friendly products (33%) or carbon footprint measurement (22%).
2. Actions related to the social (S) dimension are implemented by 7% of SMEs, such as practices ensuring employee equality (47%), practices of upgrading the workplace (44%) or customer satisfaction surveys (34%).
3. Only 3% of the SMEs has advanced to a holistic ESG strategy, adding to the above actions the governance (G) dimension, either through the preparation of sustainability reports (11%) or – at least – by simply communicating practices to employees (19%) and partners (13%).

c. Despite the limited adoption, an extremely important finding emerged from the analysis: one-third (29%) of businesses with ΕSG strategies already recognize tangible operational benefits from the adoption, while the remaining two-thirds report satisfaction (without having yet quantified the positive impact). To be noted that negative impacts (i.e. cost for ESG measures with no return value), hasn't been reported by any company at all!

d. Most importantly, the highly interesting result is the already measurable positive effect, identified by the businesses themselves, on sales, profitability and market share of the SMEs and in particular:

49% (almost half of them)!of very small enterprises have ALREADY MEASURED a tangible increase in their profitability due to ESG actions!

While, 15% of SMEs have measured increase in their sales, 13% in their profitability and 11% in their market share. To be noted that the rest of SMEs doesn't mean that they don't have increase in the above domains, as they already report satisfaction from the adoption of ESG practices, without however having yet quantified and measured the specific results.

C. Remarks on the Findings

a. The recognition by SMEs of ESG practices, as a source of revenue and profitability confirms that these actions address structural issues:

• Environmental actions are largely associated with cost reduction (e.g. energy savings),
• Social actions can attract customers as well as skilled personnel, leading to business growth (e.g. emphasis on upskilling/reskilling of staff).
• Governance actions enhance strategic maturity, transparency and business culture (e.g. sustainability reporting).

As expected, a holistic ESG strategy works multiplicatively, maximizing operational benefits.

b. The recognition of ESG initiatives as drivers of revenue and profitability holds dual significance:

Beyond the immediate benefits, raising awareness among businesses, that are still hesitant, can serve as a strong incentive for adoption of ESG actions– given that over two-thirds of SMEs cite operational benefits (such as cost reduction and increased demand), as the primary reason that would encourage them to take the step.

c. Expanding on this conclusion, the research highlights that the vast majority of SMEs (93%!!! of the sector) do not require mandatory regulations, as an incentive for ESG actions.

Under these circumstances, the relaxation of the mandatory nature of ESG actions within the EU regulatory framework is not expected to have a deterrent effect on the aforementioned outlook. On the contrary, the proposed regulations significantly alleviate barriers within the regulatory framework, as:

• The ESG sector is included in the first package of measures aimed at reducing bureaucratic burden for SMEs, with an estimated cost saving of 6.3 billion euros across the EU (which, combined with related easing of procedures for banking institutions, will facilitate the financing of ESG actions). Obligations for complex reporting related to the inclusion of SMEs in the value chains of larger companies are reduced, facilitating such collaborations. According to the above research, 20% of SMEs already report the facilitation and expansion of their collaboration with business partners, due to the adoption of ESG practices
• The above changes are expected to mobilize a significant portion of Greek businesses, as complex procedures (and the resulting high costs) are recognized by the majority of SMEs as the main barrier preventing them from adopting ESG policies. Now that the procedures will be simplified – ex the alternative of simplified Voluntary Sustainability Reporting Standard (VSME) instead of the complex European Sustainability Reporting Standard (ΕSRS) being crucial – and the relevant cost will be significantly reduced, the resources of a company can be directed to the most material aspects of ESG practices for each company, targeted to specific ESG solutions with tangible benefits and concrete results.
• Therefore, according to the above research, considering i. the strong interest of SMEs, ii their proven positive effects on the operational business performance, and iii the favorable impact of EU reforms, the environment is highly favorable for Greek SMEs to strategically adopt ESG practices and enhance their competitiveness.

D. Conclusion

a. There is considerable potential for further adoption of ESG practices among Greek SMEs with information playing a crucial role –especially given that one-third of businesses not engaging in ESG initiatives, cite lack of relevant knowledge, as the primary barrier. So, at first informing and educating the management of SMEs on the significance of ESG principles and practices, should be of high priority.

b. The lack of regulatory obligations, not only won't discourage SMEs from ESG actions, but, on the contrary, will alleviate the barriers that discouraged the SMEs from addressing sustainability issues, in the first place. Furthermore, the more studies reveal that ESG initiatives are directly related to increase of revenue and profitability (as shown above, para Bb, Bc, Bd) the more enterprises will take the necessary steps towards integrating sustainability strategies.

c. Given the above findings, SMEs are bound to soon adopt a much more favorable, proportional and substantial approach, regarding sustainability issues, treating them as real opportunities, leading to long term sustainability, revenue and profitability increase, rather than a huge bureaucratic burden. So, the easiness of the regulatory framework will finally result to a new point of view towards sustainability, that will focus on the specific, targeted, really crucial material issues for each company, on which the resources of the company should also – solely -be directed, rather than on the highly costful, complex bureaucratic procedures.

Concluding, the overall environment is really positive and encouraging towards the integration of ESG initiatives by Greek SMEs, as the breakthrough above NBG research has strongly highlighted.

Footnote

1. The study can be found on the National Bank Group's website (in Greek), in the Economic Analysis and Research section (Category: Greek Entrepreneurship): https://www.nbg.gr/el/omilos/meletes-oikonomikes-analuseis/reports/smes-esg-2025.