Novia’s project revealed major gaps in sustainability reporting knowledge in the SME service sector

Sustainability reporting is becoming part of companies' normal annual financial reporting. EU has initiated its own sustainability reporting standard (ESRS) which came into effect at the beginning of the year 2024. The directive guiding the reporting is called Corporate Sustainability Reporting Directive (CSRD) (European Commission, 2025). Mainly, this concerns larger companies that exceed 2/3 of these requirements: 50 M€ turnover, 250 personnel, and 20€ in balance sheet. However, smaller listed companies and other SMEs will be affected by the directive too, especially being part of the value chain of larger reporting companies. A very recent report by the Finnish government investigates the challenges in the application of this new CSRD directive, especially in SMEs (Alho and Ranta, 2025). At the same time, there are several older sustainability reporting standards available, and a new voluntary reporting standard for SMEs, called VSME was provided by the EU in late 2024 (EFRAG, 2025). No wonder companies feel they are getting lost in this sustainability reporting jungle.

The need for new competencies for sustainability reporting is of course a key question for an education institute like Novia. Novia as a university of applied sciences has educated Bachelor of Business Administration (BBAs) for business for over 25 years. In our project, we wanted to learn what are the future skills that will be needed for sustainability reporting. Also, in which direction should we develop business professions via our programs in business administration?

To find out more about the current landscape, Novia initiated a project with additional funding from HS stiftelsen. The key aim was to explore the preparedness of the Finnish accounting field and SMEs towards increasing sustainability reporting. We were very interested to find out how especially accounting companies are aware of this issue and to which extent they could support the SMEs in their first steps towards more regulated sustainability reporting. The main question was: What is the level of preparedness of accounting firms and SMEs, first in the Vaasa region and later in other parts of Finland?

The project aimed at delivering a survey and other investigation on this issue, mainly with the help of two Novia MBA theses being delivered (eg. Akisanya, 2024). Based on these investigations, we wanted to find out the key challenges of both accounting firms and SMEs in their application of knowledge on sustainability reporting and how could we promote needed competence development through Novia’s education programs.

The research project started in late 2023 and lasted until 31.12.2024. The outcomes were a seminar Vaasa and two MBA theses, which the latter is still in publication. In addition to these, the project will contribute to an academic article prepared later in 2025 where the consolidated findings for future competencies based on the MBA theses will be discussed in more detail.

During the project, it became obvious that our main interest was to find out if the

accounting companies could provide help to the growing need of SMEs’ sustainability reporting. Hence, the focus was formulated around the question: How prepared the accounting companies are in helping their clients in sustainability reporting?

Currently, there is very little practical guidance for ESRS implementation. As the regulation starts with the larger companies, main support but also the directive itself speaks more of the language suited for corporations. There is this voluntary sustainability reporting format (VSME) being now published by the EU but still, the main audience of this knowledge are the large corporations. However, due to regulations, a small company might be asked to provide eg. its greenhouse gas emission calculations when this SME operates as part of the value chain of a reporting company.

The main research was carried out through a survey. The survey was conducted both in Finnish and in Swedish. Due to time constraints, we focused on certain regions of Finland. The survey was sent in two batches via email to contacted accounting firms and auditors in Finland. In the first batch, 40 requests were sent in the Vaasa region (in municipalities of Vasa, Malax, Korsholm, Närpes, Jakobstad, Nykarleby, Pedersöre, Karleby, Kristinestad/Lappfjärd) with 9 responses submitted. The second batch comprised 98 similar requests to accounting firms in the areas of Porvoo, Helsinki, Espoo, and Turku, with 11 responses received. The response rate was lower than expected. However, the validity was ensured by addressing only a preselected cohort of acknowledged representatives of our target group.

The results revealed several key issues in sustainability reporting knowledge. Firstly, most respondents demonstrated a limited familiarity with key sustainability reporting standards, such as the ESRS and its predecessor, the EU Sustainability Reporting on Non-Financial Disclosures. Survey results showed that in general, there is perhaps a lack of familiarity of the core concepts and principles underlying the sustainability reporting standards, as well as the specific disclosure requirements involved among accounting firms.

This points to a significant knowledge gap that needs to be addressed to ensure compliance with emerging regulations. We could state that most of our accounting firms, being SMEs themselves currently have only little knowledge of sustainability reporting. Only 10% reported advising clients on the ESRS, and similar trends were observed for other standards.

Secondly, a lack of dedicated personnel to help clients in their sustainability reporting is evident, with 74% of companies lacking staff specifically for sustainability reporting.

We could summarize the current situation that this hinders accounting firms’ ability to address increasing demands in this area.

Thirdly, sustainability reporting is primarily undertaken by larger firms, as only 21% of companies produce their own reports, most of which are larger firms with over 50 employees who possess greater resources. In short, sustainability reporting seems to be still just something for the larger companies only.

Our survey predominantly included accounting and financial professionals from smaller companies, which may influence the overall perspective on these issues. We did not ask about their exact attitudes towards the topic but due to very low response rates, despite the communication on the survey, we could conclude that this is not a key interest area for accountors now. Hence, a more general question based on these results arises: How are the business development abilities especially in the smaller accounting companies? How prepared in general they are to develop their business and to initiate growth themselves?

Now returning to our last main question. What should we do as educators of future accounting and sustainability professionals? For an education institute, we must be able to meet the demand of future knowledge. Let’s end by discussing the main contributions of this project to that.

First, we must aim for more continuous dialogue with accounting professionals, auditors, and SMEs regarding the developing field of sustainability reporting. Through our local contributions, Novia can approach the perhaps pounding knowledge needs and growing resource gaps, especially of the smaller firms regarding sustainability reporting. For example, our BBA practical training periods and theses could serve as an avenue for this kind of dialogue with SMEs.

Secondly, in our education programs, we need to tailor the sustainability reporting knowledge to the needs of smaller businesses. We shouldn’t take for granted the official information, eg. provided by EFRAG, EU’s main body of operationalization of the directive, as suitable for all companies as such. We need to be the interpreter between corporate talk and SME talk. We should further emphasize in our education the SME’s perspective and perhaps, further develop, additional applications of sustainability and its reporting knowledge especially targeting the local needs of SMEs and their service providers, the local accounting firms and auditors. If failing this, there is a risk that sustainability and its reporting remain an issue for corporations only.

It is clear, that special training programs and further education, even short courses and webinars are needed, both for accounting professionals and their clients. Perhaps Novia could profile itself more as a bridge builder between the regulation and those who need knowledge and a voice of reason in the application of sustainability reporting. We could become guides for SMEs in their paths through the ESG reporting jungle.

Lastly, we need to keep on developing our staff’s skills and understanding of the issues. As sustainability management is not free from paradoxes or unfinished standardization (eg. the monetary value of carbon emissions) we should keep up our own knowledge base and tailor it to serve the different ways of its practical application. We should educate that sustainability management is always contextual. The applications of sustainability reporting frameworks do acknowledge this. However, the current regulation tsunami from the EU often makes one think there is just one right way for all. This is not the case. There will be continuous development for the next few years on the application of the EU’s sustainability reporting standard. Keeping our eye on that ball and having an ongoing dialogue with our local but also global partners, we will be able to keep our education relevant and value-creating for our stakeholders in the future too.

References:

Akisanya, R. (2024). Assessing the Readiness of Accounting Firms and SMEs in Finland for the Implementation of the European Sustainability Reporting Standard. MBA thesis, Yrkeshögskolan Novia. Available at: https://www.theseus.fi/handle/10024/873570

Alho, E. & Ranta, R. (2025). Kestävyysraportoinnin haasteet ja tukitarpeet suomalaisyrityksissä. Ympäristöministeriön julkaisuja 2025:4, Ympäristöministeriö. Available at: https://julkaisut.valtioneuvosto.fi/handle/10024/166065

EFRAG (2025). Sustainability reporting. Available at: https://www.efrag.org/en/sustainability-reporting

European Commission (2025). Corporate sustainability reporting. Available at: https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en

Texten har granskats och godkänts av Novias redaktionsråd 14.2.2025.