Small and medium-sized enterprises (SMEs) form the backbone of Finland's economy. In 2021, there were approximately 500,000 businesses operating in the country, over 99 percent of which were SMEs with fewer than 250 employees. These companies employed around 63 percent of the national workforce. The turnover of SMEs totaled €273.6 billion, accounting for 56 percent of all business-generated revenue. This highlights the significance of the SME sector to Finland’s economy and underscores its role as a driver of societal well-being, employment, and national economic growth.
Corporate sustainability work refers to companies’ efforts to consider social, environmental, and ethical aspects in their business operations. It is a holistic approach that acknowledges the broader role of a company in society and aims to promote sustainable development.
Sustainability work traditionally encompasses environmental responsibility, which involves efforts to reduce a company’s environmental impact—such as emissions, waste, and the use of natural resources. Social responsibility includes a commitment to human rights, workers' rights, and social justice. Ethical business practices generally refer to a company’s efforts to operate in a morally and ethically sound manner. This can include transparency, responsible marketing, and adherence to the highest ethical standards. Economic responsibility involves striving to create long-term value for stakeholders such as customers, employees, investors, and society as a whole.
Sustainability work is not merely about meeting requirements or complying with legislation—it can also provide companies with strategic advantages, such as a stronger brand, an improved reputation, and a competitive edge in attracting employees, customers, and investors who value responsibility. Overall, it reflects a company’s commitment to sustainable and responsible business practices.
Digitalization in companies refers to the process of transforming traditional business operations and practices from analog or manual forms into digital ones. It involves the use of technological solutions, data processing, and automation to improve efficiency, streamline processes, and leverage new opportunities in business.
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The Current State of Sustainability Work and Motivational Factors in SMEs
Sustainability is becoming a central part of business strategy. According to the Confederation of Finnish Industries' 2023 SME Sustainability Barometer, 89 percent of employer companies in the SME sector consider sustainability to be a very or fairly significant part of their business. The most important aspects of sustainability identified by these companies were employee well-being, occupational safety, and skills development. Climate change, biodiversity, and other environmental protection issues also ranked high in their assessments.
According to research, the key motivational factors driving sustainability work in SME employer companies include the values of the entrepreneurs and the company, customer demands, brand building, and the broader societal climate and public discourse. Customers may ask about the origin of a company’s products or services, the labor used, production methods, and transportation practices. Public discussion can also prompt companies to reflect on the sustainability of their offerings. This highlights the importance of sustainability work both internally within the company and externally in its stakeholder relations. Economic aspects of sustainability—such as cost savings, success in public tenders, and access to financing—do not yet appear to play a significant role as motivators for sustainability efforts in SMEs, according to current studies.
Sustainability work in small and medium-sized enterprises takes on a very different light when looking at broader business outlook surveys—such as the Autumn 2023 SME Barometer conducted by the Federation of Finnish Enterprises in cooperation with Finnvera and the Ministry of Economic Affairs and Employment. This study did not include questions specifically related to sustainability efforts, and topics such as barriers to or opportunities created by sustainability work did not emerge in general questions or responses. Sustainability was also absent when SMEs were asked about their most important development needs. These results appear to contradict the findings of the SME Sustainability Barometer. Why does sustainability only surface when it is asked about directly? Do we only get the "right" answers when we ask the "right" questions? Is sustainability truly becoming a central part of business strategy for SMEs as well, or is it still just empty rhetoric?
Is sustainability truly becoming a central part of business strategy for SMEs as well, or is it still just empty rhetoric?
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Realism and Economic Challenges
We can find answers to these questions by examining the operating environments of small and medium-sized enterprises. At present, immediate economic challenges and general uncertainty are particularly prominent among SMEs, limiting their ability to fully invest in sustainability efforts. According to the SME Barometer by the Federation of Finnish Enterprises, SMEs’ economic outlook has slightly improved but remains negative. The economy is expected to continue weakening, and uncertainty is further heightened by Russia’s ruthless war of aggression in Ukraine and the high cost level. In fact, 27 percent of the SMEs surveyed expect economic conditions to deteriorate further.
SMEs’ expectations regarding turnover and profitability are also weak, and investments are expected to decline in the near future. Additionally, 60 percent of companies reported facing recruitment challenges, indicating that overall, the current economic outlook and expectations are highly uncertain.
Although SMEs are, according to studies, motivated to invest in sustainability, they are currently struggling primarily with economic challenges. From the perspective of the companies themselves, the main barriers to business development are the general economic situation, the high cost level, and the availability of skilled labor. The importance of financial responsibility—especially maintaining sound finances—as an enabler of sustainability work is directly reflected in the practical possibilities of implementing such efforts. In practice, this often means that economic concerns and day-to-day survival must take priority over sustainability initiatives. On the other hand, ensuring the ability to pay employees is, at its best, a strong example of sustainability in action and a concrete expression of social responsibility.
In companies where sustainability work has been placed on the agenda, significant practical challenges are often encountered. According to the SME Sustainability Barometer by the Confederation of Finnish Industries, two out of three SMEs cite limited resources as the greatest challenge to sustainability efforts. Many companies also lack the necessary expertise related to sustainability. It is often perceived as a broad and complex concept, and relevant information is fragmented. There is a particular need for support in developing sustainability metrics, data collection, and reporting. This highlights the demand for clear tools and guidance to help companies implement sustainability work in practice.
In practice, this often means that economic concerns and day-to-day survival must take priority over sustainability initiatives.
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Digitalization and Innovation as Cornerstones of Future Business
Despite the economic challenges SMEs face, digitalization and innovation have emerged as key factors for future business development. According to the SME Barometer by the Federation of Finnish Enterprises, over half of the companies have invested in digitalization, and around 15 percent have adopted new technologies within the past year. This demonstrates SMEs’ ability to adapt to changing conditions and leverage the latest technologies in their operations, highlighting that technological development is seen—at least partially—as a solution to many of the challenges they face. While research and development are not part of everyday operations for all businesses, about 22 percent of SMEs report engaging in R&D activities. In the industrial sector, this share is even higher, underscoring the sector’s leading role in technological advancement.
On a general level, digitalization can enhance customer relationships and increase customer loyalty. Customers may prefer companies that act responsibly and leverage digital innovations. Digitalization can also improve process efficiency and reduce costs. Companies that are both responsible and digitally advanced are more attractive to employees—especially younger generations, who often value sustainability and seek to work in innovative environments.
It’s important to recognize that the challenges related to digitalization and robotics are not solely the concern of SMEs.
It’s important to recognize that the challenges related to digitalization and robotics are not solely the concern of SMEs. The real challenges lie with the companies developing and promoting these technologies—they must ensure that their solutions are user-friendly and affordable enough for SMEs to adopt. Only then can widespread implementation become truly feasible for smaller businesses.
While SMEs have adopted traditional digital tools such as websites and social media, the use of emerging technologies like artificial intelligence and data analytics has remained modest. Digitalization is primarily seen as a means to strengthen brand image and reach new customer segments. However, according to studies, its impact on product development and internationalization is still relatively limited.
For SMEs operating in international markets, business development is essential. Key areas for development include sales and marketing, employee training, and leadership. Additionally, strengthening financial and funding-related competencies is becoming increasingly important as companies navigate increasingly complex financial markets.
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Towards a Sustainable and Successful Future
SMEs are the backbone of Finland’s economy, and their commitment to responsibility and ability to adapt to change are key factors in their success. While there is a strong willingness to engage in sustainability efforts—and most companies already take responsible actions in their daily operations—concrete, systematic, and action-driven sustainability work is still in its early stages in Finnish SMEs. Developing and implementing structured sustainability practices that are integrated into the company’s strategy presents significant practical challenges for SMEs, particularly due to limited resources and financial constraints.
Future success will require SMEs to continuously evolve, integrate and strengthen sustainability work as part of their business strategy, and make better use of data and digitalization. Companies must increasingly adopt new technologies to improve efficiency and competitiveness. Training programmes provided by businesses, educational institutions, and organizations—as well as networking and public support measures—can help SMEs understand and apply these technological solutions. In addition, by improving the management of limited resources and developing sustainability metrics, SMEs can increase the effectiveness and impact of their sustainability efforts, making them more attractive to both customers and skilled employees. Sustainability is not just an ethical choice—it is a business necessity and a strategic opportunity that creates long-term value for companies and, through them, for society as a whole.
Sustainability work is for everyone, and every company can approach it in a way that reflects its own size, identity, and capabilities. While limited resources and economic challenges can constrain implementation in SMEs, standing still is not an option. On the contrary, systematic business development and integrating sustainability into the company’s core strategy offer an opportunity to stand out and gain a competitive edge. By allocating resources wisely and building internal expertise, it’s possible to achieve meaningful results even in the short term—though sustainability is, by nature, a long-term process whose full impact may not be immediately visible. Digitalization and innovation should be added to every company’s toolkit to support and simplify everyday operations. The sooner, the better.
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References
Elinkeinoelämän keskusliitto. (2023). Pk-vastuullisuusbarometri 2023: Vastuullisuus korostuu vienti- ja kasvuyritysten kilpailukeinona. https://www.sttinfo.fi/tiedote/70058592/pk-vastuullisuusbarometri-2023-vastuullisuus-korostuu-vienti-ja-kasvuyritysten-kilpailukeinona?publisherId=69819283&lang=fi
Niemi, J. (2023). Yritysvastuutyön edistäminen pienissä ja keskisuurissa yrityksissä [opinnäytetyö, Hämeen ammattikorkeakoulu]. https://www.theseus.fi/handle/10024/792433
Suomen Yrittäjät. (2023). Pk-yritysbarometri 2/2023. https://www.yrittajat.fi/tutkimukset/pk-yritysbarometri-2-2023/
Tilastokeskus. (2023). Yritykset henkilöstön suuruusluokan mukaan 2021. https://www.tilastokeskus.fi/tup/suoluk/suoluk_yritykset.html
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