New technologies such as Artificial Intelligence (AI), the Internet of Things (IoT), blockchain, and Augmented/Virtual Reality (AR/VR) are set to revolutionize sustainability work across companies of all sizes in the coming years. But how will these emerging technologies transform sustainability efforts in small and medium-sized enterprises (SMEs), and on what timeline can we expect these developments to become more widespread?
Sustainability work is becoming an increasingly central part of everyday business operations. This shift is driven primarily by tightening regulatory requirements, such as the EU’s Corporate Sustainability Reporting Directive (CSRD). For large companies, the transition toward comprehensive sustainability reporting can be challenging but manageable due to their available resources. In contrast, for small and medium-sized enterprises (SMEs), where resources and access to the latest technologies are more limited, the path forward is significantly more complex.
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Current Challenges in SME Sustainability Work
SMEs are a vital part of the global economy, accounting for around 99% of all businesses in the EU. Many SMEs face challenges in their sustainability work. Companies often perceive sustainability as a complex and hard-to-manage area, with relevant information scattered and difficult to access. A lack of time and expertise is common. As a result, the benefits of sustainability work and its connection to business operations and profitability often go unrecognized.
The benefits of sustainability work and its connection to business operations and profitability often go unrecognized.
Regulatory requirements such as the CSRD Directive and the Taxonomy Regulation, which directly apply to large companies, require detailed reporting on environmental, social, economic, and governance-related factors. Through value chains, this type of regulation increasingly affects SMEs as well. They may be expected to engage in sustainability work and reporting, for example, as a prerequisite for participating in tenders or obtaining financing.
Manual data collection, analysis, and reporting are time-consuming and costly. Unlike large companies, which have the financial means to hire consultants or implement advanced systems, most SMEs lack such resources. Furthermore, the fragmentation of current data collection methods makes it difficult to produce reliable and up-to-date data—especially regarding Scope 3 emissions, which relate to indirect emissions across the supply chain.
At this point, emerging technologies can step in, offering a way to automate and simplify sustainability work while ensuring compliance with regulatory requirements.
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The Role of Emerging Technologies in Sustainability Work
Artificial Intelligence (AI) is revolutionizing the way data is collected and processed for monitoring, evaluating, and reporting on sustainability. AI-powered applications can automate the tracking and analysis of key sustainability indicators by identifying relevant data across different areas of a company. This saves time and reduces errors in data collection, making monitoring, analysis, and reporting more efficient and accurate.
For SMEs, AI can be particularly valuable in monitoring energy consumption, waste management, and other sustainability-related operations. With AI, even smaller companies can automatically collect the necessary data, analyze it in real time, and generate reports that meet regulatory requirements and stakeholder expectations. This eliminates the need for manual data entry and analysis, allowing SMEs to focus more on implementing sustainable business strategies.
With AI, even smaller companies can automatically collect the necessary data, analyze it in real time, and generate reports that meet regulatory requirements and stakeholder expectations.
Internet of Things (IoT) enables physical devices, such as sensors and machines, to connect to the internet and transmit data in real time. From a sustainability perspective, IoT can monitor everything from energy consumption and emissions to waste and resource usage. By embedding IoT devices into core business operations, SMEs can collect accurate data without the need for manual work.
In sectors such as manufacturing, agriculture, and logistics—where sustainability work and reporting are particularly complex—IoT can be used to closely monitor the environmental impacts of operations. For SMEs, adopting IoT technology can enable real-time tracking of emissions, water usage, and waste, gathering data that helps ensure the company meets its sustainability goals.
Known from cryptocurrencies, the blockchaintechnology ensures data integrity by creating immutable digital records. In sustainability work—especially in supply chain monitoring and tracking Scope 3 emissions—blockchain can enhance transparency and accountability. Blockchain can provide a verifiable record of sustainability data, ensuring that companies can demonstrate compliance with regulations.
The blockchaintechnology ensures data integrity by creating immutable digital records.
Companies often struggle with Scope 3 reporting, which requires tracking emissions throughout the supply chain. Blockchain can simplify this process by creating immutable records of where and how products have been produced and transported. This enables even small businesses to verify the sustainability of their supply chains and ensure compliance with sustainability requirements.
Augmented and Virtual Reality (AR/VR) enable companies to provide immersive sustainability training for their employees. With VR simulations, the environmental impacts of business practices can be visualized in ways that traditional training cannot achieve. This makes learning more engaging and encourages employees to adopt more sustainable practices.
AR/VR can also enhance customer and stakeholder communication by offering virtual tours of supply chains or showcasing sustainable production and logistics processes. This transparent, interactive approach builds trust and reinforces the company's commitment to sustainable development.
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How Fast Will the Change Be?
While the potential of these technologies is clear, their large-scale adoption will take time, especially among SMEs. However, emerging technologies are becoming a central part of sustainability work across businesses of all sizes, including SMEs. These processes are already well underway—and the pace is only set to accelerate.
In the short term (the next 2–5 years)
Large companies will be the first to adopt these technologies at scale. Many of them already have the resources and infrastructure to integrate AI, IoT, and blockchain into their sustainability processes. As regulatory pressure increases and stakeholders demand greater transparency, large corporations are investing in automated systems to enhance the efficiency of their sustainability work.
In the short term, SMEs will begin adopting simpler, off-the-shelf AI, IoT, and AR/VR solutions. Digitally more advanced companies will move faster by using tools that simplify data collection, analysis, and training. However, costs, lack of expertise, and the complexity of integration will slow down adoption for the majority of SMEs.
In the medium term (5–7 years)
At this stage, large companies will be fully integrated into automated reporting systems where AI, IoT, and blockchain work in unison. These systems will automatically collect, analyze, and report data in compliance with regulatory requirements.
An increasing number of SMEs will adopt these technologies, driven by market demand and EU incentives supporting digitalization. AI-based software solutions specifically designed for SMEs will become more widespread, making the automation of sustainability reporting easier and more cost-effective.
AI-based software solutions specifically designed for SMEs will become more widespread, making the automation of sustainability reporting easier and more cost-effective.
In the long term (7–10 years)
The largest companies will have transitioned to fully autonomous sustainability systems, where data collection is seamless and information is automatically analyzed and reports are generated without manual input. All core systems and devices within the company are interconnected, continuously producing data to meet the needs of the business and its stakeholders. Consulting firms specializing in double materiality assessments and sustainability reporting will have run out of work.
In the long term, SMEs will also gain access to automated sustainability tools. As technology costs decrease and SMEs become more familiar with these systems, the adoption gap between large companies and SMEs will narrow. Regulatory authorities will offer incentives and support to help SMEs adopt new technologies more easily.
Artificial intelligence and the Internet of Things are part of everyday business operations. Sustainability work is fully integrated into business strategy and no longer treated as a separate topic. Blockchains ensure data availability and reliability. Through augmented and virtual reality (AR/VR), companies provide immersive training for employees and demonstrate their practices to stakeholders in interactive ways. Business models are adapted to circular economy principles and its goals. Sustainability is seen as a collective responsibility, with companies playing a major role in promoting societal and environmental well-being while achieving strong financial performance. Individual responsibility is embedded in corporate operations, and meeting stakeholder expectations—such as those of customers and employees—is considered a given.
For example, the UK-based company Provenance is already using blockchain technology to verify the accuracy and authenticity of brands' sustainability claims. Their platform ensures transparency across supply chains, enabling companies to reliably showcase their environmental and social impacts. Provenance helps brands meet regulatory requirements, reduce greenwashing, and strengthen consumer trust by providing verified sustainability credentials. The system automates claim management and ensures that sustainability data is integrated across multiple sales channels. provenance.org
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Risks, Challenges, and Ethics
While these technologies offer significant advantages, their adoption also involves risks and challenges. For example, the energy consumption of blockchain can pose a major concern, as large data centers may increase environmental impact. Additionally, the scalability and implementation costs of these technologies can be barriers for SMEs. It is essential to ensure that the technologies are used for appropriate purposes and that they address real business needs.
Ethics is also a crucial factor in the use of emerging technologies. In the case of AI and IoT, data privacy and the ethical collection of information must be carefully considered. While blockchain ensures data integrity, data protection regulations—such as the GDPR (General Data Protection Regulation)—set clear limits on the collection, processing, and storage of personal data. Anonymization and pseudonymization are often necessary to ensure data privacy when using blockchain technology. Especially when handling employee and customer data, it is essential to ensure that data collection, storage, and use are transparent and subject to oversight.
Ethics is also a crucial factor in the use of emerging technologies.
Access to technology also presents significant challenges, particularly for SMEs and more remote areas that lack the same level of resources or infrastructure as densely populated regions. The high cost of new technologies and the uneven distribution of resources can prevent SMEs and disadvantaged regions from fully benefiting from them. For this reason, it is essential that the adoption of technologies takes into account the needs and capabilities of these companies, ensuring that the transition is as fair as possible and supports the participation of all societal actors.
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The Role of Stakeholders
Stakeholders such as customers, suppliers, and investors play a significant role in shaping how companies develop their sustainability efforts. Stakeholders increasingly demand transparency and accountability, which pushes companies to adopt new technologies to maintain their competitiveness. In the case of Provenance, the use of blockchain is a direct response to customer demands for transparency and verification of product origin.
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In Conclusion
Emerging technologies such as AI, IoT, blockchain, and AR/VR are set to revolutionize sustainability work in SMEs within the next few years. While large corporations are at the forefront of adopting these solutions, SMEs will follow as technology becomes more affordable and tools become more accessible. AI helps automate data collection and reporting, IoT enables real-time monitoring of environmental impacts, blockchain enhances data transparency and integrity, and AR/VR introduces new opportunities for training and stakeholder engagement.
For SMEs, this technological transition offers tremendous opportunities to enhance sustainability efforts and meet regulatory requirements that are increasingly extending down the value chain. At the same time, improved resource efficiency and productivity allow them to focus more on developing sustainable business strategies, strengthening both their competitiveness and profitability. The transparency and efficiency enabled by technology help SMEs take on a greater role in responsible business and actively contribute to sustainable development.
The journey toward full automation is already well underway, and for SMEs, it is clear that these technologies are key to the future of business development. Those that adopt these solutions early have the potential to gain significant advantages—both in meeting regulatory requirements and in strengthening their business and sustainability performance.
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