Sustainability reporting in Italy: MEF publishes Sustainability Dialogue between SMEs and Banks

published on 18 February 2025 | reading time approx. 4 minutes

The Table for the Coordination of Sustainable Finance, promoted by the Ministry of Economy and Finance, is engaged in the development of a reporting model that takes into account the needs of all actors in the current sustainability-oriented regulatory landscape.

In this context, the Table, in cooperation with various stakeholders, has developed the ‘Sustainability Dialogue between SMEs and Banks’, a tool that, although not binding, offers practical guidance to unlisted SMEs in collecting and reporting information on environmental, social and governance aspects, facilitating access to financing opportunities and responding to the need for transparency in global market.

The European push for sustainability and the impact on SMEs

The integration of sustainability in corporate strategies is now a priority, especially for large companies that must report on their performance with particular attention to environmental, social and governance aspects (‘ESG’). European regulations, such as the Corporate Sustainability Reporting Directive (transposed in Italy with Legislative Decree 125/2024) and the recent Corporate Sustainability Due Diligence Directive (awaiting transposition in the various Member States), are speeding up the transition to a more sustainable economic model, requiring companies to make a concrete commitment not only to manage the direct impacts of their activities, but also the indirect ones relating to the so-called ‘value chain’, which involves suppliers, partners and customers.

Although they are not formally subject to such legislations, unlisted SMEs are therefore also faced with requests for sustainability information from corporate clients, banks and investors. While collecting this information can be a complex challenge, it also represents a strategic opportunity: measuring ESG risks enables SMEs to access private finance, public funds and guarantees more easily, as well as to strengthen their competitiveness on the global market.

The Sustainability Dialogue between SMEs and Banks

In order to support SMEs in collecting and communicating information on ESG aspects, the Sustainability Dialogue between SMEs and Banks (‘Document’) was published on 6th December 2024. It is the result of the joint work of the Table on Sustainable Finance chaired by the MEF and composed by the Ministry of the Environment and Energy Security, the Ministry of Enterprise and Made in Italy, the Bank of Italy, Consob, Ivass and Covip.

The Document responds to the information needs arising from the banking regulatory system and internal ESG risk assessment and management processes by setting the following objectives:

facilitate the exchange of information between SMEs and banking institutions;
raise awareness among SMEs on the importance of sustainability information, in line with the planned adoption of the EFRAG VSME ED standard;
lay the foundations for training initiatives to develop SMEs’ sustainability skills.

While not binding, the Table for Sustainable Finance is confident that the Document can contribute to the standardisation of ESG disclosure requirements, thus reducing the proliferation of complex and diverse requests from financial institutions.

The first part of the Document provides a clear and structured list of sustainability information that SMEs can share with banks. This information, gathered in a modular approach, is divided into five thematic areas, ranging from general information on corporate structure, through corporate initiatives on climate change mitigation and adaptation, to information on the management of social aspects and business conduct.

A crucial aspect is the attention paid to the different size characteristics of SMEs and, therefore, to their different capacities – in terms of resources, know-how and processes – to provide the required information. The modular approach promoted, in fact, does not provide a predetermined definition of a micro-enterprise, but allows for a case-by-case assessment, taking into account the relationship between the bank and the enterprise and the indications of the European legislator. In line with the principle of proportionality, the Document also distinguishes between information with priority 1, considered essential and, therefore, mandatory, and information with priority 2, considered additional and optional.

The second part of the Document offers a methodological guide designed to facilitate SMEs in reporting sustainability information to banks. In particular, this guide provides a detailed description of the required information as well as potential useful sources from which to obtain it.

Next steps for SMEs

To sum up, adopting a structured approach to ESG risk management would enable SMEs to face future challenges and ensure a global market that rewards transparency, accountability and commitment to a ‘green and fair’ transition.

However, to play a leading role in a more sustainable future, SMEs must be ready to invest in this field by developing advanced governance systems, focusing on technological innovation and enhancing training activities. Only with a structured and forward-looking commitment will it be possible to achieve tangible results, consolidate stakeholder trust and attract new business opportunities.