Introduction to New ESG Regulations

Over the past few years, the European Union has shifted ESG from a voluntary best practice to a regulatory and market driven obligation. Even when a small or medium sized enterprise does not fall directly within the scope of a specific ESG directive, it is still affected indirectly. Large corporate clients, banks, and international partners now require structured, documented, and verifiable ESG data.

Although, at EU level, a degree of regulatory “relaxation” was announced in December 2025 for CSRD and CSDDD through higher thresholds and extended timelines, the obligations for large companies remain unchanged. More importantly, their expectations toward suppliers and partners also remain intact. The same reality applies to tourism, especially when Greek businesses collaborate with large European tour operators.

For Greek SMEs, ESG requirements will arrive either through regulation, value chains, or access to finance. Preparation is no longer optional.

Which Businesses Are Most Affected

Below are the main categories of Greek SMEs that are already experiencing ESG pressure, either directly or indirectly.

SMEs Supplying Large Companies

Even when an SME is not required to publish a full sustainability report, it will increasingly be asked to provide ESG data to large customers. Those customers must comply with CSRD and report using the European VSME standard, supported by evidence.

In practice, this means supplier questionnaires and data requests covering emissions, energy consumption, labor practices, health and safety, ethics, and anti corruption policies.

Industries in Greece that face higher exposure include manufacturing, food and beverages, construction materials, transport, logistics, construction, facility services, and packaging.

SMEs with Exports or International Partnerships

In many markets, ESG criteria have become a prerequisite for participation in tenders, B2B contracts, and long term partnerships. Clients request ESG policies, KPIs, proof of implementation, and in some cases third party assurance.

Without credible ESG documentation, Greek SMEs risk exclusion from international value chains.

Companies Affected by CSRD Threshold Changes

CSRD focuses on corporate sustainability reporting and traditionally applies based on employee numbers, turnover, and balance sheet size. While recent discussions point to higher thresholds and a narrower formal scope, this does not eliminate ESG pressure.

A Greek medium sized company may fall outside direct legal obligation, yet remain under strong commercial obligation because banks and customers will continue to request ESG data.

Supply Chain Due Diligence and CSDDD

CSDDD introduces mandatory due diligence on human rights and environmental impacts across supply chains. Although the directive mainly targets very large companies, SMEs acting as suppliers must demonstrate internal processes, controls, grievance mechanisms, and traceability systems.

Recent political agreements may affect timelines, but the market direction remains clear and irreversible.

SMEs Covered by the EU Deforestation Regulation (EUDR)

The EUDR applies to commodities linked to deforestation, including cattle, timber, cocoa, coffee, soy, palm oil, rubber, and derived products such as leather, chocolate, and furniture.

New compliance deadlines were set for December 2026 for large operators and June 2027 for small and micro enterprises. For Greek SMEs such as importers, traders, coffee roasters, chocolatiers, and timber or furniture companies, this means traceability, geolocation of origin, and structured due diligence before products reach the market.

ESG Compliance as a Competitive Advantage

ESG compliance should not be viewed only as a cost. For many Greek SMEs, it creates clear business value by enabling easier entry into large supply chains, improving access to financing as banks integrate ESG into risk assessments, and reducing operational risks related to energy, waste, safety, and supply disruptions.

Common Mistakes to Avoid

One frequent mistake is responding to ESG questionnaires without proper documentation, which often creates problems during audits. Another is attempting to monitor too many indicators too early. A small number of reliable and verifiable KPIs is far more effective. Finally, assuming that ESG does not apply to smaller businesses is increasingly risky in modern supply chains.

Greek SMEs that integrate ESG criteria early and systematically are likely to gain a meaningful advantage over those that delay action. International experience clearly shows that sustainability driven value creation is no longer theoretical. It is a practical opportunity with immediate and measurable impact.

See full article published at OT here