The Contribution of SMEs Towards Sustainable Development: The European Union’s Approach and Policy

In times of increasingly frequent climate and humanitarian crises, responsible business, with its resources, knowledge and power, can address global challenges including poverty, inequality, climate change, environmental degradation, peace and justice. In this context, SMEs can constitute rings in global value chains with huge societal and environmental footprints and can apply their creativity and innovation, within “do well by doing good” strategies and corporate responsibility actions, towards the creation of “shared value”, i.e., the strengthening of a firm’s competitiveness while simultaneously advancing the economic and social conditions in the communities it affects. Given the widely recognized links between SMEs’ operation and sustainable development, the aim of this chapter is to focus and analyze the evolution of the European Union’s approach for the role of SMEs on sustainable development. The relevant approach –initiating in 2001 and promoting the voluntary adoption of Corporate Social Responsibility but without any links to sustainable development– arrives to the recent legislation regarding the adoption of the European Sustainability Reporting Standards (ESRS), where SMEs are assigned well-defined obligations.