Canadian SMEs face hurdles in green finance & reporting drive

Canadian small and medium-sized enterprises (SMEs) are showing a high degree of commitment to sustainability, but challenges in accessing green finance and in formal reporting processes may impede further progress. New global research highlights both the ambition and hurdles faced by SMEs in contributing to climate objectives.

Sustainability ambition

According to the latest international survey from Sage in partnership with the International Chamber of Commerce (ICC), 72% of Canadian SMEs consider sustainability either important or central to their business operations. Despite this, only 31% have a formal sustainability plan in place. Regular reporting remains limited, with just 10% stating they report consistently on sustainability outcomes, though a further 26% aim to start by 2026.

Finance access

The findings illustrate that access to green finance is low, with 13% of Canadian SMEs having applied for such funding and only 5% successfully securing it. This rate, however, is among the highest in North America. The figures underline a gap between sustainability goals and the capital available to fund improvements, echoing international trends where banks want to offer green finance but require emissions data to do so.

Reporting challenges

Complexity stands out as a major barrier to increasing formal sustainability reporting, cited by 62% of global SMEs in the survey. Many businesses lack access to quality data or simple tools to facilitate reporting. Among Canadian SMEs, 49% listed lack of time and capacity as their main obstacle to taking action, suggesting practical constraints hinder progress as much as financial ones.

Role of technology

Digital solutions are playing an increasingly significant role in unlocking climate finance for SMEs. The report shows that 11% of Canadian SMEs are already using carbon or emissions-tracking tools, surpassing the global average. Companies utilising AI-driven accounting or emissions monitoring tools are 1.6 times more likely to secure green finance and 2.4 times more likely to report formally on sustainability compared to those who do not use such technologies.

Interest in artificial intelligence as a reporting aid is high, with 46% of Canadian SMEs saying AI tools could make sustainability reporting easier. The adoption of these technologies not only simplifies reporting but can help build trust with lenders seeking verifiable data on emissions and other sustainable practices.

Global pattern

Internationally, 70% of surveyed SMEs state that sustainability is now central or important to their business. Action areas include energy efficiency, waste management, and renewables, yet only a third have any reporting structure in place. Just 2.8% of global SMEs applied for green finance in the past year, with the proportion of those securing it even lower.

Banks appear willing to fund sustainability efforts, with 73% expressing an interest in green finance products for SMEs. However, they increasingly require robust data to measure outcomes and returns, leaving less-prepared SMEs unable to benefit from what the report estimates to be an untapped USD $789 billion in available funding.

Policy recommendations

The research set out five recommended actions for enabling greater access to sustainable finance for SMEs: simplifying sustainability reporting, accelerating adoption of digital and AI tools, introducing more support and incentives, streamlining data sharing across stakeholders, and tailoring finance products for projects suited to smaller businesses.

"Small and medium-sized enterprises are on the frontline of climate action, but too many are still locked out of the finance they need to grow sustainably", said Elisa Moscolin, Executive Vice President of Sustainability and Foundation at Sage. "The barrier isn't intent; it's access to the tools that can help them scale their businesses while building resilience. By using AI and digital accounting tools, SMEs can report faster, build lender trust and unlock finance at scale. That's the path from ambition to action."

"SMEs are critical to the world's climate transition, yet the system still isn't built for them. We need simple, proportionate reporting frameworks and practical pathways to sustainable finance so that ambition turns into impact. This report shows how to make that happen," said John W.H. Denton AO, Secretary General, International Chamber of Commerce.