Exploring Factors Affecting the Readiness of SMEs to Implement Sustainability Reporting Practices in Southeast Nigeria

Abstract

Sustainability reporting is gaining global prominence as a tool for enhancing corporate accountability and fostering long-term development. Despite its relevance, readiness of small and medium-sized enterprises (SMEs) in developing economies to adopt such practices remains underexplored. This study examines the factors influencing the readiness of SMEs in South-Eastern Nigeria to adopt sustainability reporting. Data were collected through a structured questionnaire from 181 SMEs across the five states in the region. The data were analysed using SPSS version 26, employing descriptive statistics and inferential tests including regression and ANOVA. Results revealed that although a basic awareness of sustainability reporting exists among SMEs, significant readiness gaps persist due to limited internal capacity and a lack of structured external support. Organisational factors such as firm size and managerial commitment significantly influenced readiness, while external pressures from regulators, industry associations, and stakeholders also played a role. Perceived benefits, such as improved reputation and competitive advantage, were acknowledged; however, barriers, including cost implications, technical know-how, and the absence of clear policy frameworks, hindered practical implementation. The study concludes that SMEs in Southeast Nigeria exhibit partial readiness, shaped by both internal capabilities and external drives. It recommends targeted training, simplified reporting templates, and policy frameworks to encourage adoption. Implementing these recommendations will significantly improve SMEs' readiness for sustainability reporting, thereby fostering sustainable business environment. By shedding light on local barriers and enablers, this study offers valuable insights for policymakers, development agencies, and SME networks seeking to integrate sustainability into their business practices across emerging economies.