Abstract
Abstract
This study examined the emerging practice of sustainability reporting among Small and Medium
Enterprises (SMEs) in Nigeria, with a specific focus on its drivers, trends, challenges, impacts,
and future prospects. In light of growing global emphasis on environmental, social, and
governance (ESG) performance, sustainability reporting has become a strategic tool for
businesses seeking to align with international standards and stakeholder expectations. While
sustainability reporting is increasingly adopted by large corporations in Nigeria, its integration
among SMEs remains limited, largely due to insufficient awareness, regulatory gaps, inadequate
technical capacity, and perceived high costs. The study draws on theoretical underpinnings such
as stakeholder theory and legitimacy theory to explore the motivations behind SMEs’ adoption of
sustainability practices. A review of recent empirical literature revealed that although SMEs
recognize the potential benefits of sustainability reporting including enhanced brand image,
increased access to finance, and long-term competitiveness most lack the structure and support to
implement it effectively. The findings suggest that simplified reporting frameworks, targeted policy
incentives, digital solutions, and stakeholder engagement are critical to improving adoption rates.
The study concludes that for Nigerian SMEs to thrive in an increasingly sustainability-conscious
economy, there must be a deliberate and collaborative effort among regulators, development
partners, and SMEs themselves to integrate sustainability reporting into their operational
frameworks.