Why Fintech and SaaS SMEs Can’t Ignore ESG Anymore

For fintech and SaaS businesses, ESG is no longer something that “large corporates do”. Across the UK and Europe, small and medium-sized enterprises are increasingly expected to demonstrate ESG awareness in a structured, credible way.

This shift is being driven by three powerful forces: funders, customers, and stakeholders. And for many SMEs, the practical response has been the same — producing an annual ESG status report.

Funders are embedding ESG into core decision-making

Whether raising equity or debt, fintech and SaaS SMEs are encountering ESG as part of routine due diligence.

Research into private markets shows just how embedded ESG has become:

• A Deloitte survey of private market firms found that over 90% now have ESG policies in place, with client and investor demand cited as a primary driver.
• Surveys of limited partners indicate that a large majority plan to increase ESG-focused allocations, while many expect fund managers to demonstrate credible ESG integration.
• Regulators and lenders are also tightening expectations, with sustainability risk increasingly treated as a component of financial risk.

For fintechs reliant on repeat fundraising rounds, venture debt, or institutional capital, ESG is no longer a “nice to have”. It is part of the risk narrative funders expect companies to understand and articulate.

Annual ESG status reporting has therefore become a practical way for SMEs to show awareness, progress, and governance without overstating maturity.

Customers are demanding ESG evidence, not just intent

Customer pressure is accelerating ESG adoption just as quickly.

This is particularly true for fintech and SaaS businesses selling into:

• Public sector frameworks
• Regulated industries
• Financial institutions
• Large enterprise clients

UK public procurement frameworks now place significant emphasis on social value and sustainability, with ESG-related commitments frequently contributing to bid scoring and contract awards. While not every tender applies the same weighting, sustainability and social impact are now standard evaluation themes, rather than exceptions.

In parallel, enterprise buyers increasingly expect suppliers — regardless of size — to complete ESG questionnaires covering areas such as:

• Environmental impact and carbon awareness
• Data protection and cybersecurity
• Diversity, equity, and inclusion
• Governance, ethics, and risk controls

For fintech and SaaS companies, this creates a clear challenge: ESG requirements often arrive before internal systems are mature. An annual ESG status report provides a consistent, reusable way to respond to these demands without reinventing the wheel for every tender or client request.

Stakeholders and responsible investors are raising expectations

The pressure is not only external. Internal stakeholders are also shaping ESG expectations.

Investor research consistently shows growing concern about the quality and credibility of sustainability reporting. A PwC global investor survey found that the vast majority of investors believe current corporate sustainability reporting contains unsupported or unclear claims, highlighting demand for clearer, more reliable disclosures.

For early-stage fintechs and SaaS businesses, this has two implications:

1. Investors want ESG information that is proportionate, honest, and decision-useful
2. Overly polished or consultant-heavy reporting can raise as many questions as it answers

A simple, well-structured ESG status report — focused on material risks and year-on-year progress — often builds more trust than ambitious but opaque narratives.

The reality: ESG reporting is costly and time-intensive for SMEs

Despite growing awareness, ESG reporting remains a pain point.

Many SMEs face a difficult choice:

• External consultants can deliver polished reports, but often at costs running into tens of thousands of pounds
• Internal production can absorb weeks of senior leadership time, pulling focus away from growth and delivery

For fintech and SaaS businesses operating lean models, neither option is attractive — especially when ESG reporting must be repeated annually.

A growing shift toward pragmatic, SME-ready ESG reporting

Rather than pursuing complex sustainability frameworks, many fintech and SaaS SMEs are now adopting lightweight ESG status reporting approaches that:

• Focus on material ESG risks relevant to digital businesses
• Align with funder, customer, and investor expectations
• Reduce dependence on external consultants
• Enable efficient annual updates
• Create a credible audit trail of ESG awareness and improvement

As regulatory scrutiny increases and ESG questions become standard across funding, procurement, and governance, annual ESG status reports are fast becoming as routine as financial reporting.

Final thought

Fintech and SaaS SMEs don’t need to present themselves as ESG leaders overnight. But they do need to show that they understand their environmental, social, and governance risks — and that they are addressing them thoughtfully and consistently.

The businesses that act early will find fundraising smoother, procurement less friction-heavy, and stakeholder trust easier to maintain. Those that delay may find ESG expectations arrive suddenly — and under pressure.