Introduction
The twin transition has become a core EU narrative because Europe wants competitiveness that is also climate-aligned and resilient. Yet SMEs often experience these transitions as two separate agendas: digitalisation is pushed by customers, efficiency needs, and market pressure, while environmental action is framed as compliance or “nice to have.” This separation can lead to an unbalanced pathway where SMEs modernise their ICT and processes but do not systematically reduce energy demand, material use, or emissions.
The challenge is not that digital tools cannot support sustainability; they frequently can. The risk is that digital adoption expands faster than governance: more devices, more software subscriptions, more data retention, and more cloud services, without targets, measurement, or staff routines that prevent rebound effects. EU strategic analysis also highlights that the twin transition requires substantial annual investment and coordinated action, underlining the importance of making SME-level implementation practical and affordable.
What “twin transition” means for SMEs
In policy terms, the twin transition is the intentional integration of green and digital priorities so that digitalisation supports sustainability outcomes, rather than undermining them. For SMEs, a useful operational translation is: “every digital decision should have a sustainability check.” That check can be simple, such as lifecycle thinking for devices, energy-aware procurement, data retention rules, and basic indicators reviewed quarterly.
The European Commission’s Digital Decade framing includes “leveraging digital transformation for smart greening,” reinforcing that the purpose is not only more technology, but better outcomes and governance. This matters because SMEs typically have limited time and specialised staff, so the twin transition must be implemented through lightweight routines that fit day-to-day operations.
Why SMEs go digital faster than green
SMEs tend to digitalise rapidly because benefits are immediate and visible: faster workflows, better customer communication, improved sales channels, and more flexibility. Green improvements in ICT, by contrast, often require measuring impacts that are less visible (cloud usage, embodied carbon, e-waste pathways), and the payback is not always captured in a single budget line.
Evidence on SME readiness also shows structural differences. The EU SME twin transition monitor finds that Nordic and Benelux countries lead overall readiness while Southern and Eastern European countries face greater challenges, indicating that context (infrastructure, skills systems, investment capacity) strongly shapes SME performance. Where readiness is lower, SMEs may prioritise digital survival and postpone environmental upgrades, especially when they perceive sustainability as cost rather than strategy.
The “digital rebound” problem
Digital tools can reduce emissions (e.g., optimising logistics, reducing waste, supporting remote collaboration), but they can also increase total consumption if they drive more demand. This is the rebound effect: efficiency gains are partly or fully cancelled by growth in activity. A common SME example is cloud adoption: moving services off-site may be efficient, but if storage and data processing grow unchecked, energy demand and costs can rise.
This dynamic aligns with EU policy warnings that digital and green must be steered together, and with the need for “smart greening” rather than technology expansion alone. SMEs reduce rebound risk by setting boundaries: retention periods, “default off” settings, device lifecycle standards, and procurement rules that avoid overbuying tools and hardware.
Investment and capability constraints
The twin transition is not just a behavioural issue; it is also an investment and skills issue. EU foresight work has highlighted large additional annual investment needs for the twin transitions through 2030, showing why targeted support and de-risking mechanisms are critical, especially for smaller firms. At firm level, SMEs may lack access to finance for upgrades such as efficient equipment, improved buildings, or higher-quality ICT infrastructure.
Survey evidence from the European Investment Bank (EIB) shows that many EU firms invest in both climate-related measures and digital transformation, but investment decisions are affected by uncertainty and constraints. For SMEs, this means that the best-designed sustainability guidance still needs to be modular, low-cost, and tied to productivity, otherwise it will not scale.
A practical alignment model for SMEs
A workable twin-transition model for SMEs can be organised into five management questions:
- What digital value are we creating? Map the business purpose of each major digital tool (sales, operations, HR, compliance).
- What is the sustainability “cost surface”? Identify likely hotspots: devices, energy in premises, data storage, printing, travel substitution, e-waste.
- What are our minimum standards? Set baseline rules: device lifespan targets, repair-first policy, “clean storage” routines, supplier criteria, and secure end-of-life handling.
- What do we measure quarterly? Use a small set of indicators: number of devices per employee, average device age, office electricity trends, cloud storage growth, e-waste returns.
- Who owns the routine? Assign shared responsibility: management sets targets; IT configures defaults; procurement applies criteria; staff follow simple behaviours.
This approach matches the logic of monitoring tools used at EU level: composite readiness frameworks exist because transitions are multi-factor, and SMEs need simplified versions that still capture what matters.
Skills as the missing connector
Skills often determine whether SMEs can align digital and green decisions. The OECD highlights the twin digital and green transition for SMEs while noting trade-offs and the need to consider capabilities. In practice, SME staff often receive vendor-led training focused on features, not on sustainable use, lifecycle thinking, or measurement.
Vocational education and training (VET) providers, trainers, and SME support organisations can fill this gap by teaching “decision literacy”: how to select tools, configure defaults, manage data responsibly, and design workflows that avoid waste. The result is not only lower footprint but also clearer governance and better cost control, which makes sustainability more attractive to management.
Conclusion
SMEs can “go digital without going greener” when digital adoption is treated as urgent competitiveness work while sustainability is treated as optional or external. EU policy and monitoring efforts emphasise that the twin transition is about integration, and readiness varies across Europe, meaning SMEs need practical tools and capacity building rather than one-size-fits-all expectations.
This is where D-GREEN becomes operationally relevant: by supporting VET trainers and SME stakeholders with training content, methods, and practical instruments, the project helps SMEs connect everyday ICT decisions to measurable sustainability routines. D-GREEN’s contribution is to make alignment achievable at SME pace: modular learning, clear checklists, and self-assessment logic that can guide prioritisation when time and investment capacity are limited. In that sense, D-GREEN supports the twin transition not as a slogan, but as an implementable workplace practice that protects competitiveness while reducing digital waste and unmanaged growth.
References
- European Commission. (2022, June 28). 2022 Strategic Foresight Report. https://commission.europa.eu/strategy-and-policy/strategic-foresight/2022-strategic-foresight-report_en
- European Commission. (2025, June 16). 2025 State of the Digital Decade package. https://digital-strategy.ec.europa.eu/en/policies/2025-state-digital-decade-package
- European Commission, Joint Research Centre. (n.d.). The SME twin transition monitor: Towards a competitive Europe (repository page). https://publications.jrc.ec.europa.eu/repository/handle/JRC140504
- European Commission, Joint Research Centre. (2025, January 20). The SME Twin Transition monitor for the EU (repository page). https://publications.jrc.ec.europa.eu/repository/handle/JRC137875
- European Investment Bank. (2024). EIB Investment Survey 2024 (publication page). https://www.eib.org/en/publications/online/all/eib-investment-survey-2024
- European Investment Bank. (2024, October 23). EIB Investment Survey 2024: More than 60% of European companies have invested in climate mitigation and adaptation and more than 70% in their digital transformation (press release). https://www.eib.org/en/press/all/2024-386-eib-investment-survey-2024-more-than-60-of-european-companies-have-invested-in-climate-mitigation-and-adaptation-and-more-than-70-in-their-digital-transformation
- OECD. (n.d.). Digitalisation of SMEs. https://www.oecd.org/en/topics/sub-issues/digitalisation-of-smes.html
- OECD. (2026). The twin transition of retail SMEs (Local Retail, Global Trends). https://www.oecd.org/en/publications/local-retail-global-trends_55e2edec-en/full-report/the-twin-transition-of-retail-smes_e9ff5378.html
