Environmental transparency: A catalyst for SMEs’ environmental disclosure and financial outcomes

Abstract

Environmental transparency enhances corporate competitiveness, as legal constraints and stakeholder demands have increased global interest in ethical business practices. This study examines 302 Ghanaian manufacturing small and medium-sized enterprises (SMEs) in an emerging market context. This study investigates the impact of environmental disclosure (ED) and corporate reputation on the financial performance (FP) of SMEs. We adopted a quantitative approach through hypothetical testing, using partial least squares structural equation modeling (PLS-SEM) and the purposive sampling technique. Our findings show that ED and business reputation (BR) influence the financial success of SMEs in emerging markets. Additionally, business strategies positively moderate BR and ED. The results indicate that ED practices can guide managerial policies through regulatory compliance in meeting United Nations Sustainable Development Goals targets and improve environmental transparency and reputation demanded by stakeholders. A strategic policy alignment with the firm’s ED framework influences SMEs’ environmental transparency, competitiveness, and FP, offering both theoretical and practical insights for SMEs. © 2026 International Council for Small Business.