The greenhouse gas reduction gap in manufacturing companies: An action-research framework for European reporting requirements

The Corporate Sustainability Reporting Directive (CSRD) and its reporting standard ESRS E1 impose detailed greenhouse gas (GHG) disclosure and reduction requirements that many manufacturing SMEs struggle to operationalize. However, little empirical evidence exists on the gap between European reporting ambitions and the realistically achievable GHG reductions in manufacturing SMEs. This study reports on an eight-month action-research collaboration with two Austrian SMEs to co-develop a five-stage GHG accounting and reduction framework that guides SMEs from initially encountered lack of knowledge, resources, and data, over a baseline balance sheet to ESRS-aligned actionable decarbonization plans. In case 1, a full Scope 1–3 baseline of 9.200 tCO2eq was compiled, leading to a 2030 forecast of 10.817 tCO2eq. Planned engineering measures and anticipated supply chain improvements reduced this by 44%, meeting near-term science-based targets. In case 2, overcoming accounting complexities, gaps in data systems, and unknown product-use emissions, a 2023 baseline of 62.990 tCO2eq was calculated, with 85% from downstream product use. Despite internal energy and logistics measures and supply chain gains totaling 2.549 tCO2eq, projected 2030 emissions (84.216 tCO2eq) remain well above Scope 3 reduction targets. The cross-case comparison reveals a persistent “GHG reduction gap” between ESRS-aligned trajectories and what SMEs can achieve given resource and data limitations. Our framework demonstrates how SMEs can systematically account for emissions and prioritize mitigation measures across energy, materials, and mobility to derive decarbonization paths. Scenario planning for GHG inventories revealed where ambition outpaces engineering reality. Implications highlight the importance of data ownership, custom templates, digital data capture, and scenario planning to translate ESRS E1 into practice, overcoming GHG accounting challenges and the reduction gap.