## 2 Literature Review
The lack of a standardized reporting model for ESG information is a significant challenge. Ref. [27] emphasized that the absence of standardization and data diminishes transparency and comparability among companies, especially regarding reporting requirements. According to [28], ESG reporting faces challenges such as greenwashing practices, a lack of auditing, the absence of standardization in disclosures, and the lack of a global body overseeing these issues. Additionally, ref. [29] highlights the need for regulatory standards, consistent metrics, and comparable mandatory reporting on ESG factors. The lack of access to financing, credit, and green investment funds poses a challenge for SMEs in developing countries [30]. According to this author, many SMEs face difficulties obtaining bank credit due to a lack of tangible collateral. This is particularly evident in South Africa, where most credit applications from SMEs are rejected by banks. The research conducted highlights the scarcity of studies on ESG practices and their impact on financing access in these nations. Additionally, a survey of 600 SME owners and managers across three provinces in South Africa demonstrated a positive correlation between sustainability commitment and access to external financing, mediated by financial performance and effective corporate governance structures within the companies. Furthermore, ref. [22] highlighted green technology financing in Malaysia in 2010 targeted at SMEs, with ESG being cited as one of the indicators considered by investors to support green financing. In summary, ref. [18] suggests that governments should offer tax incentives and subsidies for green investments, in addition to establishing investment funds to support sustainable development. Financial constraints due to the high costs associated with ESG practices are another challenge addressed in this work. Ref. [13] investigated the impact of investing in ESG projects on corporate financial performance and defaults resulting from the costs of these projects. They analyzed 1249 companies in North America, Latin America, Europe, the Middle East, Africa, and Asia between 2011 and 2019, finding that the company's headquarters allocation influences the relationship between financial performance and ESG activities and that international companies, especially in Asia and North America, are more successful in ESG initiatives, while Latin American companies, whether local or multinational, face financial challenges. They recommended that successful ESG regions provide financial support and expertise to Latin American companies to implement ESG practices. Additionally, ref. [4] noted that achieving environmental performance incurs additional production costs and ESG reporting expenses due to a lack of clarity and disclosure costs, resulting in operational inefficiencies and thereby affecting company profits and evaluations. Therefore, stringent ESG standards may initially increase costs, but competition and scale can offset and thus drive innovation and improve recycling techniques [31]. The lack of interest or motivation from stakeholders is a challenge addressed by [6; 32] in their work, and despite representing only 4.5% of respondents, this lack of motivation is a significant barrier. In a study conducted in Latvia, ref. [33] identified six challenges, with lack of motivation being the most mentioned at 46.3%. Emphasizing the need for regulations and incentives, such as tax benefits and lower interest rates on loans, for companies engaged in sustainability initiatives. Organizational resistance is a challenge highlighted by [34], who emphasize the importance of overcoming this challenge through governance, with boards playing a key role in setting the tone and guiding corporate employees towards an ESG mindset, making the environmental and social impacts of activities visible to employees. Boards should appropriately prioritize stakeholder ESG issues, set realistic goals, and develop initiatives to address these impacts.