Background: Through DT and the development and implementation of digital tools, coordination, collaboration, control, and monitoring of supply chains have improved. The digital supply chain and the extended focus and emphasis on sustainability have contributed to the development of SSC4.0. The development of the European Green Deal and the associated EU Taxonomy entails transparency from companies and requires disclosure of digitally tagged information regarding companies’ sustainability impact. Hence, the need for new practices to enable this disclosure and reporting obligation are necessary. The applications of SSC4.0 principles may aid this transition and alignment with the regulation. However, an adaption to SSC4.0 principles can be challenging, more so for SMEs compared to larger enterprises. There is lacking research regarding SMEs' alignment with the European Green Deal, as well as the application of SSC4.0. Hence, more research is necessary to develop managerial implications for fostering DT towards SSC4.0, to enable an alignment with the EU Taxonomy.

Purpose: The purpose of this study is to investigate how sustainable supply chain 4.0 principles support SMEs to align and report their sustainable activities in accordance with the EU Taxonomy and Corporate reporting initiatives.

Method: Our methodology and method follow a relativism ontology, within the spectrum of constructionism. The conducted study was a qualitative research with an exploratory and inductive approach, which used a multiple case study design consisting of eight case companies. The primary data was collected through interviews to provide insight on the topic, which was analyzed by following a conventional content analysis process.

Conclusion: The results show that the SSC4.0 principles offer opportunities for SMEs to manage the alignment with the EU Taxonomy and the reporting directives. The case companies show progress in terms of DT and sustainability, and the results indicate the usage of digital tools within the case companies enables SSCM. Although the result shows the case companies obtaining certain enablers for SSC4.0 adaption, there are potential challenges that may hinder both SSC4.0 implementation and alignment with the EU Taxonomy and the CSRD.