The article discusses the digital and sustainable (twin) transformations in small and medium-sized enterprises (SMEs) in the European Union (EU). It highlights the importance of these transformations for achieving the EU's digital and green goals, as well as the United Nations Sustainable Development Goals (SDGs). The study identifies key factors influencing SMEs' competitive advantage in these transformations, including the number of SMEs adopting digital and sustainable practices, resource productivity, market share from eco-friendly products, initial investment, technical complexity, and the number of digital and sustainable technologies used. The research proposes a two-stage methodology to analyze twin transformations in SMEs, involving the analysis of EU-27 SME indicators and the development of a multi-criteria decision-making framework based on the COPRAS method. The framework helps assess SME progress towards twin transformations by considering both positive and negative factors. The study also reveals that SMEs lag behind larger enterprises in digital and sustainable practices, with significant research gaps in this area. The results show that SMEs in certain countries perform better in applying environment-oriented digital technologies, while others face challenges in implementing sustainable practices. The framework provides a structured approach for policymakers to evaluate and support SMEs in their digital and sustainable transitions, contributing to long-term competitiveness and environmental sustainability. The research emphasizes the need for further studies to address the challenges and opportunities in twin transformations for SMEs.The article discusses the digital and sustainable (twin) transformations in small and medium-sized enterprises (SMEs) in the European Union (EU). It highlights the importance of these transformations for achieving the EU's digital and green goals, as well as the United Nations Sustainable Development Goals (SDGs). The study identifies key factors influencing SMEs' competitive advantage in these transformations, including the number of SMEs adopting digital and sustainable practices, resource productivity, market share from eco-friendly products, initial investment, technical complexity, and the number of digital and sustainable technologies used. The research proposes a two-stage methodology to analyze twin transformations in SMEs, involving the analysis of EU-27 SME indicators and the development of a multi-criteria decision-making framework based on the COPRAS method. The framework helps assess SME progress towards twin transformations by considering both positive and negative factors. The study also reveals that SMEs lag behind larger enterprises in digital and sustainable practices, with significant research gaps in this area. The results show that SMEs in certain countries perform better in applying environment-oriented digital technologies, while others face challenges in implementing sustainable practices. The framework provides a structured approach for policymakers to evaluate and support SMEs in their digital and sustainable transitions, contributing to long-term competitiveness and environmental sustainability. The research emphasizes the need for further studies to address the challenges and opportunities in twin transformations for SMEs.