Sustainability reports are more than just an obligation—they can deliver real business benefits. With the Corporate Sustainability Reporting Directive (CSRD), companies face new requirements that not only ensure compliance but also open up long-term opportunities. But how can you shift from IRO (Impact, Risk, Opportunity) to ROI (Return on Investment)? Here are three proven approaches that leading organizations are already putting into practice:
Why this matters: Companies that strategically leverage sustainability not only improve their efficiency but also secure competitive advantages—from better financing conditions to increased market value. According to a 2023 McKinsey survey, 83% of C-suite leaders believe that robust ESG performance leads to higher shareholder value (source). Now is the time to see reporting as an opportunity, not a burden.
The Corporate Sustainability Reporting Directive (CSRD) has fundamentally changed sustainability reporting in Germany. On July 31, 2023, the European Commission adopted the European Sustainability Reporting Standards (ESRS). These standards serve as binding guidelines for the structure and content of sustainability reports, ensuring comparability and transparency across the EU.
In Germany, the CSRD is implemented through the CSRD Implementation Act (CSR-RUG), without any additional national requirements. The CSRD significantly expands the number of companies required to report: Nearly 50,000 companies in the EU will be subject to the regulations, including around 13,000 in Germany starting in 2026 (source).
The ESRS are divided into three categories: general standards, thematic standards, and sector-specific standards. This structure provides clear guidelines to help companies make precise, data-driven disclosures and enables sector-relevant benchmarking.
A central concept of the CSRD is double materiality. Companies must disclose not only the risks they face from climate change but also their own impacts on climate and society. This "dual materiality" links the perspective of financial risks with the effects on the environment and society, ensuring a holistic view of sustainability challenges and opportunities (source).
Other core aspects include digitalization and auditing. The CSRD requires standardized digital submission of data and mandates a "limited assurance by third parties." A comprehensive materiality analysis is also necessary to meet the new standards.
From 2025, companies must also present a plan to reduce emissions that aligns with the goals of the Paris Agreement and aims for net-zero emissions by 2050. These requirements create the framework for integrating sustainability reports into strategic and economically meaningful processes, with the European Commission emphasizing the importance of credible, science-based targets (source).
To implement EU requirements, Germany has a clearly defined timeline with transitional arrangements:
| Wave | Companies | Reporting Obligation |
|---|---|---|
| First Wave | Large listed companies and public interest entities with more than 500 employees | Fiscal year 2024 (report in 2025) |
| Second Wave | Large companies with more than 250 employees | Fiscal year 2027 (report in 2028) |
| Third Wave | Listed SMEs | Fiscal year 2028 (report in 2029) |
Sanctions highlight how seriously CSRD compliance is taken: Violations can result in fines ranging from €50,000 to €10 million, or up to 5% of annual group turnover (source).
Adjusting existing legal structures in Germany makes implementation easier for companies. Early preparation is essential: Companies should familiarize themselves with the ESRS at least 18 to 24 months before the end of their first reportable fiscal year. Only then can they successfully comply with the standards and pave the way for further best practices.
The EU Parliament emphasized the importance of the CSRD with the words: "[The CSRD will] end greenwashing, strengthen the EU's social market economy and lay the groundwork for sustainability reporting standards at global level."
Connecting ESG goals with a company’s operational processes requires a thoughtful, long-term strategy. For listed companies, it is mandatory to implement an internal control and risk management system tailored to the company’s specific activities and risks. This system forms the foundation for structured integration of ESG principles and ensures that sustainability is embedded in day-to-day decision-making.
A key starting point is linking ESG goals to executive compensation structures. By tying executive pay to sustainable corporate objectives, sustainability becomes a core part of business strategy rather than just a compliance issue. According to a PwC study, 45% of DAX40 companies now include ESG metrics in executive remuneration (source).
Many companies begin their ESG journey with clearly defined goals, such as setting a net-zero target. Such measures lay the groundwork for concrete and measurable business benefits, including improved investor confidence and operational resilience.
A coherent ESG approach can turn reporting obligations into real value creation. Companies that strategically integrate ESG benefit from greater operational efficiency, reduced compliance costs, and stronger relationships with stakeholders. For example, research by Harvard Business School found that firms with high ESG performance enjoy lower capital costs and higher market valuations (source).
Growing demand from investors and lenders for ESG-relevant information gives companies that embed ESG into their business strategy a clear competitive edge. Even organizations not legally required to disclose are increasingly expected to be transparent about their ESG performance. One example of this trend is sustainability-linked lending, where banks factor ESG risks into their credit assessments. According to the European Banking Authority, over 60% of European banks now integrate ESG factors into lending decisions (source).
Furthermore, a proactive ESG approach offers another advantage: better preparation for future regulations. Companies can get ahead of the Corporate Sustainability Due Diligence Directive (CSDDD) by reviewing existing due diligence processes and integrating enhanced due diligence obligations into their policies and strategies.
A prime example of successfully linking ESG and business strategies is Siemens Healthineers. The company has set itself the goal of becoming climate-neutral by 2030, following the guidelines of the Science Based Targets initiative (SBTi). By aligning with these standards, Siemens Healthineers combines measurable and science-based targets with international benchmarks. Adhering to SBTi criteria not only ensures transparency but also allows stakeholders to better compare progress. As a result, Siemens Healthineers has reported significant reductions in emissions and improved access to green financing (source).
Other DAX40 companies are following suit, establishing specialized ESG committees on their supervisory boards. These bodies ensure that ESG topics are discussed at the highest leadership level and integrated into strategic decisions, further embedding sustainability into corporate governance.
The Corporate Sustainability Reporting Directive (CSRD) sets reporting requirements for 49,000 large companies in the EU as well as subsidiaries of non-EU companies operating in the region. This vast scope underscores the importance of having accurate and consistent underlying data to ensure compliance and comparability.
Building trust through data quality happens when companies base their ESG reporting on reliable data management practices. The CSRD’s requirements are not to be underestimated: it covers 12 standards and 82 reporting obligations. The challenge becomes even clearer when you consider that 47% of organizations still use error-prone spreadsheets (source). Accurate data is therefore not just a compliance issue but an economic imperative.
There is also a requirement for external assurance, raising the bar for data quality even higher. The CSRD mandates that sustainability reports be verified by external auditors. This makes professional data collection and documentation indispensable. Without modern data management tools, meeting these requirements efficiently is nearly impossible.
To meet the strict requirements of the CSRD, companies are increasingly turning to modern data management systems. ESG reporting under CSRD standards requires more than 1,100 data points (source). Manual processes quickly reach their limits here. Automation significantly reduces errors and enables integration of data from various sources.
One example of an effective solution is Informatica's IDMC (Intelligent Data Management Cloud). This platform offers a centralized way to collect and integrate ESG data from different sources—whether from internal departments or external partners. Centralized data collection and analysis make it much easier to verify reports and comply with the numerous CSRD and ESRS requirements.
Centralized data management is key to compliance. With a central data management system, companies can ensure that all ESG data is stored, processed, and reported in line with CSRD requirements. Solid data management practices also guarantee complete documentation and traceability of data, which is a decisive advantage during audits. The next step is to prepare this data to meet stakeholder expectations.
A precise and consistent data foundation is the basis for reports that meet stakeholders’ transparency expectations. Digital tagging is now mandatory: companies must tag their sustainability information so it is easily accessible and understandable, enabling comparability across the EU (source).
The European Sustainability Reporting Standards (ESRS) provide clear guidelines on how various sustainability metrics must be reported. The ESRS framework consists of overarching standards, such as ESRS 1 and ESRS 2, as well as topic-specific standards. ESRS 2 covers topics like governance, strategy, and the management of impacts, risks, and opportunities, forming the foundation for structured reporting.
Early preparation is crucial. Companies should conduct a double materiality analysis to identify the most relevant sustainability topics. Successful reporting starts with strategic planning: from understanding the ESRS scope to identifying data gaps and defining the necessary workflows.
The EU Parliament stated in a press release on November 10, 2022: "[The CSRD will] end greenwashing, strengthen the EU's social market economy and lay the groundwork for sustainability reporting standards at global level."
The Corporate Sustainability Reporting Directive (CSRD) places stakeholder engagement at the heart of compliance requirements. Companies are required to report transparently on their consultations with affected groups. 85% of investors consider ESG factors in their decisions, further emphasizing the importance of thoughtful stakeholder engagement (source).
The first step is systematically identifying relevant stakeholder groups. This includes employees, suppliers, and customers, as well as investors, financial institutions, and authorities who use sustainability reports. The environment is often considered a "silent stakeholder"—here, environmental experts or specialized NGOs can provide valuable perspectives.
Prioritizing stakeholders should ideally be based on their influence, ESG maturity, and the existing relationship with the company. An interesting aspect: companies that actively involve employees in sustainability initiatives report a significantly lower employee turnover rate—by 25-50% (source). This shows how closely stakeholder engagement and business success are linked.
There are various methods for engagement: surveys are suitable for large groups and preserve anonymity, while interviews provide deeper insights. Workshops foster deeper understanding, and assemblies offer space for broad discussions. These approaches lay the groundwork for a solid materiality analysis, which is explored in the next section.
The materiality analysis is a core component of CSRD compliance. It considers both the company’s impacts on the environment and society (Impact Materiality) and the financial risks and opportunities arising from sustainability issues (Financial Materiality). According to studies, around 70% of companies rely on an evidence-based approach that combines data and stakeholder input (source).
A successful example is the Schaeffler Group, which conducted a materiality analysis in 2023 in line with CSRD requirements and ESRS 1. Both inside-out (Impact Materiality) and outside-in perspectives (Financial Materiality) were considered. In preparation for workshops, Schaeffler identified relevant sustainability topics—based on previous analyses, ESRS requirements, customer demands, and ESG ratings. The results were discussed across business units and regions and confirmed by the executive board (source).
For German companies, a structured approach is recommended to ensure CSRD compliance: This includes a comprehensive analysis of the entire value chain—from raw material sourcing to end use—creating a topic list based on ESRS standards, and annually reviewing and updating the analysis. Transparent documentation of the process is essential, especially for audits.
Stakeholder feedback increases the credibility of reports. According to the Global Reporting Initiative (GRI), 85% of companies say that stakeholder engagement helps them better identify and manage sustainability risks (source). This shows how important it is to systematically incorporate feedback into reporting.
Practical implementation starts with stakeholder mapping exercises to prioritize groups by influence and interest. Engagement strategies should be tailored to the needs of each stakeholder group to gather valuable feedback. The collected feedback is then analyzed and prioritized by relevance and impact.
Digital platforms offer new opportunities for stakeholder engagement. They facilitate dialogue with a broad audience and enable continuous feedback. The AES Corporation emphasizes:
"By engaging with each of the stakeholder groups, AES can align business practices to drive long-term sustainability and shareholder value."
This approach demonstrates how stakeholder feedback can directly contribute to value creation.
For integration into reports, companies should develop performance indicators and shape report content based on stakeholder feedback. For example, EcoActive ESG reported in 2024 that close collaboration with stakeholders can promote more sustainable practices—such as reducing CO₂ emissions or improving working conditions in the supply chain. Companies should design their reports to clearly reflect the concerns and priorities of their stakeholders (source).
The integration of ESG topics now clearly demonstrates how sustainability reporting can be more than a box-ticking exercise—it can offer strategic advantages. German companies like Siemens AG and the Mercedes-Benz Group provide impressive examples. Siemens invested €650 million in CO₂ reduction measures and was able to cut emissions by 46%. These achievements enabled the company to access more favorable financing conditions (source).
Mercedes-Benz, on the other hand, managed to make all vehicle production sites CO₂-neutral by 2022 and plans to reduce production emissions by 80% by 2030 (source). These advances strengthen not only operational efficiency but also the company’s position as a technology leader.
Interestingly, around 90% of listed companies in Germany use their sustainability reports to build investor trust, and about 70% use ESG data to optimize their supply chains (source). This shows: strategically deployed sustainability reports can create real business value.
Dr. Theresa Spandel of Climate & Company sums it up well:
"In the current regulatory uncertainty surrounding sustainability reporting, it makes us optimistic to see businesses that continue to pursue the benefits sustainability reporting offers them – from more resilient supply chains to improved access to financing. We remain convinced that sustainability matters will continue to play a crucial role for both firms' competitiveness and the transition to sustainable economies in Germany, the EU and at a global scale. With this project, we aim to contribute constructively, in dialogue with decision-makers from business, politics, and finance, to ensure that ambitious sustainability reporting remains feasible and increases competitiveness for companies."
The advantages are clear: better risk management, more resilient value chains, and easier access to sustainable financing. Companies that strategically use their CSRD data—for example, by presenting green transformation plans—also benefit from better financing conditions.
The shift from IRO to ROI offers not only the chance to meet regulatory requirements but also to gain real competitive advantages. With the introduction of the CSRD, the number of companies required to report in Germany will rise from 550 to 15,000 (source). This means not only more effort, but also new opportunities to use sustainability reports as a strategic tool.
An exciting example is the collaboration between Climate & Company, BIO COMPANY, followfood, and Terra Naturkost Handel. Since February 2025, they have been developing scalable approaches to make the strategic benefits of sustainability reporting accessible to mid-sized companies. This shows that not only large corporations can benefit from best practices (source).
A first step for companies should be to establish a cross-functional ESG team that brings together expertise from finance, HR, procurement, legal, and operations. A double materiality analysis helps identify the most important sustainability topics and allocate resources effectively.
It is crucial to integrate ESG goals directly into business strategy. Sustainability reports should be seen as a strategic tool—not a bureaucratic burden. Lidl demonstrates how concrete goals, such as a 42% reduction in Scope 1, 2, and 3 emissions by 2030, can be implemented in both reporting and operational improvements (source).
Reiner Hoffmann, Chairman of the German Council for Sustainable Development, puts it succinctly:
"Companies themselves need this data to make their business models sustainable and competitive."
Those who act proactively now will not only ensure compliance with regulatory requirements but also strengthen the trust of investors, customers, and talent.
The days when sustainability reports were created superficially are over. Companies that align their reporting strategically and implement the best practices presented here turn regulatory hurdles into real competitive advantages.
Companies can meet the requirements of the Corporate Sustainability Reporting Directive (CSRD) by establishing a solid data foundation early on and defining clear reporting processes. A clear governance structure plays a central role, as does the involvement of relevant stakeholders—both of which are crucial for strengthening transparency and credibility.
Another important step is a careful analysis of EU and national reporting standards. Here, a double materiality analysis should be conducted to identify the company’s key sustainability topics. This analysis enables relevant aspects to be presented precisely and transparently. With a well-planned and structured approach, the sustainability report will not only be compliant but can also be used as a strategic advantage to strengthen the company’s market position.
Companies that integrate ESG goals (environmental, social, governance) into their business strategy benefit in many ways. A targeted ESG focus helps to better manage risks, reduce operating costs, and strengthen customer and investor loyalty. It can also solidify market position and make access to capital easier—a decisive advantage in an increasingly competitive environment. According to S&P Global, firms with strong ESG performance are 2.6 times more likely to outperform their peers in the long term (source).
Another plus: Strong ESG performance builds stakeholder trust and supports long-term competitiveness. Companies that take a strategic approach to ESG combine economic success with an active contribution to a more sustainable future—a win for all involved.
Engaging stakeholders plays a central role in ensuring that sustainability reports not only meet legal requirements but also address the expectations of key interest groups. It enables companies to identify truly relevant topics and tailor reporting to actual needs. The World Economic Forum notes that companies with robust stakeholder engagement are more likely to achieve their sustainability goals and avoid reputational risks (source).
To implement this effectively, early and well-organized dialogue with key stakeholders is essential. The goal is to understand their expectations precisely and integrate them into both business strategy and reporting. Transparency is vital: sustainability reports should clearly show which stakeholder groups were involved, how the engagement was structured, and what insights were gained. This openness not only boosts credibility but also builds trust and underscores the value of stakeholder engagement.