The strategic added value of corporate sustainability – from ESG obligation to entrepreneurial foresight

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But ESG is far more than a regulatory obligation – it is a strategic lever that directly addresses the current challenges of many German companies. High energy costs, volatile raw material prices and rising CO₂ prices are weighing on competitiveness. According to recent reports by the Deutsche Bundesbank, high energy costs are the main drivers of inflation and weakened exports – with noticeable consequences for German competitiveness.[2] At the same time, companies are looking for ways to increase their efficiency, reduce costs and build resilience against external shocks. This is precisely where ESG management offers synergies: The integration of energy, material and emissions data into control processes makes it possible to identify inefficiencies and significantly reduce operating costs. Estimates show that active management of raw material prices, water and CO2 prices can reduce operating costs by up to 60%.[2] According to the International Energy Agency, energy inefficiencies cost USD 4.6 trillion annually – that is around 5% of global GDP.[3] ESG is therefore not only an instrument for minimizing risk, but also a lever for reducing costs and increasing competitiveness.

This is also reflected in the unbroken high interest on the international financial markets for ESG-compliant investments. Investors and banks still prefer companies with reliable ESG data and a clear ESG orientation. [1] Those who use ESG as a strategic management tool not only reduce risks, but can also tap into new sources of capital.

Sustainability – supposed mandatory exercise instead of strategic lever

The EU’s current Stop-the-Clock approach offers companies the opportunity to pause and specifically realign their approach to sustainability – without the pressure of formal reporting requirements. This time can be used effectively to strategically prepare and sharpen structures, data and processes. Initial analyses confirm that targeted, control-relevant and company-specific information is not the focus of current reporting. This is reflected in the wealth of information in the CSRD reports: Reports by German DAX companies are another 30% longer than the EU average.[1] Surveys show that only 12.6% of companies in 2024 believed that the current approach to CSRD reporting could actually lead to more sustainability.[2]

We therefore recommend that companies affected take four ‘No-Regret Actions’ in the two years leading up to the actual disclosure obligation. These start exactly where the German Mittelstand companies are investing according to current industry reports: in cost reduction, process optimization and digitization. This means that sustainability is not seen as an additional expense, but as a strategic lever.

Stop-the-Clock? Time for vision instead of standstill – RÖDL No-Regret Actions

1. Collect control-relevant ESG data

For an ESRS-compliant report, up to 200 quantitative data points must be collected depending on the materiality assessment – often with high, sometimes manual effort. Apart from external reporting, this data is currently rarely used for control purposes. The abundance of standardized key figures often does not address company-specific materiality. In addition, the data collected is often incomplete or unreliable.

This is precisely where a business advantage lies: Companies that integrate emissions, energy or material consumption data into planning and budgeting processes can identify cost drivers and inefficiencies at an early stage. This creates competitive advantages over companies that do not use this data. It is therefore worth realigning towards more automation and rethinking the use of ESG data. Smart ESG KPIs make it possible to identify and collect the relevant key figures from this flood of data. Higher degrees of automation in the collection process reduce manual effort, increase data quality and create a basis for entrepreneurial decisions.

2. Address specific stakeholders

Suppliers, customers and banks continue to demand ESG information, regardless of the regulatory postponement. Investors, customers and employees demand transparency, clear climate targets and no ‘greenwashing’ practices, with banks in particular using ESG data as part of their creditworthiness analyses. Companies that have not yet implemented sustainability reporting are therefore still faced with the task of providing specific sustainability information in order to maintain their business relationships and secure financing conditions. Instead of a comprehensive sustainability report, targeted communication with selected, transparent and audited ESG data can better meet the needs of stakeholders.

3. Strengthen resilience

Resilience means being able to recognize risks and cushion them in good time. In particular, many companies are currently not systematically recognizing risks associated with resource scarcity or climate risks. The demand for fresh water, for example, will exceed supply by 40% by 2030. For companies in the industry, which accounted for 45% of global fresh water withdrawals in 2020, efficient water management is therefore a central resilience factor.[1] The early identification of climate risks, such as the predicted increase in CO2 prices in the EU internal market, not only reduces risks, but can also lead to production optimizations or the development of new markets if lower-emission technologies are used.

4. Position yourself in the competition

Better data, more precise stakeholder management and strengthened corporate resilience strengthen the company’s position overall and can act as growth factors. A solid data basis improves budget and investment decisions and leads to better capital allocation in the long term. For example, a company in the metal processing industry can use process and material master data to efficiently calculate whether reuse instead of disposal is economically viable and invest specifically in recycling plants.

Resource efficiency and production optimization are not only risk management, but also a lever for growth. Those who act early can tap into new markets, improve capital allocation for long-term growth and strengthen their own reputation.

Conclusion

The facts show that regulation alone does not create transformation. However, it can create the framework for targeted change. Ultimately, it is important to emphasize that global climate change will continue to progress. There is no ‘stop-the-clock’ for climate change. It is therefore up to companies to recognize this transformation independently of short-term priorities in the regulatory landscape, to react to it early on and to use it strategically for themselves. A central starting point for recognizing where the greatest risks and strategically most important potentials lie for the specific business model is therefore the double materiality assessment.

1 DIHK (2025). 14th Energy Transition Barometer of the Chamber of Industry and Commerce Organization 2025.2 Deutsche Bundesbank (2025). Monthly Report – July 2025, 77th year, No. 7
3 McKinsey Quarterly (2019). Five ways that ESG creates value.
4 RMI (2024). The Incredible Inefficiency of the Fossil Energy System.
5 Morgan Stanley Institute for Sustainable Investing (2025). Individual Investor Interest in Sustainable Investing Remains Strong.6 Kirchhoff (2025). CSRD Reporting: German companies publish the longest and most detailed report.7 Federal Ministry of Education and Research (2025). GBP Monitor January 2025: Expensive reporting obligations slow down sustainable investments.8 Desotec (n.d.). Industrial water reuse: the growing need to counteract water scarcity.