The latest developments and the current situation regarding sustainability reporting: what German companies need to know now

The Council of the European Union has approved the simplifications to sustainability reporting and corporate due diligence obligations. EU Member States now have, in principle, one year to transpose these provisions into national law. Furthermore, a few days ago, the Sustainability Transformation Monitor initiative run by the Peer School for Sustainable Development e.V. (Mannheim) published this year’s study. This highlights the current state of affairs and the sentiment regarding sustainability within German companies. Can we derive any action points for German companies from these two topics? hsp brand manager Maori Kunigo discussed this with Dr Steve Waitschat, an expert and consultant on sustainability reporting.

The debate surrounding sustainability reporting remains a dynamic one: the Council of the European Union recently gave the go-ahead to measures to simplify sustainability reporting. At last, one might say, companies can look forward to clarity and planning certainty. But does that reflect reality? „There’s been a bit of hype surrounding this,“ says Dr Waitschat, putting the news into perspective. Political approval has been given to simplify the reporting requirements, and the specific thresholds – which were already known – remain in place: around 1,000 employees or €450 million in turnover as benchmarks, with the first mandatory reporting period being 2028 (for the 2027 financial year).

The Sustainability Transformation Monitor surveys decision-makers in German companies on the current state of play regarding sustainability. This includes measures and initiatives, as well as the identification of trends and barriers. The project is carried out by the University of Hamburg, the Peer School of Sustainability in Mannheim, the Bertelsmann Foundation and the Mercator Foundation. A total of 822 companies were surveyed; these voluntary participants answered questions on sustainability transformation. The results provide useful practical insights.

Who took part?

• Around half of the companies surveyed are from the real economy, whilst the other half are from the financial sector.
• Responses come from both large, reporting-obligated companies and smaller firms.

Key findings: Politics and regulation are the biggest stumbling block. Almost 50 per cent see political uncertainty as a barrier to their own transformation. A lack of resources, skills and data availability are also frequently cited. However, support from senior management is the decisive factor. If senior management does not back the initiative, even budgets and staff resources are of little help. More than 60 per cent of respondents see no immediate business case for sustainability measures and therefore do not prioritise them.

Despite the generally rather gloomy mood, many companies are still planning to publish sustainability reports. For example, 75 per cent of those who would no longer be subject to mandatory reporting requirements still intend to produce a report in future.

If the business case is not immediately obvious, it is worth starting with practical measures. The study highlights which areas appear to be particularly beneficial for businesses.

• Energy and resource efficiency: Over 60 per cent see significant added value here. Measures to reduce energy consumption or material usage often yield rapid savings and reduce dependence on global supply chains.
• Circular economy and waste management: Taking a long-term view of material efficiency reduces costs and risks arising from raw material shortages.
• Staff retention: Almost 50 per cent see sustainability as an important factor in retaining talent – a key consideration in the competition for skilled workers.
• Market opportunities: Around half see potential here, although this varies depending on the sector.

Sustainability experts have been pointing out for years that an increasing number of banks are insisting on a sustainability report when granting loans. The simple idea behind this is that companies which do not operate sustainably do not practise future-proof and resilient risk management. Such companies have been shown to have a higher probability of default. Accordingly, the Sustainability Transformation Monitor 2026 shows that Banks attach far greater importance to sustainability than many companies realise. Whilst companies often believe that sustainability plays only a minor role in lending decisions, the banks themselves say that they are increasingly integrating sustainability considerations into their risk management.

For German companies, this means that sustainability is not simply a matter of image or public relations, but has a financial impact. The costs and effort involved in producing and maintaining a sustainability report are manageable. This is offset by considerable financial benefits, provided that the sustainability data is presented in such a way that dthat lenders can make use of them. This can have a significant impact on lending terms.

When it comes to sustainability and reporting, companies should not wait for definitive policy guidelines but should take proactive steps at an early stage. The first step is to collect relevant data – for example, on energy consumption, emissions, material use, waste or risks in the supply chain. On this basis, it is advisable to report in accordance with established standards such as GRI or the ESRS drafts in order to establish a robust framework. At the same time, a clear business case should be developed that highlights specific economic benefits such as cost savings, risk minimisation, better financing opportunities or greater appeal to customers and staff.

Support from senior management and a pragmatic, step-by-step approach are crucial to success. Even just a few compelling management slides can help kick-start the discussion. Practical projects – for example, on energy and resource efficiency or the assessment of supply chain risks – deliver visible results quickly and strengthen internal acceptance. Companies that start early with data collection, reporting and initial measures gain a strategic advantage and increase their efficiency, resilience and capacity for innovation in the long term.