Study Provides Detailed Insights into the Challenges and Opportunities of the Corporate Sustainability Reporting Directive (CSRD)
The necessity of an ecological transformation has now become a societal consensus. According to a previous study by the IfM Bonn, Mittelstand enterprises in Germany also predominantly support the ecological transformation. At the same time, there is a growing societal interest in information which depicts how sustainably individual companies operate. Current legislation also reflects this interest, notably the Corporate Sustainability Reporting Directive (CSRD) issued by the EU in 2022.
On behalf of the Bertelsmann Foundation, researchers from the IfM have examined the impact of the Corporate Sustainability Reporting Directive (CSRD) on Mittelstand enterprises. The EU regulation aims to provide private financial markets with information about the sustainability of companies. While previously only stock market-oriented large enterprises were affected, as of 2026, many large Mittelstand companies will also be required to publish sustainability reports. Furthermore, numerous smaller companies, which are not themselves subject to reporting obligations, will also be indirectly affected by the regulation, as they face increasing information demands from their business partners which have to meet CSRD reporting requirements – whether they be customers, suppliers, or financial partners.
Often, however, they first have to establish structures and processes for gathering information. For example, if greenhouse gases are emitted during production activities, the company must conduct a greenhouse gas assessment. "An earlier study from IfM Bonn showed that in 2022 only 17% of companies had installed such processes. In addition to the direct costs of information gathering, the competitive effects resulting from increased transparency must also be taken into account," reports Dr. Markus Rieger-Fels. He therefore recommends that the reporting standards should consider the indirect effects of regulation on non-reporting companies more strongly. For instance, reporting requirements on the value chain could rely more on statistical estimates than on data submissions from customers and suppliers. Additionally, the minimum contents of reports for first-time users should be limited to a much more manageable number of key information elements and gradually expanded later. “Such an approach would enable companies to decide for themselves which additional sustainability information they want to communicate to their stakeholders. This also allows sustainability reports to be tailored specifically to the capabilities of each individual company and the specific information needs of its stakeholders," explains Dr. Markus Rieger-Fels.
"Sustainability reporting also offers a whole range of opportunities for Mittelstand businesses: Newly gathered sustainability information can be used for the identification of savings potential, for the long-term development of the company’s own business model, or for the identification of innovation potentials," emphasizes Fritz Putzhammer, project manager at the Bertelsmann Foundation. Furthermore, sustainability reports can be strategically utilized as communication tools and for the application of public support funds. Besides, the reports can also facilitate solutions for business succession by reducing information asymmetries regarding the sustainability of the business model between buyers and sellers.
Ultimately, sustainability reporting could also be used to meet administrative information and documentation requirements. However, for this to happen, government offices would have to align their information requirements with the formats and contents of sustainability reports. If successful, sustainability reporting could help reduce the increase of additional bureaucratic burdens on Mittelstand businesses.
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