Is sustainability reporting worthwhile? With the recent discussion surrounding the Omnibus package and the rollback in European transparency requirements, this is a question on many directors’ minds. Our honest answer: it depends. Not on the legislation, but on how you approach it.
What research says about the value of reporting
Recent research by the Bertelsmann Stiftung, offers refreshing insights. The central conclusion is clear: the added value of sustainability reporting is not in the report itself, but in the organizational changes that the reporting process initiates as well as in the targeted use of the collected data.
The reporting process as a catalyst
The Bertelsmann study identifies five transformational processes that ESG reporting can initiate. The first is strategic anchoring. Conducting a
Second, the reporting process is forcing professionalization of processes. Organizations are building more robust data governance systems, clarifying responsibilities and investing in data collection systems. This may seem like a cost at first, but will yield efficiency gains over time.
In addition, new governance structures are emerging. Sustainability is systematically embedded, sometimes down to the board level. Formalizing responsibilities makes themes more concrete and prioritizes them. Fourth, the preparation of a sustainability report strengthens internal cooperation, as employees from different departments come together: sustainability, procurement, finance, HR. Silos are broken down. Finally, reporting ensures that stakeholder engagement shifts from a non-committal to a structural part of business operations.
From process to financial value
These transformation processes translate into concrete outcomes that create financial value. Research from Deloitte and others shows that 98% of executives surveyed report some degree of progress toward their sustainability goals. More than half cite greater efficiency, lower risk and enhanced stakeholder trust as the key internal benefits of investing in non-financial reporting. Externally, brand reputation, talent attraction and better price positioning score high.
Importantly, investors are placing increasing importance on ESG information. According to research by EY, 99% of investors surveyed use sustainability reporting as part of their investment decisions. Although companies often still perceive the direct benefits in financing as limited, pressure from banks and investors is increasing. Avoiding a “malus,” think a higher risk premium or more expensive loans, is seen as at least as important as receiving a “bonus” for good performance.
Efficiency and risk management
The efficiency gains come from increased transparency. When you systematically map energy, water and materials consumption, you automatically identify areas where optimization is possible. At Ducky Dons, a circular pioneer in the comforter and pillow sector, CO2 calculations for scope 1, 2 and 3 provided surprising insights. Not only were the expected emissions in raw materials, but also purchased services such as IT turned out to be a significant source. That kind of insight creates opportunities for action.
Improved risk management is a second concrete outcome. Integrating sustainability information into existing risk management systems reveals new risks: climate risks, water stress, supply chain vulnerabilities. Academic research published in the Journal of Financial Reporting and Accounting confirms that companies with strong ESG scores suffer less severe consequences when incidents do occur.
The customer as a driving force
One of the most tangible benefits is better access to customers. Many organizations experience a so-called trickle-down effect: larger customers place higher demands on their supply chain because of their own reporting requirements under the CSRD. For SMEs prepared for this, it opens doors. Nick van Nieuwenhuizen of Ducky Dons puts it aptly: “When our customers have questions, we want to be able to provide solid answers.”
In addition, employer attractiveness plays a growing role. Acting sustainably is proving to be an important factor in recruiting and retaining staff, especially younger employees. Preparing a sustainability report provides the facts and figures to make internal and external communication about your environmental and social performance more credible. As Van Nieuwenhuizen puts it, “If you don’t start working on sustainability, you will be much less able to attract employees.”
Delta Electronics illustrates how reporting can yield concrete results. The company introduced an internal carbon pricing mechanism in which each site that purchases fossil energy pays an internal contribution to a sustainability fund. By 2024, this generated $21 million, invested directly in energy-saving technologies. Their scope 1 and 2 greenhouse gas emissions have decreased 53.6% since 2021, while employee engagement is at 90%, which is very high for the industry.
When does it work (and when doesn’t it)?
The extent to which sustainability reporting creates value depends on several factors. Crucial is the organization’s starting position: available data, resources and expertise. Motivation also plays a role. Organizations that approach the reporting process as an opportunity to learn and improve get more out of it than those that see it primarily as an administrative requirement.
External factors matter as well. The complexity of reporting standards such as the ESRS can be frustrating when rules are unclear or excessively detailed. The availability of good tools and the competence of consultants also make a difference. Overly complex processes reduce reporting to a fill-in-the-blank exercise, where real value is lost.
From reporting to impact
The lesson from the study is clear: sustainability reporting can be a powerful catalyst, but only when organizations actively use the process as a management and learning tool. The value shifts from the report to the use of the sustainability data.
This is consistent with what we see from our Empact practice. At Ducky Dons, the process led to sharper objectives and an ESG strategy that is immediately executable. “It is more alive,” said Van Nieuwenhuizen. “Our strategy and objectives have become sharper.” The company can now also communicate more transparently to stakeholders. “You can give stakeholders clearer insight into what you are doing in the sustainability area, which makes them more aware of your efforts.”
At Delta Electronics, sustainability has now become an integral part of every investment decision. With an internal carbon price of $300 per ton, sustainability is not becoming a stand-alone project, but woven into the daily operations of the company.
So the question is not whether reporting can create value, but how to set it up so that that value is actually realized. That requires a practical approach, good data, and a willingness to use the reporting process as a springboard for real change. Because just filling out forms isn’t going to get us there.