CSRD Following the Omnibus Process: What ESG Now Means for Companies and CFOs

In this post, we summarize and contextualize the key takeaways from an episode of the torq.partners Finance Podcast. Together with Theresa Zöckler, VP of Growth at Code Gaia, we explore how companies—particularly CFOs and finance teams—can take a pragmatic approach to ESG following the Omnibus process: moving away from mere compliance with reporting requirements toward clearly prioritized issues, clean data flows, and a measurable return on investment.

The focus here is on small and medium-sized enterprises and the question of how ESG can be meaningfully integrated into governance, risk management, and investment decisions.

What is the CSRD, and what has changed as a result of the Omnibus process?

The CSRD (Corporate Sustainability Reporting Directive) is an EU directive on mandatory sustainability reporting. Its goal is to make ESG (environmental, social, and governance) information more comparable, reliable, and verifiable.

However, the Omnibus Process led to adjustments to the original plans:
Reporting requirements were significantly reduced, thresholds were raised, and some deadlines were postponed. This provides some relief, but it also creates uncertainty about which companies are specifically affected and which requirements still apply.

At the same time, the focus is shifting. Instead of rushing to meet all regulatory requirements as quickly as possible, there is now more room for business-relevant ESG issues that have a real impact.

How does the uncertainty surrounding the CSRD affect small and medium-sized enterprises?

Many companies initially view the relaxed guidelines as a relief. The immediate pressure to implement them eases, budgets are reviewed, and projects are reprioritized. At the same time, some organizations feel “left hanging” due to the lack of clear guidelines and long-term predictability.

In practice, this leads to a realignment of ESG roles, responsibilities, and investments. Rather than simply complying with regulations, the focus shifts to determining which sustainability issues are strategically relevant and create real added value.

Why does ESG often fail in practice?

In many companies, the problem lies less in a lack of will than in structural barriers. Common causes include:

• lack of management priority,
  
• unclear responsibilities,
  
• fragmented or unreliable data sources.

Without a fundamental belief that ESG can create value, sustainability remains an isolated project. However, once that belief is established, operational questions quickly arise: Where is the relevant data? How is it regularly entered into the system? Who is responsible for ensuring its quality and timeliness?

Which companies are continuing to drive ESG forward despite the easing of requirements?

Companies in emission-intensive industries, consumer goods manufacturers facing significant supply chain pressure, and tech companies subject to high investor expectations remain particularly active. Banks, investment funds, and business partners are also indirectly increasing the pressure by increasingly requiring ESG data.

Some companies are deliberately positioning themselves as pioneers, while others are responding specifically to external demands. Opportunistic ESG initiatives without a strategic foundation, on the other hand, are losing significance.

What role do CFOs and finance teams play in ESG?

With the CSRD, ESG is being integrated more deeply—as an integral part of risk management, strategy, and investment decisions. This gives finance a central role.

CFOs can use materiality analysis to identify ESG opportunities and risks in a structured way. Sustainability metrics are not considered in isolation, but are evaluated alongside traditional performance indicators such as EBITDA, cash flow, or return on investment.

ESG is thus evolving from a reporting issue into a genuine management framework.

How can the return on investment from ESG be measured in concrete terms?

The economic benefits of ESG become tangible when the financial implications of measures are consistently calculated. Examples include:

• Energy efficiency measures,
  
• Data center and location decisions,
  
• Building standards,
  
• Process optimizations,
  
• Supply chain and default risks.
  
  

The more reliable data is available, the more clearly business cases and payback scenarios can be presented. This is precisely where one of the greatest strengths of finance teams lies in the ESG context.

Which data interfaces are essential for effective ESG reporting?

In practice, three data sources are particularly important:

• Accounting and financial data for carbon footprint assessments,
  
• HR data for social metrics,
  
• Clearly defined responsibilities for recurring data flows.
  
  

Whether the integration is done via APIs or manual uploads is secondary. What matters most is a clear schedule, well-defined responsibilities, and reliable data quality.

Offsetting, Climate Neutrality, and Regulatory Limits

"Climate-neutral" claims have been subject to strict regulatory restrictions. Offsetting can serve as a supplementary measure, but it can never replace actual emissions reductions.

When offsetting is used, transparent and certified projects are essential. Measures taken within one’s own operations and along the supply chain take priority, as they have the greatest long-term impact.

Practical First Steps for SMEs

For small and medium-sized businesses, it's better to start with a focused approach than to try to tackle everything at once. The following steps have proven effective:

1. Conduct a materiality analysis,
2. Prioritize less relevant ESG issues,
3. Define clear responsibilities,
4. Secure data sources and update them regularly,
5. Measure and report on progress.

In this way, ESG becomes gradually manageable, even without a direct reporting requirement.

Outlook: How will ESG evolve in the coming years?

Over the next two to three years, we can expect to see more robust ROI examples, more nuanced requirements from investors and customers, and a greater focus on investment and regulatory hurdles.

Companies that view ESG not merely as an obligation but as an integral part of their management will become more resilient, more competitive, and better prepared for regulatory changes.