The conversation between Code Gaia CEO Markus Adler and Philipp Killius (Forvis Mazars) can also be listened to in our podcast Code Green.
Executive Summary
The Omnibus Regulation initially left many companies in a state of shock. Today, I see it above all as an opportunity to use the time gained to set up processes and data structures. The EU taxonomy also remains complex and unpopular, but is being simplified. Waiting is dangerous for small and medium-sized companies, as they are still affected via supply chains. Robust materiality analyses are particularly important as the foundation of any sustainability strategy. Ratings are becoming increasingly important – not only for the capital market, but also in the B2B context. There are also new requirements in the supply chains, which are particularly crucial for suppliers. On the horizon, I see the topics of climate, biodiversity, circular economy and a possible comeback of the SDGs. My conclusion: sustainability is not a project, but a process. It is crucial that companies start now and stick to it consistently.
About our author
Philipp Killius is an expert in ESG and sustainability with more than 20 years of experience. As a partner at Forvis Mazars, he is responsible for sustainability and supports companies in meeting regulatory requirements, managing risks and exploiting opportunities through transformation. His expertise ranges from SMEs to DAX-listed corporations – always with the aim of anchoring sustainability in a practical and strategically effective way. For him, sustainability is a calling to make companies more resilient, innovative and future-proof.
BACKGROUND
For over two decades, I have been helping companies to meet regulatory requirements, manage risks and, above all, exploit opportunities through sustainable transformation. In my role as a partner at Forvis Mazars, I am responsible for sustainability and have the privilege of working with both SMEs and DAX-listed companies. For me, sustainability is much more than a profession – it’s a calling.
In my conversation with Markus Adler in the podcast, I talked about many current developments: from the Omnibus Regulation to the EU taxonomy, the double materiality analysis and ESG ratings through to upcoming trends. I would like to reproduce this exchange here in an unabridged but structured form – as an insight into my daily practice.
Table of contents
Omnibus and the future of ESG reporting
The Omnibus Regulation has shaken up the ESG world. Many companies were initially surprised and reacted with uncertainty. The mood fluctuated between frustration and a feeling of shock. However, it is now clear that the omnibus is not a brake, but a shift. Companies are being given time.
The question is how this time is used. I clearly see two camps. On the one hand, there are the “true believers” who are consistently pursuing sustainability regardless of regulatory deadlines. On the other hand, there are companies that have previously only reported out of obligation and are now scaling back their commitment. From my consulting experience, I know that the majority of our clients are using the time they have gained constructively. They are not only concerned with fulfilling formal compliance requirements, but are also questioning their processes, data landscapes and business models. They are asking themselves how they can position themselves beyond the reporting obligation – and that is exactly the right attitude.
Sustainability is not a project with a beginning and an end, but a continuous process. It makes companies more resilient, more innovative and more attractive – both internally and externally.
Philipp Kilius
Partner and Head of Sustainability/ESG at Forvis Mazars in Germany
The EU taxonomy: both a challenge and an opportunity
Hardly any company reports enthusiastically about the EU taxonomy. It is seen as bureaucratic, difficult to understand and not very practical. The greatest difficulties lie not in identifying the economic activities affected, but in assessing their conformity. The technical criteria are complex, not always clear and leave room for interpretation.
There is also the problem of data quality. Many companies simply do not have the necessary information to provide reliable proof of compliance. It becomes particularly critical when data from international subsidiaries or supply chains is missing – outside Europe, the term “taxonomy” is often met with a lack of understanding.
At the same time, the taxonomy forces companies to take a close look at their value chains. In this respect, a positive aspect can also be seen here. There are also certain simplifications with Omnibus: The materiality thresholds have been raised, the reporting forms have been made clearer and additional information on gas and nuclear energy has been removed. This makes the application more practicable – but the fundamental challenge remains.
The double materiality analysis is at the heart of every sustainability strategy. It determines which topics are really relevant for companies – today and in the future.
Why SMEs should not wait and see
Many small and medium-sized enterprises hope that they will not be affected by the higher thresholds. At first glance, this is true, but it would be a dangerous illusion. Because even if they are not formally required to report, they will be asked for ESG data by customers, banks or business partners. If you don’t have the answers here, you risk losing orders or partnerships.
There are also strong economic arguments: Sustainability helps to reduce costs, for example through energy efficiency. It strengthens the company’s attractiveness as an employer, especially for generations Y and Z. And it drives innovation by critically scrutinizing and further developing business models.
My advice to SMEs is therefore clear: use the time you have gained. Continue with the initiatives you have started. Clarify your level of ambition: do you want to be a pioneer, a follower or is pure compliance enough for you? And above all: Involve your employees. Standing still would be the greatest danger.
Materiality analyses as a foundation
For me, the double materiality analysis is at the heart of every sustainability strategy. It determines which topics are really relevant for companies – both in terms of their impact on the environment and society as well as their financial significance.
The process begins with a broad collection of topics based on the industry, competitors and associations. The next step is to analyze the impact materiality, i.e. the social and ecological effects of the company’s own actions. The financial materiality is assessed in parallel: Which topics harbor risks or opportunities for the business?
The credible involvement of stakeholders is crucial. Digital surveys can quickly provide a broad basis, while personal interviews allow for more in-depth insights. These building blocks create a robust picture that serves as the basis for targets, measures and key figures – and thus sets the strategic direction for many years to come.
Sustainable finance and ESG ratings
Ratings are no longer a niche topic, but a key factor for capital procurement and reputation. Whether banks, investors or business partners – they all use ESG ratings to assess the sustainability performance of companies.
A distinction must be made between capital market-driven ratings, such as those from Moody’s or Morningstar, and B2B-oriented ratings such as EcoVadis. It is important to choose the right target group and the right rating. Anyone who starts a rating without being prepared will be disappointed. Policies, data and documentation must be in place beforehand. The times when you could simply run through a rating on a test basis are over.
I can see that the rating agencies themselves are being more strictly regulated, with greenwashing and the EU Green Claims Directive. But that doesn’t change the importance: a good ESG rating strengthens access to capital, facilitates discussions with investors and is also increasingly in demand in supply chains.
Supply chain regulation and the role of SMEs
The Supply Chain Act not only affects large corporations, but also their suppliers in particular. For many SMEs, it is crucial to establish structures at an early stage in order to secure their position in the supply chains.
The first step is to clearly define the level of ambition: do you want to fulfill purely regulatory requirements or proactively shape sustainability? Then it’s about resources: What can be done internally, where do you need external support?
Data collection is particularly important. Excel lists once a year are not enough. Sustainability data must be recorded regularly, automatically if possible, and integrated into the existing risk and management systems. It is equally important to clearly define responsibilities and anchor sustainability in the organization – be it through a sustainability manager or through committees that regularly deal with the issues.
Trends on the horizon
When I look ahead, I see several big issues. Climate remains the dominant field: companies need to measure COâ‚‚ emissions, develop strategies and introduce IT-supported systems to track progress. Biodiversity is becoming increasingly important, not only due to European regulations, but also globally. The circular economy will act as a driver of innovation – not just in terms of packaging, but in the fundamental redesign of products and processes.
I also believe that the SDGs will make a comeback. A few years ago, they were on everyone’s lips, but they have since been somewhat forgotten. But the closer we get to 2030, the stronger the question of accountability becomes. Companies that communicate their contribution to the global goals today can position themselves clearly – not only as an obligation, but also as an opportunity for positive differentiation.
Conclusion
Sustainability is not a project with a beginning and an end, but a continuous process. It makes companies more resilient, more innovative and more attractive – both internally and externally.
My appeal to all companies is therefore: get started if you haven’t already done so. Use the time that Omnibus has given you and have the courage to get support when it is needed. Sustainability is not an end in itself, but a strategic opportunity. For me, it is a vocation to accompany this path – and I am convinced that together we can not only advance companies, but also our society and the environment.
