Sustainability Reporting: The Hidden Goldmine for Mid-Sized Companies

As regulations shift and external pressure on sustainability reporting diminishes, many mid-sized companies are at a crossroads—either continue to invest in sustainability efforts or scale back. But new research from the Center for Sustainability Research at the Stockholm School of Economics reveals that sustainability reporting is a strategic goldmine, especially for mid-sized businesses. To find out more I met with the researchers.

One of the researchers, Tommy Borglund from Örebro University, together with colleagues from the Stockholm School of Economics, is studying how financial materiality affects companies’ business performance and stock prices. Through interviews with sustainability officers and CFOs, combined with quantitative analyses, their research builds a new understanding of the role of sustainability in business strategy. The aim is to examine how sustainability efforts can create—or destroy—value. So far, the results point to significant strategic opportunities, particularly for mid-sized companies.

“It’s crucial for companies to seize this moment to think strategically and make use of the insights these reports bring,” says Tommy Borglund.

Why Mid-Sized Companies Stand to Gain the Most Over Time
While large corporations are often already aligned with frameworks like GRI, it’s the mid-sized companies—according to the research—that are seeing the greatest benefits from CSRD, even though it initially requires more effort. Reporting has enabled these companies to integrate sustainability into their operations in new ways, identify risks and opportunities earlier, and strengthen their competitiveness.

The research, funded by the Nasdaq Foundation, also shows that sustainability reporting—although it can initially feel administratively burdensome—eventually becomes a strategic asset. Companies that lack a standardized framework like ESRS would still need to engage in extensive stakeholder dialogues to understand their needs—a task that risks being more time-consuming and less efficient. ESRS and CSRD provide the structure and direction needed for this work.

Sustainability as a Driver of Innovation
Several companies in the study shared how sustainability efforts led to the discovery of new business opportunities—so-called “golden eggs”—within their product offerings. The research shows that sustainability reporting can act as a catalyst for innovation, which in turn yields a positive return on investment.

“CSRD acts as a motor for innovation, and it’s important that even smaller companies recognize its potential,” says Borglund.

Integration and Engagement – Keys to Success
According to the research, a critical success factor in the CSRD process is how well sustainability issues are anchored within the organization. Companies that involve multiple departments in sustainability efforts have made greater progress. This leads to increased understanding, higher engagement, and a better ability to translate reporting outcomes into strategic actions.

However, Borglund and his team note that sustainability aspects are often still insufficiently integrated into the strategic sections of corporate reports. This represents a major opportunity moving forward.

Collaborate with the Finance Department
Another key takeaway from the research is the importance of collaboration with the finance function. These departments already have data collection and quality assurance processes in place—skills that are equally valuable in sustainability reporting. When sustainability data begins to inform investment decisions and performance tracking, the link between sustainability and business becomes even more apparent.

“It’s important to actually calculate the costs and revenues related to sustainability,” Borglund emphasizes.

Conclusions So Far
Even though the Commission has now proposed an “Omnibus” initiative aimed at reducing the reporting burden for smaller companies, the research indicates that it is often the small and mid-sized businesses that experience the most innovation-driven impact. This is particularly true for manufacturing companies which, despite having fewer employees, have a significant impact and thus gain greatly from structured sustainability work.

Tommy Borglund’s research points to several important takeaways for mid-sized companies:

• Continue with sustainability reporting: Despite the potential regulatory relief from the Omnibus initiative, the research shows that sustainability reporting is a worthwhile investment.
• Integrate sustainability into strategy: Reporting provides insights that can strengthen overall business strategy.
• Harness the power of innovation: Sustainability work can become a catalyst for both innovation and business development.

At 2050, we see the same pattern in our client projects. The greatest value of CSRD lies in its ability to make sustainability strategy tangible and structured—based on data-driven analysis of material topics in relation to the company’s ecosystem and stakeholders. This creates both resilience and business value.

Participate in the Research
Interested in contributing to Tommy Borglund’s ongoing research? He welcomes companies willing to share their experiences. Contact us and we’ll connect you—become part of this exciting research journey.

Elin Engkvist
Senior Consultant at 2050