There is a question CFOs of mid-sized companies have increasingly been asked in recent years, without it being explicitly formulated that way.
The question comes from the house bank sending a new questionnaire.
It comes from the major customer needing ESG evidence for their own reporting.
It comes from the prospective employee asking about the sustainability strategy in the interview.
And it comes from the auditor who is starting to examine sustainability data with the same care as financial data.
The question, simplified: How does this company stand in terms of sustainability?
What many CFOs notice in this moment is that they have no good answer. Not because the company does nothing. But because what is done is nowhere structured, evaluated, and integrated into corporate steering.
There is communication about sustainability. There are initiatives. Maybe there is a sustainability report. But there is no robust data basis, no integration into planning and controlling, and no clear accountability at CFO level.
That is the actual problem. And it is a leadership problem, not a communication problem.
This article explains why sustainability in mid-sized businesses is a financial steering task, what that concretely means for CFOs, and what must be done to move from a communication topic to an operational steering metric.
Why Sustainability Ended Up in the Wrong Department
There is an understandable historical reason why sustainability is located in marketing in many companies.
The first requirements for sustainability communication came from outside:
Customers asking about environmental standards,
Media addressing corporate responsibility,
Employer rankings evaluating sustainability initiatives.
The natural reaction was communicative: we describe what we do and present it positively.
Marketing is well-equipped for this task. It can prepare content, formulate messages, and create visibility. That is valuable and right.
But this is exactly where marketing’s competency ends. What marketing cannot do is create commitment. It cannot ensure that the communicated goals are also financially backed. It cannot check whether the presented measures are compatible with liquidity planning. And it cannot guarantee that the data collected withstands external review.
This inability is no criticism of marketing as a function. It is a structural reality. Marketing is oriented toward communication, not toward steering.
And sustainability that is only communicated but not steered is in today’s business environment not just incomplete. It is risky.
The risk is concrete.
Banks asking for ESG data and getting no robust answers classify the company as less transparent and therefore as riskier. That is reflected in conditions.
Customers requiring ESG evidence and receiving superficial communication start checking alternatives.
Auditors examining sustainability data and finding no traceable data basis produce findings.
And investors asking about future viability and seeing no integrated strategy draw conclusions about the quality of corporate governance overall.
These consequences cannot be solved through better communication. They can only be solved through better steering. And steering is the core competence of finance.
How Sustainability Really Intervenes in the Finance Organization
To understand why sustainability is a CFO task, it must be understood how deeply it intervenes in a company’s financial decisions. That is deeper than most CFOs initially expect.
The financing dimension
The EBA Guidelines obligate banks to systematically include ESG risks in their credit decisions. That is no voluntary best practice. It is regulatory law applying to all banks active in the EU.
What that means for a mid-sized company is the following: every credit decision its house bank makes today contains an ESG risk assessment. The bank asks explicitly or implicitly:
How stable is this company in the face of climate risks?
How well does it manage its regulatory sustainability risks?
How transparent is it about its ESG data?
A company without structured ESG data is classified as less steerable and therefore as riskier. That manifests in higher interest rates, stricter collateral requirements, or slower credit decisions. That is no theoretical future effect. That is the current reality in bank conversations.
The consequence for the CFO is unambiguous: ESG data is no appendix to the annual report. It is a component of the company’s financing foundation. Whoever doesn’t have it or cannot prepare it robustly pays an economic price for it.
The investment dimension
Sustainability measures are rarely cost-neutral. Energy efficiency investments tie up capital and create depreciation before they generate savings. Supply chain adjustments raise procurement costs in the short term before they reduce risks in the long term. Process changes require training, system adjustments, and transition periods in which productivity suffers.
Each of these measures must be financially evaluated:
How much does it tie up?
When does it amortize?
What effects does it have on liquidity and result in the relevant periods?
Which dependencies arise between sustainability investments and other investment plans?
These questions can only be answered by finance. And if finance doesn’t answer them, sustainability investments either are not made because the uncertainty is too large, or are made without sufficient grounding, which later leads to liquidity problems.
A CFO who treats sustainability investments like any other investment — with capital requirement calculation, scenario analysis, and integration into mid-term financial planning — gives the company the foundation for informed decisions. That is leadership.
The risk dimension
The risk management of a company has changed. Not because regulators demand it, although that is also the case. But because the risks themselves have changed.
Climate risks are today insurance-relevant in many industries. Extreme weather events, floods, heat stress on production facilities: these risks affect insurance premiums, insurability, and business interruption risks. A company that does not systematically capture and evaluate these risks has blind spots in its risk management.
Regulatory risks are particularly dynamic in the sustainability dimension. What is voluntary today may be mandatory in two years. Whoever begins building structures today has a head start. Whoever waits until the obligation comes is under time pressure.
Supply chain risks have gained a new quality through supply chain due diligence legislation. A company that does not check its suppliers for ESG risks carries potential liability risks. That is no longer just a reputation topic. It is a legal and financial topic.
These three risk dimensions together yield a clear picture: sustainability is an integral component of risk management. And risk management is a CFO core task.
The steering dimension
Most deeply, sustainability intervenes in the steering logic of a company. When sustainability goals are not integrated into controlling, they have no steering relevance. They exist parallel to the economic management of the company, without connection to budget, planning, and performance measurement.
That is the fundamental problem with sustainability located in marketing. It exists as a communication topic without operational connection to corporate steering. Numbers are collected but not embedded in planning. Goals are formulated but not backed with budgets. Measures are described but not analyzed for their economic consequences.
Finance can establish this connection. By integrating ESG metrics into the controlling dashboard. By embedding sustainability goals in budget planning. By incorporating the economic consequences of sustainability decisions into scenario planning. And by clearly regulating responsibilities for ESG performance and incorporating them into corporate steering.
Why CFOs Cannot Delegate This Topic
There is a temptation many CFOs know: to delegate the sustainability topic to a sustainability manager or staff position and thereby remove themselves from direct responsibility.
This strategy doesn’t work. Not because sustainability managers would be incompetent, but because the topic must structurally be located at CFO level if it is to have steering relevance.
The reason is simple:
Budgets are negotiated at CFO level.
Investment decisions are made at CFO level.
Financing conversations are held at CFO level.
Risk assessments are accountable at CFO level.
When sustainability is not anchored at this level, it has no voice in all these processes.
What arises in practice when sustainability is delegated is the following: a sustainability manager or staff position collects data, formulates reports, and coordinates measures. But when it comes to securing budgets for sustainability investments, when the question arises which priority ESG topics have in annual planning, or when a bank conversation requires a well-founded ESG risk assessment, the CFO authority is missing.
That doesn’t mean the CFO must make every ESG detail decision themselves. It means they retain strategic steering sovereignty over the topic and ensure that sustainability is integrated into all relevant finance processes.
Concretely that means: the CFO decides which ESG metrics appear in the controlling dashboard. They decide which ESG risks are captured in risk reporting. They lead or accompany the conversations with banks about ESG requirements. And they ensure that sustainability goals are backed with budgets and anchored in planning.
What a CFO Must Concretely Do
The question that arises is not whether sustainability is a CFO task. The question is what concretely needs to be done to transform it from a communication topic into a steering metric.
That requires no complete transformation of the company. It requires a structured build-up in four dimensions that build on each other.
Dimension 1: Build the data basis
Everything begins with data. Without robust data there is no steering, no reporting, and no well-founded communication outward.
The decisive insight here is that the first step does not require perfection. It requires structure. A consistent set of ESG metrics regularly collected, documented, and updated is more valuable than a one-off comprehensive report that is two years out of date before the next version appears.
Which metrics are collected depends on materiality. Materiality in this context means: which sustainability topics have the largest influence on the company’s business model? For a manufacturing company, energy consumption and CO2 emissions are typically material. For a services company, social topics like working conditions and diversity are often more material than environmental topics. For a company with complex supply chains, the Scope 3 area is particularly relevant.
The materiality analysis is the first operational step. It limits which topics must be prioritized and prevents resource waste through collecting data that has no steering relevance for the specific business model.
After the materiality analysis follows the data structure. For each material topic area it is defined which metric is collected, how it is calculated, who is responsible for collection, in what rhythm it is updated, and according to which standard it is documented.
This structure must be carefully built once. After that, ongoing maintenance is significantly less effortful than the initial build-up.
Dimension 2: Integration into existing finance processes
Data collected but not integrated into existing processes has no steering effect. The decisive question is not whether ESG data exists, but whether it appears where decisions are made.
Concretely that means four integration steps.
Integrate ESG metrics into the controlling dashboard
CO2 emissions, energy consumption, relevant social metrics: these magnitudes must appear alongside classic finance KPIs so they gain steering relevance. What does not appear in the dashboard is not steered.
Embed sustainability goals in budget planning
When a company aims for a 20 percent reduction of its CO2 emissions in three years, this target must be backed with concrete investments. Which measures are planned? What do they cost? When do they unfold their effect? Without this embedding, the goal is a statement of intent without operational substance.
Integrate ESG risks into risk reporting
Climate risks, regulatory ESG risks, supply chain risks: these must be captured, assessed, and addressed in the company’s risk register. Risk reporting that ignores ESG risks is incomplete in today’s business environment.
Include ESG performance in management reporting
Not as a separate appendix, but as an integrated component of regular management reporting. The CFO and executive management should have in every reporting period a picture that combines economic performance and sustainability performance.
Dimension 3: Prepare financing conversations
Bank conversations are for most CFOs the most concrete moment in which ESG competence is either demonstrated or missed. The EBA Guidelines have systematically raised the requirements of banks in this area in recent years.
What banks today concretely want to know is not summarized in a sustainability report. They are operational questions:
Which climate risks has the company analyzed?
How do these risks affect the probability of business interruption?
Which transition risks arise from regulatory changes and how are they steered?
How does the company’s CO2 footprint develop and which measures are planned?
A CFO who answers these questions with robust data, clear logic, and a traceable strategy positions their company as transparent and steerable. That has effects on conditions.
Preparing for these conversations is a concrete CFO task. It requires that the relevant ESG data is available, that the risk assessment is documented, and that a mid-term ESG strategy exists integrated into financial planning.
Dimension 4: Manage supply chain pressure
The second large source of pressure beyond banks are business customers who themselves are reporting-obligated and demand ESG evidence from their suppliers.
This pressure is for many mid-sized companies the largest immediate ESG challenge. A supplier who cannot deliver robust ESG data represents a compliance risk for a reporting-obligated customer. And compliance risks are eliminated through alternative suppliers.
That is no hypothetical future scenario. That is a selection criterion already actively applied in the procurement processes of large corporations today.
The CFO answer to this pressure is not primarily a communicative one. It is structural: ensure that the data customers demand is actually available and robust. That requires the same data structure and the same process integration already described.
The Most Common Mistakes and What They Cost
There is a pattern of mistakes regularly arising in mid-sized companies in dealing with sustainability. Each of these mistakes has economic consequences that are quantifiable, even if rarely viewed that way.
The first mistake is delay through perfection
Many companies start too late with the build-up of ESG structures because they wait until they have fully grasped the topic. In the meantime, bank conversations run with inadequate ESG data basis, supplier relationships lose substance, and a structural backlog arises against competitors who started earlier.
The second mistake is isolated data collection.
ESG data is collected without connection to finance processes. It exists in a separate report but not in the controlling dashboard, not in budget planning, not in risk reporting. This isolation makes it steering-less. It can be communicated but not used.
The third mistake is missing CFO ownership.
Sustainability is delegated to a staff position or a sustainability manager who lacks the necessary authority in finance processes. The result is a topic that is formally addressed but unfolds no operational effect.
The fourth mistake is the confusion of standard and relevance
Many companies choose a reporting standard and collect all metrics required by it, regardless of whether they are relevant for the specific business model. That creates high effort without proportional steering benefit. The right order is always: determine materiality, then choose standard, not the other way around.
The fifth mistake is the separation of sustainability and financial planning. Sustainability goals are formulated without financial backing. That makes them statements of intent that fall victim to savings measures at the next budget round because they are not viewed as investments with defined returns.
What the Mid-Market-Specific Approach Means
There is an important objection that CFOs of mid-sized companies rightly raise: the corporate models for ESG integration are too complex, too resource-intensive, and too little tailored to the reality of a company with 100 to 2,000 employees.
This objection is correct. Corporate models cannot be transferred one-to-one.
But that doesn’t mean the alternative is non-action. It means the right approach is different: lean, prioritized, integrated into existing structures rather than built parallel.
What a mid-market-specific ESG approach concretely means:
Few but relevant metrics rather than comprehensive catalogs. A manufacturing company working with five well-defined and consistently measured metrics is better positioned than a company collecting 50 metrics with shifting definitions.
Integration into existing systems rather than new parallel structures.
ESG data should as far as possible come from systems that already exist: ERP systems for energy data, HR systems for social metrics, finance systems for economic ESG indicators. What is newly built should fit seamlessly into existing reporting structures.
Stepwise build-up rather than big-bang approach. The first year focuses on materiality and data basis. The second year on integration into finance processes. The third year on deepening and external communication. This rhythm is realistic and sustainable.
Clear responsibilities rather than committee structures. In the mid-market, sustainability needs no own department. It needs clear ownership in existing functions, with the CFO as overarching steering authority.
The Connection Between Sustainability and Corporate Resilience
There is a deeper justification for ESG integration that goes beyond compliance and bank conversations. It has to do with corporate resilience.
Companies that integrate sustainability into their steering develop in doing so capabilities that raise their overall resilience. They become better at recognizing risks early because they have learned to systematically capture climate and regulatory risks. They become better at managing data structurally because ESG integration has forced them to formalize data processes that were previously informal. And they become better at long-term planning because sustainability goals by definition have a longer time horizon than quarterly planning.
These capabilities are not only valuable for sustainability. They are generic corporate management competencies that make a difference in every crisis situation.
A company that already had a solid ESG data basis and integrated risk steering in 2020 was better prepared for the disruption through the pandemic than a company oriented only toward short-term optimization. Not because ESG directly relates to pandemic resilience, but because the structures, ways of thinking, and processes necessary for ESG integration generally contribute to better corporate management.
That is the strategic argument for ESG integration that goes beyond the regulatory and market necessity: it makes companies better.
What to Do Next Concretely
A CFO who has read this article and is convinced that sustainability is a financial steering task faces the practical question what to do first.
The answer is not a comprehensive transformation initiative. It is a structured entry that produces realistic progress in three steps.
The first step is the honest stocktaking.
What already exists?
Which ESG data is collected, how consistently, and where does it land?
Are they integrated into finance processes or do they exist in parallel?
Which ESG requirements are currently coming from banks, customers, and regulators?
This stocktaking takes two to four weeks and gives a clear picture of the starting situation.
The second step is the materiality analysis.
Which sustainability topics are truly relevant for the specific business model?
This analysis, ideally conducted with an experienced ESG expert, focuses all further activities. It prevents resource waste through addressing topics that have no steering relevance.
The third step is the definition of the first three to five ESG metrics taken into the controlling dashboard. Not ten, not twenty. Three to five that are truly material, consistently measurable, and for which a clear data source exists. This step anchors sustainability in operational steering. Everything further builds on this.
What I Bring
I am Nicole Vekonj, interim manager finance & controlling and Certified ESG Expert (Steinbeis). I accompany CFOs of mid-sized companies in lifting sustainability from the communication level into financial steering: from the materiality analysis through building a robust ESG data basis to integration into controlling, planning, and risk steering.
My approach is not conceptual; it is operational. I build structures that fit into existing finance processes, not exist alongside them.
If you, as CFO, want to know where your company stands regarding ESG integration and what the next concrete steps should be: let’s talk for 30 minutes.
Nicole Vekonj | Interim Manager Finance & Controlling | Certified ESG Expert (Steinbeis) | zahlenkompetenz.de
