In 2026, the German Federal Financial Supervisory Authority (BaFin) will be scrutinizing the management reports of German companies, with a focus on macroeconomic changes. What initially sounds like classic financial supervision is directly related to ESG: trade restrictions, volatile commodity prices, and structural adjustment processes are no longer just economic fluctuations, but harbingers of an economy that is being fundamentally changed by climate change and resource scarcity. Those who fail to report transparently now risk not only complaints, but also losing the trust of investors, banks, and business partners.
In its management reports on the 2025 annual and consolidated financial statements, the financial supervisory authority BaFin will focus on how companies are responding to macroeconomic changes. The focus will be on trade restrictions, fluctuating commodity and energy prices, structural adjustment processes, and technological changes. The management report should show how the company's management is dealing with these challenges — currently, and in the future.
ESG as a driver of future macroeconomic changes
What BaFin is demanding is not arbitrary: macroeconomic changes will increasingly be driven by ESG factors in the future. Climate change is accelerating and resource scarcity is becoming a reality. The prevalence of this issue is demonstrated by the fact that even financial supervisory authorities such as BaFin are advocating regulatory measures and systematically integrating ESG risks into their audit logic. The macroeconomic changes are multifaceted and can affect companies at various levels. To illustrate this, let us mention just three key risks:
The macroeconomic changes are multifaceted and can affect companies at various levels. To illustrate this, let us mention just three key risks:
1. Extreme weather risks for property, plant, and equipment
Heavy rain, flooding, and heat waves are a reality. Production facilities come to a standstill and property, plant, and equipment are damaged. Companies must be transparent about how they assess physical climate risks, which locations are exposed, and what adaptation strategies they are pursuing.
2. Supply chain dependencies and geopolitical upheavals
Gas deliveries from Russia have shown how quickly supply chains can collapse. China dominates critical raw materials, from rare earths to solar panels. Companies must disclose how dependent they are on individual suppliers or regions and what diversification strategies they are pursuing.
3. Resource scarcity and the risks of the energy transition
Volatile CO₂ prices, decarbonization of energy systems, and competition for scarce resources such as green hydrogen are intensifying. The management report must clearly state how the company is dealing with transformation costs and preparing for rising CO₂ prices.
Tools for transparent ESG reporting are becoming standard
Financial institutions such as BaFin and the European Banking Authority (EBA) are publishing new guidelines on ESG reporting. To comply with these guidelines, comprehensive tools are available to analyze risks and opportunities and provide recommendations for action.
• CO₂ emissions balances (Scope 1-3) record emissions throughout the entire value chain.
• Supply chain risk analyses identify critical dependencies and assess resilience.
• Climate and vulnerability analyses systematically assess susceptibility to climate risks.
It is precisely these tools that lead to transparent sustainability communication and make a decisive difference for successful reporting and increasing creditworthiness with banks. Financial institutions are increasingly evaluating the ESG performance of their customers and rewarding well-positioned companies with better terms.
Recommendations for action
Companies should critically review their management reports:
• Are physical climate risks and their effects presented transparently?
• Are supply chain dependencies and geopolitical risks specifically identified?
• Are risks from resource scarcity and volatile CO₂ prices addressed?
• Do you use tools such as climate and vulnerability analyses, CO₂ emissions inventories (Scope 1-3), and supply chain risk analyses?
Conclusion: Make ESG risks transparent – or fall behind
The focus of the BaFin balance sheet review in 2026 sends a clear signal: macroeconomic changes and ESG risks are interdependent. Companies that address ESG risks transparently using professional tools not only meet legal requirements, but also improve their creditworthiness and strengthen stakeholder confidence.
