Exploring the barriers and drivers of ESG in the German Mittelstand: A qualitative analysis of mechanical and plant engineering companies

Marsela Bebic, Natálie Bruder Badie, Ladislav Tyll and Mohit Srivastava

Corporate Social Responsibility and Environmental Management, 2025, vol. 32, issue 2, 2147-2170

Abstract: This qualitative study investigates the adoption of Environmental, Social, and Governance (ESG) among German Mittelstand mechanical and plant engineering firms. Through semi‐structured interviews, the research identifies key barriers to ESG implementation, including human resource challenges, conceptual ambiguity, legal complexities, standardization gaps and rapid implementation pressures. Simultaneously, it uncovers driving forces such as customer demands, talent attraction, rating agency influence, intrinsic motivation, executive commitment, and regulatory compliance. Notably, profit and loss (P&L) impact emerge as a dual force, influencing both barriers and drivers. The study proposes a best practice model featuring clear responsibilities, centralization, and ESG integration in processes. Additional recommendations include developing a business case for ESG, engaging in industry‐specific networks, and aligning with prominent rating agencies. This research offers strategic insights for sustainable business practices within the Mittelstand context. It presents implications for governments and businesses, suggesting targeted policies to mitigate barriers and reinforce drivers of ESG adoption.

Date: 2025
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https://doi.org/10.1002/csr.3054

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Persistent link: https://EconPapers.repec.org/RePEc:wly:corsem:v:32:y:2025:i:2:p:2147-2170

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