ESG due diligence after the Omnibus: what still matters at mid-cap

The CSRD delay and the Omnibus proposals take most mid-caps out of sustainability reporting. Buyers and LPs still ask the questions. This checklist keeps the ESG items that move value.

Since April, many of the mid-cap companies we work with have quietly shut down their CSRD projects. They had good reason to. The "stop-the-clock" directive (Directive (EU) 2025/794, in force since 17 April 2025) pushed reporting for the second wave of companies back by two years, to financial year 2027. The Commission's Omnibus proposal of 26 February would then limit the CSRD to companies with more than 1,000 employees. The Council's general approach of 23 June goes further and adds a €450m turnover test. Trilogues have not started, as Parliament has yet to adopt its position. But on any of the texts on the table, a company with 300 employees and €80m of revenue is out of scope.

As a reporting matter, that settles it. As a deal matter, it does not. This autumn's sell-side processes are opening with the same ESG sections in the buyer's request list as last year. LP questionnaires have not shrunk either, and lenders still price sustainability-linked margins. What has changed is that the target no longer has a regulatory reason to produce the data. So the gaps now show up in the data room, not in an annual report.

Below is the list we use on mid-cap FDD and VDD work. It leaves out anything that does not affect EBITDA, net debt, working capital or the SPA.

1. Energy and carbon cost in the P&L

This is where ESG becomes a quality of earnings question.

• Energy as a share of costs. We rebuild energy spend by site and by vector (electricity, gas, fuel) over 36 months and set it against volumes. A margin that improved in 2024 because gas contracts reset lower is not the same as one that improved because of efficiency work. Buyers will ask which it is.
• Contract position. Fixed-price contracts, their end dates and the price in the forward curve at renewal. A target hedged until mid-2026 at prices below the current forward has a known headwind. We show it in run-rate EBITDA or, at the least, in the business plan review.
• The new French energy audit regime. The loi DDADUE (loi n° 2025-391 of 30 April 2025) switches the energy audit obligation from company size to energy use from 1 October 2025. Companies using on average 2.75 GWh a year or more must carry out an audit every four years, covering at least 80% of their consumption, and publish an action plan; the first audit is due by 11 October 2026. Above 23.6 GWh, a certified energy management system (ISO 50001) is required by 11 October 2027. For a mid-size industrial with two or three sites, this is now a real cost and a real compliance date. We check that it is in the budget.
• CBAM for importers. The definitive CBAM period starts on 1 January 2026. Parliament approved the simplification package on 10 September: it introduces a 50-tonne annual exemption that takes most small importers out, and moves the sale of certificates to February 2027. A distributor or manufacturer importing steel, aluminium or fertiliser above that threshold will pay for 2026 imports in 2027. We size it on 2024 import volumes and put it into the plan.

On a recent industrials target (€40m EV), energy was 7% of revenue and the main gas contract ran out four months after the expected closing. Repricing at the forward curve took €0.9m out of €6.5m of reported EBITDA. The buyer took it as a run-rate adjustment, not as a risk to cover in the SPA.

2. Environmental provisions and site liabilities

This is the ESG item most likely to move the equity price, and it rarely appears under an "ESG" heading.

• Classified sites (ICPE). We list every site with its ICPE status and the remediation obligations that apply when activity stops. The obligation exists whether or not it is provisioned.
• What is booked and what is not. French GAAP and IFRS both require a provision only where there is a present obligation that can be reliably estimated. Many mid-caps book nothing until a site is closed. We ask for any Phase I/Phase II reports, inspection reports from the DREAL and remediation estimates.
• Treatment in the bridge. A provision already booked for a known remediation is debt-like: it is a cash cost caused by past activity. An unbooked but documented obligation is debt-like too, at a probability-weighted amount, or it goes to a specific indemnity. Normal operating permits and future compliance capex are not debt-like; they belong in the capex plan.
• Deferred environmental capex. Asbestos removal, filtration upgrades and roof repairs flagged by inspections and postponed. Where the work is required to keep operating, we treat the backlog like deferred maintenance capex.

On a €40m EV deal, a €1.2m unprovisioned remediation estimate on a site the buyer plans to close is €1.2m off the equity cheque, or a specific indemnity with an escrow. The choice depends on how firm the estimate is. That is the conversation to have before the SPA draft, not after.

3. What LPs and lenders will still ask for

Being out of CSRD scope does not take a company out of its shareholders' reporting. Most mid-market funds report to their LPs through the ESG Data Convergence Initiative (EDCI) or a similar template, and SFDR Article 8 funds need data for their own disclosures. The EDCI metrics are short:

None of this needs a CSRD project. All of it needs a finance team that keeps the underlying data. In VDD, we now include a short annex that ties these figures to source documents. It saves the buyer a round of questions and stops the numbers from changing between the IM and the confirmatory phase.

Two French rules also stay in place whatever happens to the Omnibus. Companies with more than 500 employees in mainland France must publish a greenhouse gas report (BEGES, article L229-25 of the Environment Code) every four years, including significant scope 3 emissions and a transition plan; the maximum fine is €50,000, or €100,000 for a repeat offence. And the Commission's VSME recommendation of 30 July 2025 asks CSRD companies to limit what they request from smaller suppliers to the VSME content. For a mid-cap supplier to large groups, VSME is likely to become the format of the questions it receives.

4. What drops down the list

We no longer spend time on a full double materiality analysis, ESRS datapoint mapping or Taxonomy alignment for companies that will not report. We note whether the work was started and how far it got, because it says something about the finance function. But it is not a red flag if it stopped.

What to do before a sale this autumn

1. Rebuild energy cost by site over three years with the contract maturities, and agree with the buyer early how a known repricing is treated in run-rate EBITDA.
2. Check the 2.75 GWh test now. If the company is above it, budget the energy audit due by October 2026 and say so in the VDD.
3. List every ICPE site with its remediation exposure, and decide before the SPA draft whether each item goes in the net debt definition or in a specific indemnity.
4. Prepare the EDCI-type data set with source documents. It costs a few days and avoids a late round of LP-driven questions.
5. Do not restart a CSRD project for the sale. A short, sourced ESG annex covering the items above is what buyers will read.

This note is general information, not advice on a specific transaction.