Index – Economy – The government repeats three letters that change the world

Germany is considered a pioneer in ESG regulation, the German Supplier Act was introduced in 2021, ahead of uniform EU-level ESG regulation. In Germany, from 2023, companies with more than 3,000 employees, and from 2024, companies with more than 1,000 employees must also take into account a system of criteria containing ESG elements.

This supplier law also stipulates that German companies must also inform their suppliers in accordance with the requirements of the system, so this may even affect Hungarian small and medium-sized enterprises (SMEs).

– indicated Anikó Túri at the Makronóm conference of the MBH, where experts discussed the topic of ESG. The State Secretary for Public Administration of the Ministry of National Economy noted: that is why it is important that Hungarian suppliers meet the various ESG-related data provision requirements.

A sustainability report includes, for example, that a company provides a daycare center or a summer camp for the children of its employees

– illustrated some of the aspects with an example. The EU regulation (SFDR) also defines guidelines for financial aspects, and from January 2023 detailed reporting requirements according to uniform EU standards concerning ESG are effective. The report must present the impact of the company’s operation on the environment and people, as well as the resulting risks.

In this, compared to the previous regulations, who are obliged to prepare such a report was also expanded

Anikó Túri explained. He explained that the new regulation uses a much broader definition to identify large companies that must prepare such a report. The regulation will be introduced gradually. This report must be prepared for the first time this year, and it will already affect domestic companies.

It is a gradual learning process

The Hungarian ESG Act was adopted at the end of last year in line with European Union directives, which was amended last week and published in the Hungarian Gazette last night. The Secretary of State said that the scope of those involved will be gradually expanded:

• In 2024, ESG data will be provided voluntarily or by organizations that undertake it under contract. This applies to those that employ more than 500 people, have a balance sheet total of over HUF 10 billion and a net sales revenue of over HUF 20 billion.
• In 2025, the regulation will be extended to those large enterprises listed on the stock exchange that exceed certain indicators (250 employees, total balance sheet total of HUF 10 billion or annual net sales of HUF 20 billion).
• In 2026, the reporting obligation will apply to large companies that exceed the set limits,
• In 2027, it will be extended to small and medium-sized enterprises listed on the stock exchange.

“Domestic SMEs are hampered by a lack of information regarding ESG-related obligations. Only every third company has detailed knowledge about this,” revealed Anikó Túri. He pointed out that they also want to reduce this information deficit with the framework law. In addition, they made it clear whose role will be in this area. There will be an ESG consultant, certifier, and certifier.

The ESG consultants they provide sustainability consulting services, they must be accredited, and they must participate in training. The training is organized by the Hungarian Economic Development Agency (MGFÜ), and separate institutions will be created for this purpose.

The ESG certificates natural or legal persons who certify the ESG report. You have to imagine it like an auditor.

The for ESG ratings the EU regulations apply. The entire and partial activities of the company are examined.

The Companies that distribute and manufacture ESG software they make info-communication products that ensure that the system works smoothly.

Anikó Túri said that a National ESG Council has been established and an ESG management platform will be launched, where companies must upload their reports. The state secretary highlighted that the MGFÜ is already holding workshops, which it will continue in the future. The MGFÜ energy consulting voucher program is also launched, the purpose of which is to enable companies to plan energy efficiency investments with various energy consultants. This program starts on May 2, 2024.

It is important not to consider ESG as a compliance aspect, but to realize its inherent benefits, such as financial

– said András Puskás, deputy CEO of MBH Bank. He explained that a lot of money is being spent on saving species, and this year will also be about this, i.e. the protection of biodiversity.

Earlier, the vice president of the Magyar Nemzeti Bank, Csaba Kandrács, indicated to our newspaper that we are in the sixth great extinction wave, the last time we saw this was the extinction of the dinosaurs 65 million years ago. The decrease in biodiversity also has a devastating effect on the economy. In this regard, a joint project with the OECD was launched with funding from the European Union to examine how the risks related to the decline of biodiversity affect the financial system.

(Cover image: People work on different floors of the modern office building 20 Cannon Street at dusk. Photo: Oli Scarff / Getty Images)