Sustainability: Not enough to be good, you have to be able to demonstrate it too
KPMG warns that emerging Hungarian companies will find the CSRD – the system of sustainability reports prescribed by the European Union – a big challenge. Based on CSRD the first report needs to be submitted in 2026, on 2025 results, with an outlook on the future. There may seem to be plenty of time to prepare now, but developing reporting frameworks is a lengthy and often investment-intensive process; what is more, the financial sector, banks in particular, already impose heavy data requirements on companies for assessing credit applications.
As a first step, financial institutions and listed companies in Hungary now have to prepare sustainability reports, but soon, all Hungarian middle-sized companies will have to prepare a similar report, starting in 2026, on their activities in 2025.
This affects at least 1,000-1,500 Hungarian companies, so in the coming years it will mostly cause headaches for emerging Hungarian-owned companies, as the Hungarian subsidiaries of multinational companies already prepare sustainability reports, or at least provide information about their operations based on the parent company’s standards, due to the reporting obligation of the parent company.
It is not enough to be good, you have to report on it in a reliable and transparent manner. This will require data, measurements, and the calculation of indicators defined in the CSRD, integrating related activities and strategic goals. In accordance with the CSRD’s principle of double materiality, not only the content of sustainability measures and risks but also their expected financial impacts must be reported on, if they prove to be material, using the applicable accounting standards.
You may be set for a disappointment if you think there is plenty time available. It is worth starting your preparations, and even compiling a complex voluntary report on 2024, so that any pitfalls are identified by the time of the 2025 reports. This makes all the more sense because financial institutions already have high sustainability disclosure requirements for new loans or for refinancing old ones, for example, and compliance with these can translate into more favourable financing conditions.
More on this in the press: Fenntarthatósági jelentéssel kell készülnie a magyar vállalatoknak – Napi.hu, 1500 magyar cég készülhet: komoly fejtörést okozhat majd egy jelentés – Piac&Profit (piacesprofit.hu) (Hungarian companies must prepare for sustainability reporting – Napi.hu, 1,500 Hungarian companies can start preparing: new report to pose real challenge – Piac&Profit (piacesprofit.hu)) and on KPMG’s website: Fenntarthatóság: Nem elég jónak lenni, be is kell tudni – KPMG Magyarország (Sustainability: Not enough to be good, you have to able to demonstrate it too – KPMG Hungary)
