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Hungarian ‘ESG Act’ implementing regulations have been published

Detailed rules on the fulfilment of the due diligence obligations of companies for sustainability purposes and the registration process for ESG reports, ESG rating agencies and ESG software have been published in Issue 81 of the Hungarian Offical Journal 2024. Issue 80 also contains regulations about the requirements for accreditation as an ESG consultant and the rules of procedure for accreditation.

 

The aim of the Regulation is:

Containing also the questionnaire annexed to the ESG report 13/2024. (VIII. 15.) SZTFH Regulation, on the basis of the ESG Act, sets out the detailed rules that allow an objective comparison of companies according to sustainability criteria and the monitoring of their responsibility.

 

The main screening criteria are

  • Establishment of a risk management system: a documented risk management system must be in place to minimise ESG risks, both within the business’s own sphere of responsibility and in the supply chain. The risk management system includes the recording of environmental and social impacts and the analysis of organisational governance impacts, in particular screening, identification, assessment, prioritisation, prevention, elimination, correction and follow-up;
  • Develop an internal responsibility strategy and system;
  • Conduct regular and ad hoc risk analyses;
  • Establish preventive and corrective actions for all identified adverse impacts within the scope of its own business and with its direct suppliers;
  • ESG reporting obligation: by preparing an ESG report and completing the questionnaire annexed to the ESG report;
  • Declaration of direct suppliers with regard to the risks they face.

The Regulation also includes minimum formal requirements for the preparation of the ESG report.

 

Temporary, facilitating provision

The ESG reports of companies under Section 1 (1) (a) of the ESG Act for the financial year 2024 and of companies under Section 1 (1) (b) of the ESG Act for the financial year 2025 only have to be pre-audited and do not have to be certified, neither the ESG reports themselves nor the pre-audit results are public and are not published.

 

Questionnaire annexed to the ESG report

The table in Annex 1 of the SZTFH Regulation contains the questions that form the basis of the ESG reporting and supply chain due diligence.

The questions cover ESG activities of companies in the areas of environment (45 questions), society (41 questions) and corporate governance (14 questions). For the screening of direct suppliers, the questions are adapted to the size of the suppliers, their geographical location and the scope of the questions to be answered.

It is important to underline that direct suppliers cannot commit to answering voluntary questions either in a contract or in a written declaration.

 

ESG calculator coming soon

For the preparation of the ESG report, the SZTFH will soon provide an ESG calculator to help you calculate the more complex numerical data of the questionnaire.

 

For more information (in Hungarian), please visit the SZTFH website:

ESG report
ESG questionnaire
ESG Authority Activity

Sustainability is not a project, it’s the future – BCSDH CEO weekend at SIÓ and Masterplast

This year’s BCSDH weekend offered an exciting programme for the 20 participating business leaders and partners, despite the bad weather.

On Friday, the professional programme started at SIÓ’s factory in Siófok, where the host Dezső Mészáros, Managing Director of SIÓ-Eckes, welcomed the participants and gave an insight into the company’s sustainability strategy. The presentation of the responses to the challenges of climate change in the fruit juice industry and the steps taken to achieve the ambitious climate targets was followed by a factory tour led by experts.

The next day, the team was hosted by Masterplast Plc and welcomed by Dávid Tibor, CEO, who presented their solutions for sustainable change in the construction industry and their insulation solutions for climate adaptation.

We thank the host, SIÓ-Eckes and Masterplast managers and staff for the professional programme and hospitality.

 

Beyond Zero film premiere and roundtable: sustainability is both a leadership responsibility and a corporate culture

The Business Council for Sustainable Development in Hungary (BCSDH) presented the Beyond Zero film for the first time in Hungary at an exclusive CEO event in cooperation with Sustainova, sponsored and hosted by E.ON Hungária Group.

In addition to the CEO of BCSDH member companies, members of the Net Zero Advisory Board were also invited to the event on 17 September, including Paul Fox, the UK Ambassador to Hungary, who also joined.

The event was moderated by Irén Márta, Managing Director of BCSDH, and the participants were welcomed by Attila Chikán Jr., President of BCSDH and President-CEO of Alteo, Zsolt Jamniczky, Deputy CEO of E.ON Hungária Group, Tomas Svoboda, Co-Founder and CEO of Sustainova, and Nathan Havey, writer-director of the film (via video message).

This inspiring documentary explores the personal and corporate transformation of business leader Ray Anderson, answering questions about the steps to a successful paradigm shift, how to engage leaders, convince investors and engage business partners to achieve climate goals.

After the screening, committed leaders, Tímea Pesti (Ald | LeasePlan), Zsolt Jamniczky (E.ON Hungária Group), Balázs Báthory (Market Építő Zrt.) active in sectors important to climate protection shared their thoughts and dilemmas during a round table discussion. Participants emphasized how important the faith and will of the CEOs is, so that sustainability permeates the entire organizational culture and encourages employees to take action. Observing the natural environment and gaining inspiration for specific developments from it can be of great help in the implementation of the climate goals, this is also one of the key messages of the film.

BCSDH cooperates with Sustainova in Hungary to disseminate this inspiring film for business leaders and employees to accelerate systemic change and meaningful action towards climate goals.

You can see the photo gallery of the event by clicking on the link.

Data collection is the biggest challenge in measuring the circular economy

The Circular Economy Working Group met for the third time this year on 3 September at IFUA Horváth&Partners Ltd. During the working group meeting, we sought answers to questions concerning ESG reporting such as: What is the role of reporting and measurement in the circular economy transition? What voluntary tools are available on the market? How do CSRD and ESRS requirements affect companies?

Ivett Takács, Manager of the Circular Economy Platform, presented the latest developments in reporting and measurement tools. She highlighted that with the increase of available data, more and more extensive standards systems are emerging in the market, such as the new ISO Circular Economy Standards Package, which will be available from May 2024. These offer a comprehensive toolkit for implementing the circular economy, from principles to measurement, and provide a global consensus among countries on a common definition and principles of the circular economy. The Global Circularity Protocol standardisation framework, modelled on the Greenhouse Gas Protocol, is currently being developed and will be implemented in 2026.

At EU level, voluntary standards have been joined by mandatory requirements such as the EU Taxonomy and the CSRD and ESRS standards. If a company is subject to reporting under CSRD and, after conducting a double materiality analysis, it is determined that the circular economy as a topic is material in its impact or financially for the company, it is required to report on this under ESRS E5. The circular economy indicators included in this report were presented by Nóra Stancsics, Senior Consultant at IFUA Horváth and Dr. Viktória Bodnár, Managing Director. They pointed out that many of the indicators under the CSRD E5 standard are narrative, and that measuring quantitative indicators is a challenge for companies. Not only the measurement, but also the design of the systems and the comparison of the results is difficult – there is no equivalent as for example for GHG emissions. Also, feedback from participants suggests that data collection is the biggest difficulty for companies.

From the summer of 2025, the Magyar Nemzeti Bank will prepare a recommendation for Hungarian credit institutions and financial companies on the integration of ESG risks into credit risk and risk modelling, Renátó Ritter, MNB staff member, said in her presentation. The core of this is a minimum ESG questionnaire that banks will require banks to complete when applying for a loan from a corporate client for an amount of HUF 500 million or more, so this will also impose important obligations on companies from summer 2025.

This year, the Circular Economy Platform will focus on showcasing successful partnerships that are already in place and promoting further cooperation. One successful example of this is the Rossman x Respray refillable vending machine innovation, which was presented by Rossman’s Managing Director László Flórián and Respray’s CEOs Andor Réti and Gergely Zámbó. Respray combines an innovative valve and nozzle technology with an in-house developed refill machine that allows refilling of bottles in the customer’s environment thanks to different functions. The successful project was launched in autumn 2020, with two rounds of investment and a total of HUF 70 million raised so far with the participation of investors. The rechargeable deodorants available in stores have five times lower emissions than the conventional versions. A further advantage of refillable deodorants is that not only the final product, but also the production of the refillable bottle and the contents are made in Hungary.

 

The picture on ESG is getting clearer – deeper insight into the implementing regulations of the ESG law

With more than 40 people in person, we held our next ESG working group meeting on 11 September 2024, hosted by KINSTELLAR.

The focus of the meeting was on the implementing regulations for the ESG law published in August. The most anticipated from companies were the detailed rules for the fulfilment of due diligence obligations for sustainability purposes, which were published in the Decree 13/2024 (VIII.15.) of SZTFH.

The event started with a welcome speech by Dr. Balázs Tomaj, lead lawyer of KINSTELLAR Energy Law Group. In his presentation he briefly described the domestic regulatory environment of ESG.

To our great pleasure, we again accepted the invitation of Gábor Csaba Molnár, ESG Director of the Regulatory Authority for Regulated Activities, who gave an overview of the specific implementing regulations and the content of the supplier questionnaire. His presentation was followed by a lively question and answer session.

 

Attila Bálint, the sustainability officer of IKEA Hungary, then used practical examples to show how sustainability criteria can be incorporated into the selection of suppliers and how their implementation can be monitored and ensured.
To conclude the event, Irén Márta informed the participants about the organisation’s upcoming events.

 

The Knight’s Cross of the Order of Merit of Hungary was awarded to Attila Chikán Jr., president of our organisation

The President of the Republic of Hungary Tamás Sulyok awarded the Knight’s Cross of the Hungarian Order of Merit to Mr. Attila Chikán Jr., President and CEO of ALTEO Plc. and President of the BCSDH. The Order of Merit was presented on August 15 by Minister of Energy Csaba Lantos in the Pesti Vigadó.

The prestigious state award recognizes the exemplary work of Attila Chikán Jr. in the field of green energy transition, as well as his commitment to society and the environment, and his openness to innovation. When receiving the award, Attila Chikán Jr. said: “The award primarily recognizes the commitment to sustainability that plays a central role in all aspects of the operations of ALTEO and BCSDH and is the result of the efforts of excellent teams in both organizations. I would also like to take this opportunity to thank my colleagues for their high-quality professional work.”

 

Our ‘Future Leaders’ Talent program wins European Enterprise Promotion Award

The Business Council for Sustainable Development in Hungary (BCSDH) was awarded first place in the category “Encouraging Sustainable Transition” in the national round of the European Enterprise Promotion Awards (EEPA) with its ‘Future Leaders” Talent program. The award ceremony took place on 2 July at the Ministry of National Economy (NGM), where the award was presented to Irén Márta, Director of BCSDH, and Zita Szederkényi, Head of the ‘Future Leaders’ Talent program, by Márton Nagy, Minister of National Economy.

The EEPA aims to recognise and showcase Europe’s best entrepreneurship development initiatives, highlighting best practices and the added value of entrepreneurship. The competition for the award is divided into six categories, with a particular focus on promoting a sustainable transition.

The BCSDH’s ‘Future Leaders’ Talent program has been running successfully since 2014 and aims to equip graduates with the skills to respond to sustainability challenges and integrate sustainability principles into corporate decision-making. Over the past decade, 130 companies have participated in the program, contributing to a dynamic knowledge exchange. In total, we have worked with 256 experts from a wide range of industry and academic disciplines. In addition to the corporate sector, universities, researchers, social organisations and regulators have participated as experts and speakers, increasing the impact and relevance of the program. Participation in the program has become an asset for all parties. Over the past ten years, 316 leaders have graduated in the program, are now actively leading the sustainability transition of their companies and are members of the program’s Alumni organisation.

“This recognition is a great source of pride and reaffirms that we are on the right track in driving the shift to sustainable business. Special thanks go to the mentors, speakers, hosts, sponsors and participants of the program, without whom we could not have achieved this success,” said Irén Márta, Director of BCSDH.

Speed, Porsche… Cupra, Sustainability

We continued in a slightly different way the first line of the well-known Hungarian pop song, as on 30 May our Race to Zero working group was hosted by Porsche Hungária Kft., where we had the opportunity to visit the Innovation and Training Centre and gain a more detailed insight into the Group’s sustainability efforts at global and local level.

In his welcome speech, Tamás Bognár, Head of Communications of Porsche Hungária, emphasized their commitment to climate protection and briefly presented the Innovation and Training Centre, which was built with HUF 2 billion of their own resources, and is used to train the professionals of the future, especially with regard to the electric car market. The Cupra brand is a flagship of the Group and of electromobility.

Melinda Tóth, Environmental and Sustainability Specialist at Porsche Hungária, presented the global and local objectives and programmes, which are implemented along a 5 pillar strategy. Of course, zero emission mobility plays a major role in this.

Electromobility was also an important topic in the next presentation, as Orsolya Barsi, Head of the Climate and Environment Department of the Mayor’s Office, presented the 100 Climate Neutral Cities project, of which Budapest is one of the participants. Businesses also have a major role to play in the implementation of climate adaptation. This was confirmed by Ada Ámon, Director of the Budapest Climate Agency, who stressed the importance of concrete cooperation with the business sector, as only together we can achieve the climate neutrality targets.

This was followed by a mini workshop organised by Deloitte with the help of Flóra Borek, Senior Manager and László Porkoláb, Senior Consultant, where we reviewed with the participants the latest trends and industry challenges of decarbonisation, with a focus on the Scope 3 assessment in the value chain and the increasing expectations towards suppliers. The issue of carbon tariffs emerged as an emerging challenge. The inputs will help to prepare the next round of the Towards Net Zero survey, which is expected to be launched in September.

The presentations were followed by a tour of the Innovation and Training Centre, where not only the educational activities but also the building itself is the result of a sustainability-conscious design, with green solutions and awareness-raising.

Our next event is the “Race to Zero on the Spot” programme on 19 September, when we will tour the Pünkösdfürdő Baths Park, dreamed up and implemented by the BKM’s Főkert (Gardening) Division, providing inspiration and ideas for corporate biodiversity programmes.

BCSDH at Business Fest 2024

’Where business meets business’, BCSDH is also present – at the Business Fest 2024 on 13 June at Millenáris, BCSDH will be represented among many well-known companies and organisations representing value. We have prepared an exciting discussion: Irén Márta, Managing Director of our organisation, will discuss “Human Value: the key to corporate sustainability?” with her guests Zsolt Csavajda, Managing Director of DSM Kft. and Gábor Arató, Managing Director of Manupackaging Hungary Kft. This is a particularly topical issue, as the BCSDH 2024 professional focus is on human, as a value. At the beginning of the year, we started our professional work on this topic at the BCSDH business breakfast and forum event, together with the involvement of the membership, and continued it at the CEO roundtable discussions to prepare recommendations for companies to take action on the topic of “human value”, which will be presented at the BCSDH business lunch in October.

BCSDH ’Transform Talks’ 2024: ’Being human’ – Responsible leadership = integration of human values into systems

Rising inequalities are one of the world’s most pressing sustainability challenges (alongside climate change and biodiversity loss). Oxfam’s latest Report states that globally, the richest 1% own 45.6% of global wealth, the poorest 50% just 0.75% in 2023. High levels and patterns of inequality have also become a systemic risk at global level, threatening entire nations and societies.

Inequality also directly affects the performance of companies: it limits productivity, consumption and growth, destabilises supply chains, and causes political and economic instability. The business case for tackling inequality is about mitigating these risks while contributing to the long-term sustainability of business. It is important to understand what business needs to do to drive systemic change and accelerate the process to reduce inequalities. The key to driving change is to ensure that people are seen as a value in companies’ value-creation processes.

This was the topic of this year’s BCSDH ‘Transform Talks’ CEO Roundtable discussion series, in which more than 40 company leaders participated and shared their thoughts on the topic, the events were led by Márta Irén, BCSDH’s managing director.

Corporate values and culture, openness, partnership, community building. Some key concepts that characterise companies that put people first. It was clear from the roundtable discussions that the participating companies have a strong commitment to their employees. Training and education, support for physical and mental health, and the creation of employment systems adapted to life situations are all priorities. Many company managers shared their positive experiences and good practices in these areas.

However, companies face significant challenges in attracting and retaining employees with the right skills and competences. Significant progress is also needed in improving staff mobility and health awareness. At the same time, it is clear that partnership and leadership by example are of paramount importance in this area. Companies are taking on increasing responsibilities in a number of areas, including the continuous training of their staff and increasing access to health services.

The concrete results of the ‘Transform Talks’ CEO Roundtable discussions will be presented at the BCSDH Business Lunch on 10th October, together with the company’s best practices.

Special thanks to the hosts of the events for providing the venue, the photo galleries can be viewed at the links below:

8 May – Host: Knorr-Bremse
9 May – Host: OTP
14 May – Host: MFB
22 May – Host: Zwack

Thanks to our Time to Transform 2023 sponsor!

 

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