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.
