Environmental (E) · Social (S) · Governance (G)
Sustainability has become steadily more important in recent years. Environmentally conscious, sustainable operations and corporate governance, along with social responsibility, are no longer merely ethical questions — they matter for corporate performance too.
The EU is at the forefront of this effort. Alongside their financial and accounting environment, the companies concerned now face a far more complex, multidisciplinary regulatory environment that can only be met with significant investment. EU Taxonomy, the Green Deal, CSRD, CSDDD are only a few of the expectations that are now built into Hungarian law as well.
The Hungarian ESG Act, in force since January 2024, introduced a sustainability due diligence obligation for companies, the management of the environmental and social risks that arise, and a regular obligation to report on both.
Outside the scope of the audit — the certification audit is carried out by an accredited ESG certifier.
The Accounting Act was amended (Chapter III/A) with a separate chapter requiring a certain range of companies to prepare a sustainability report as part of their business report.
This is audit work — an auditor holding a sustainability qualification has to provide a limited assurance opinion on it.
The two sets of rules have a great deal in common, and both derive largely from the European Union's sustainability directives — but the two regimes, and the reporting obligations they impose, differ fundamentally.
Magyar Szakértői Holding Kft. offers its services under Chapter III/A of the Accounting Act in partnership with the Grant Thornton group.
Who is affected, and from when
This applies if, in the two financial years preceding the financial year, at least two of the three criteria exceeded the following values:
By 1 January 2027 the companies concerned would do well to already have their science-based targets defined and in place.
Business impact
You need credit and do not get it.
Your premiums may rise, because your risks are rising.
You may be left out of grant funding.
You may lose your position as a supplier (SCOPE 3).
An ESG impact study may become part of the permit application for your investments.
A cleaner future will weigh in retaining staff, while consumer confidence in sustainable products keeps growing.
FAQ
Companies within the scope of the ESG Act have to carry out sustainability due diligence and prepare an ESG report, which is then checked in a certification audit by an accredited ESG certifier who — if it is compliant — issues an ESG certificate. Companies within the scope of the Accounting Act have to prepare an audited sustainability report as part of their business report, within the annual financial statements.
Both the ESG Act and the sustainability report apply to large public-interest entities from the 2024 financial year, while other large companies and public-interest small and medium-sized enterprises will have to prepare sustainability reports in the years that follow.
The reporting obligation applies first to large public-interest entities, taking into account the balance sheet total, the annual net revenue and the average number of employees. After that, large companies and public-interest SMEs will be covered as well.
The authority's responsibilities include supervising companies' obligations, ensuring the transparency of ESG data reporting processes, and accrediting ESG advisers. A substantial part of the Act entered into force in 2024.
Companies under the obligation face the sanctions set out in the Accounting Act and in the ESG Act if they fail to prepare and publish their report. For the sustainability report the general rules of the Accounting Act on default apply, so the Hungarian tax authority (NAV) inspects and sanctions. For the obligations set out in the ESG Act and for the ESG report, the Supervisory Authority for Regulatory Affairs (SZTFH) has the right to inspect and impose sanctions.
The companies concerned have to prepare an ESG report on how they met their sustainability due diligence obligations in the previous financial year, and are required to make it available on their website.
The sustainability report has to contain information on the sustainability-related aspects of the company's business model and strategy and of their implementation, including the risks and impacts affecting stakeholders and the corporate value chain.
Companies have to publish their ESG reports on their website within six months of the end of the financial year, which increases their transparency and credibility.
The sustainability report has to be disclosed as part of the company's annual financial statements, at the same time and in the same manner.
Both the ESG Act and the sustainability report set out rules on what sustainability due diligence and related measures companies have to carry out. The detailed rules will be set out in separate legislation.
Regulatory environment
Sustainability report
Give us your balance sheet total, annual net revenue and average headcount and we will tell you which financial year you first have to report for.
