The Parliament adopted the Hungarian ESG law

By: Trademagazin Date: 2023. 12. 13. 15:40

On December 12, the Parliament adopted the ESG Act supporting sustainable financing and uniform corporate responsibility, which will enter into force on January 1, 2024. The purpose of the new law is to promote sustainable financing and uniform corporate social responsibility, taking into account environmental awareness and social and social aspects.

As of January 1, 2024, the scope of the law extends to large enterprises with their registered office in Hungary that are deemed to be in the public interest. While for large domestic enterprises, it will come into effect on January 1, 2025 (it is considered a large enterprise, where 2 out of 3 criteria exceed the minimum value: 250 employees, sales revenue of HUF 20 billion, total balance sheet total of HUF 10 billion).

Pursuant to the sustainability due diligence obligation and ESG reporting obligation, companies affected by the legislation must examine their supply chain and assess certain human rights and environmental risks. This means that a certain responsibility must also be assumed in the operation of companies beyond the company’s direct operational scope. A risk analysis must be prepared on the extent to which the suppliers are exposed to the mentioned social and environmental risk, and appropriate corrective measures must be taken. A complaint management system must also be operated, i.e. the company’s task is to investigate human rights and certain environmental complaints made against its suppliers. It will be mandatory to prepare a public report on all of this within 6 months after the end of the year. The fulfillment of the data provision will be checked by the Supervisory Authority of Regulated Activities, and companies may be fined if they fail to prepare the ESG report.