ESG – about sustainability standards, from a legal perspective

This article is available for reading in Trade magazin 2024/11

Guest writer:
Dr. László Szűcs
lawyer, member of Réti, Várszegi and Co Law Office
PwC Legal

As regards direct suppliers, the regulation sets out the standards that businesses must check to identify risks. Obviously not all companies can be expected to incorporate the 500 or so standards into their operations, so the legislation treats large, medium-sized, small and micro-enterprises established in Hungary, the EEA or Switzerland, in OECD member states or so-called third countries as separate categories. The implementation of the standards can be assessed in a supplier audit on the basis of the above operational and size differences. Hungarian companies must screen their direct suppliers against the standards set out in the regulation and prepare an annual report on the results of the screening, which must be audited and published as required by law. Suppliers are required to respond to enquiries about the standards. Where companies identify risks to their suppliers in relation to the standard, they can require their suppliers to address the risks appropriately. The standards-based operating model will still be applicable to a small number of businesses in 2024, but the personal scope of ESG regulation will gradually broaden. By 2030 all businesses, with the exception of micro-enterprises, will have to move to standard-compliant operations. //