ESG in Hungary: measuring is the weakest link

This article is available for reading in Trade magazin 2026/02-03

We can find specific EU legislative measures behind this slowdown. On 26 February 2025 the European Commission put two “Omnibus” packages on the table to simplify sustainability and investment rules. On 9 December 2025 negotiators from the European Council and the European Parliament reached a provisional agreement on the simplification of the CSRD and CSDDD/CS3D. The scope of the CSRD would be extended to companies with 1,000 employees and the co-legislators have also included a net turnover threshold of EUR 450m; listed SMEs would be excluded from the scope. In the case of CSDDD/CS3D, the threshold would rise to 5,000 employees and EUR 1.5bn in net sales, compliance would be postponed until July 2029 and a simpler, risk-based screening logic could also be introduced in terms of scoping priorities.

The rule may be relaxed, but the key question remains: what can the company actually measure and verify – in the K&H Index, measurement is set at 10 points

What does the K&H index measure – and why is the decline so revealing?

The K&H sustainability index reached 35 points in the second half of 2025, remaining in the lower part of the 35-40 point range, while falling by 4 points compared to the previous half-year. The index isn’t the answer to a single question, but rather the weighted average of five separately calculated sub-indices: the sustainability attitude of company management, specific activities, the existence of a written sustainability strategy, the measurement/auditing of the environmental footprint and social responsibility. At the end of 2025 360 sustainability representatives responsible of medium and large companies with annual sales exceeding HUF 300m were interviewed by telephone.

Operability instead of compliance

The business consequence of regulatory slowdown is that the focus on sustainability is slipping down the decision-making hierarchy at lots of companies: there are fewer “strategic programmes” and more day-to-day operational compromises. The question isn’t what would be ideal, but what steps can be taken without a major investment, what processes can be simplified and where can risk be reduced without building a new layer of administration. The attitude sub-index fell from 72 points to 63 points, meaning that overall fewer companies feel that sustainability is a direct decision-making constraint.

The focus of compliance is shifting along the chain: fewer obligations for smaller players and more targeted inspections at high‑risk points

Environmental measures: moderation

The overall picture of environmental corporate actions has become more subdued: the activity sub-index fell from 39 points to 34 points. The sustainability strategy sub-index scored 31 points, while the measurement and auditing sub-index was at 10 points. Fewer and fewer companies are building written strategies, measurement systems or regular monitoring beyond operational steps. The proportion of companies with a written sustainability strategy has fallen to 6%, and only 23% apply sustainability criteria when selecting suppliers. Measurability and formalised operations have clearly taken a back seat. Companies with revenues above HUF 4bn remain more active, with an index value of 49 points, while companies with revenues below HUF 2bn have reached their lowest value to date.