Sustainability: easing EU expectations, shifting corporate focus

The European Union has significantly amended several sustainability regulations in recent days, easing the obligations on companies. The CSRD reporting obligation now only applies to companies with over a thousand employees and has been postponed by two years, while the cycle of the CSDDD due diligence obligation has been changed to five years, and the introduction has been further postponed. In the loosening regulatory environment – ​​at the time of K&H’s recent research, companies were already aware of the EU easing measures decided at the beginning of the year, which have now come into effect in a milder form than before – a similar trend is emerging in the attitude of companies: the focus is increasingly shifting to maintaining competitiveness and optimizing operations.

“The loosening of the regulatory environment and the economic challenges have together led to companies approaching sustainability issues in a more pragmatic way. Although the indicators indicate a greater or lesser decline in many areas, companies are still present in sustainability areas – their focus is only shifting from long-term compliance to everyday competitiveness and operational safety”

– commented on the results of the survey by Levente Suba, K&H’s Head of Sustainability.

Corporate attitudes have also declined

The attitude sub-index has decreased from 72 points to 63 points. Although the proportion of those who feel fully involved in carbon neutrality efforts has increased (from 3% to 9%), overall fewer companies consider it important to align their operations with sustainability goals. Currently, only 35% of companies believe that they need to transform their operations in order to achieve environmental goals.

Outstanding growth in the area of ​​social responsibility
However, the social sub-index has shown an improvement: it has increased by 15 points to 35 points. More and more companies are dealing with social issues (78%, and an average of four at the same time), and the number of topics covered has also expanded. The three most popular areas of responsibility are ethical business behavior, focus on work-life balance, and fair treatment of employees.

More restrained steps in environmental activity

The activity index value moderated from 39 to 34 points. Although the proportion of companies using selective waste collection remains very high (92%), and 85% have reduced or would reduce their paper consumption, there is a decline in several areas. Fewer companies are planning energy efficiency improvements, thermal insulation or energy consumption reduction, while the proportion of those who would support employees to work in an environmentally friendly manner has increased (39%).

Strategic planning and measurement have also fallen out of focus

The sustainability strategy subindex reached 31 points, and the measurement and auditing subindex reached 10 points – both their lowest values ​​so far. The proportion of companies with a written sustainability strategy halved (6%), and the proportion of those that apply sustainability criteria when choosing suppliers also decreased significantly (23%). The decline in communication and the less frequent use of certificates also contributed to the weaker results. On the other hand, the proportion of companies measuring or planning to measure carbon emissions has increased (from 7 to 9 percent).

Sectoral and regional differences in the main index

Companies with sales of over 4 billion forints remain the most active (49 points), while companies with sales of under 2 billion forints have produced their lowest sustainability index value to date.

There is only a 6-point difference between the highest and lowest values ​​among sectors: compared to the 35-point average, the index for industrial companies is 38 points, for agricultural companies 37, for service companies 34, and for commercial companies 32 points. Similarly, the difference is minimal at the regional level (33 and 35 points for the three regional sub-indexes).