Sustainability: there is still a big gap between actions and intentions

K&H’s sustainability index was completed for the first time in the first half of 2022. The results of the survey, which was repeated six months later, show that the companies continue to give priority to the matter of sustainability, but their actual activity in this field is quite restrained. Companies with a turnover of more than HUF 4 billion deal with the issue of sustainability much more intensively than the average, the index measured in their circle – as in the previous semester – is exceptionally high: it shows 47 points. Domestic companies are planning to develop a sustainability strategy to an increasing extent – this can be read from the research for the entire circle of companies examined. The sub-index indicating this rose from 30 points to 34. It is also striking that more and more companies are measuring their own pollutant emissions and having these measurement results checked by an independent external expert. This is indicated by the fact that the sub-index for measurement and auditing increased from 12 to 16 points.

The economic situation is not favorable

Unfavorable economic processes affect companies in two directions. On the one hand, they increasingly recognize the importance of environmentally friendly energy sources. 61 percent of the companies believe that it will be clearly necessary to use alternative, sustainable energy sources, and another 28 percent are also inclined to do so. At the same time, due to the economic difficulties, 84 percent of the companies believe that their sustainability efforts will be more or less delayed.

“The fact that the demand for sustainability did not decline as a result of the unfavorable economic situation is a good result in itself,” concluded Suba Levente, head of K&H’s sustainability program. He added: under such conditions, it is not surprising if the use of otherwise more expensive green energy does not increase, and only 2-3 percent of companies use this option.

It is all the more surprising that a significant number of company managers are not exactly aware of the EU’s carbon emission goals – that is, that they want to achieve zero emissions by 2050 – and the proportion of those who gave the correct answer even decreased compared to the previous semester. However, the EU regulatory system sets strict limits on the emission of harmful substances, which will affect the life of every company.

Carbon neutrality – burden or opportunity?

Compared to the previous semester, the proportion of companies that do not feel involved at all in terms of carbon dioxide emissions has decreased significantly, while almost half of the companies perceive the problem. The higher a company’s sales revenue, the more likely they feel affected, but this semester their rate is particularly high among agricultural companies as well. Obviously, not independently of the macroeconomic problems, for the time being the characteristic is that the majority of companies experience the tasks related to sustainability more as a difficulty than as an opportunity.

However, the challenge is present, and this is obviously the reason why more and more companies are raising sustainability to a strategic or priority level, just as 3 percentage points more than before (14 percent of companies in total) stated that they are preparing a sustainability strategy, which they also make publicly available. does. Strategy-making is primarily a feature of large companies, and Western Hungarian companies are at the forefront in this area. However, in agriculture, one of the sectors that cause the greatest environmental impact, the proportion of enterprises that prepare such a strategic document is still negligible (3 percent). Companies in the commercial sector do not excel when it comes to sustainability either.

However, there has been a demonstrable increase in the proportion of companies that do not yet measure their carbon emissions, but at least plan to do so – even if in a relatively longer time frame.

The role of the sustainability report is increasing

“Of course, it is not enough in itself if the written strategy remains on paper and does not contain specific carbon reduction targets that are regularly measured; if the results are not verified by an independent expert and an authentic report is not prepared by the companies,” said Suba Levente. It is encouraging, he added, that compared to the previous semester, the proportion of companies that do not prepare and do not plan to prepare a regular (annual) sustainability report has significantly decreased. It is also favorable that half of the companies that prepare a sustainability report regularly have it audited by an independent auditor. Overall, however, only 13 percent of companies still prepare a sustainability report at all. However, the number of companies that planned to develop their sustainability strategy in the foreseeable future increased significantly to 11 percent.

“Audited sustainability reports will play an increasingly important role in the future, when financing banks and investors will demand it in the same way that a financial report approved by an independent auditor is natural today,” stressed Suba Levente.