Postponement came, preparation remained: this is how Hungarian companies are preparing for ESG obligations in light of the Omnibus

On 14 April 2025, the European Council gave its final approval to the so-called Stop-the-Clock (STC) Directive, which is part of the EU Omnibus legislative package, and which provides a temporary reprieve for companies to fulfill their sustainability obligations. The decision will see the application of the Corporate Sustainability Reporting Directive (CSRD) postponed, with the start of the obligation for large non-listed companies being moved from 2026 to 2028, and for listed small and medium-sized enterprises (SMEs) the application originally planned for 2027 being moved to 2029. The aim of the CSRD is for companies to report on their environmental, social and governance (ESG) performance in a transparent and detailed manner.

Ákos Lukács, EY Climate Change and Sustainability Partner, highlights: “By adopting the Omnibus Stop-the-clock Directive, companies will gain time for thoughtful, effectively designed sustainability reporting. Reporting obligations will be simplified, which may reduce the administrative burden on businesses, and it is expected that the willingness to invest will increase. The focus may return to sustainability practices, which create innovative solutions and competitive advantages for companies.”

The extension of the deadlines will also give affected domestic companies a breather. Almost half of the nearly 50 company leaders who participated in the EY survey admitted that they are still getting acquainted with the requirements of the CSRD. Nearly a quarter of the respondents have so far prepared a trial report, a fifth have prepared a dual materiality (DMA – focusing on financial and social impacts) analysis, and a similar proportion have already consulted their auditors about the options.

The majority of respondents intend to prepare their sustainability report for 2025 in accordance with the CSRD Directive. Four out of ten do not plan to submit a report, and only a fraction of participants are considering other market standards or waiting for the updated version of the Voluntary Sustainability Reporting Standard for SMEs (VSME).

In order to strengthen ESG processes, companies will mainly collect data over the next year, define responsibilities and targets within the organization, formulate a sustainability strategy, and assess their corporate carbon footprint.

According to the STC Directive, the transposition of the Corporate Sustainability Reporting Directive (CSDDD) into national law and the application of obligations affecting the largest companies will come into force from 2027 instead of the previously planned 2026. The CSDDD requires large companies to take responsibility for the operation of their entire supply chain, with particular regard to the protection of human rights and the environment.