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Index – Economy – Government repeats three letters that change the world

Index – Economy – Government repeats three letters that change the world

Germany is a leader in environmental, social and governance (ESG) regulation, and the German Supplier Code was passed in 2021, ahead of uniform EU-level ESG regulation. In Germany, from 2023, companies with more than 3,000 employees, and from 2024, companies with more than 1,000 employees must also take into account a criteria system containing ESG elements.

This supplier law also stipulates that German companies must also inform their suppliers in accordance with the requirements of the system, so this may also affect Hungarian small and medium-sized enterprises (SMEs).

– Anikko Toure noted at MBH's Makronóm conference, where experts discussed the topic of Environmental, Social and Governance (ESG). This is why it is important that Hungarian suppliers meet the various ESG data provision requirements,” noted the State Secretary for Public Administration at the Ministry of National Economy.

A sustainability report includes, for example, a company providing a daycare center or summer camp for the children of its employees

– Explain some aspects with an example. The EU Regulation (SFDR) also sets guidelines for financial aspects, and as of January 2023, detailed reporting requirements in accordance with the consolidated EU standards on environmental, social and governance aspects became effective. The report must present the impact of the company's operations on the environment and people and the risks resulting from them.

In this, compared to previous regulations, who is obliged to prepare such a report has also been expanded

Aneko Toure explained. He explained that the new regulation uses a much broader definition to determine which large companies must prepare such a report. The list will be introduced gradually. This report should be prepared for the first time this year, and will already impact local businesses.

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It is a gradual learning process

The Hungarian ESG Code was adopted at the end of last year in line with EU directives, which was amended last week and published in the Hungarian Gazette last night. The Foreign Minister said that the scope of participants will be gradually expanded:

  • In 2024, environmental, social and governance (ESG) data will be made available voluntarily or through organizations that do so under contract. This applies to companies that employ more than 500 people, have a balance sheet of more than HUF 10 billion and net sales revenue of more than HUF 20 billion.
  • In 2025, the regulation will be expanded to include large publicly listed enterprises exceeding certain indicators (250 employees, total balance sheet HUF 10 billion or annual net sales HUF 20 billion).
  • In 2026, the reporting obligation will apply to large companies that exceed the specified limits,
  • In 2027, its scope will be expanded to include small and medium-sized companies listed on the stock exchange.

“Local SMEs face barriers due to the lack of information regarding ESG obligations. Only every third company has detailed knowledge about this matter,” Aneko Toure revealed. He noted that they also want to reduce this information deficit through the framework law. In addition, They explained who the role would be in this area. There would be an environmental, social and corporate advisor, a certifier, and also a certifier.

the ESG Consultants They provide sustainability consulting services, must be certified, and must participate in training. The training is organized by the Hungarian Economic Development Agency (MGFÜ), and separate institutions will be established for this purpose.

the ESG certifications Natural or legal persons who certify the ESG report. You have to imagine it like an auditor.

the For ESG ratings EU regulations apply. The complete and partial activities of the company are examined.

the Companies that distribute and manufacture ESG software They make information and communication products that ensure the system runs smoothly.

Aneko Toure said that a national environmental, social and governance (ESG) standards council has been established and an environmental, social and governance (ESG) management platform will be launched, where companies must upload their reports. The State Minister stressed that MGFÜ is already holding workshops, and will continue in the future. The MGFÜ Energy Consulting Voucher Program has also been launched, the purpose of which is to enable companies to plan energy efficiency investments with various energy consultants. This program begins on May 2, 2024.

It is important not to view ESG considerations as an aspect of compliance, but to recognize their inherent benefits, such as financial benefits

– said Andras Puskas, Executive Vice President of MBH Bank. He explained that a lot of money is spent on saving species, and this year will also be about that topic, that is, protecting biodiversity.

Earlier, Vice President of Magyar Nemzeti Bank, Csaba Kandrács, pointed out to our newspaper that we are in the sixth great extinction wave, and the last time we saw it was the extinction of the dinosaurs 65 million years ago. Declining biodiversity also has a devastating impact on the economy. In this regard, a joint project was launched with the OECD and funded by the European Union to study how risks associated with biodiversity degradation affect the financial system.

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(Cover Photo: People working on different floors of the modern office building 20 Cannon Street at dusk. picture: Ollie Scarfe/ Getty Images)