The following is a summary of the key changes made to Hungary’s ESG Act.
Standardised ESG questionnaire
Companies may find it difficult to collect and analyse ESG data in light of the numerous questionnaires to assess sustainability risks, investments, access to finance and supply chains. In practice, these questionnaires vary in scope, depth and information standards, and are challenging to complete, and non-compliance can result in loss of resources and business relationships.
As a result, the amendment introduces a single uniform questionnaire for Hungarian companies to report ESG-related data on their operations, corporate policies and plans. The ESG questionnaire will serve as the annex to the ESG report that companies, which fall under the purview of the ESG Act, must prepare and publish.
According to the amendment, if a company is requested to provide information covered by the ESG Act , the company will only be required to complete this questionnaire. In practice, this means that only the ESG questionnaire should be taken into account by the requested company in the course of corporate sustainability due diligence.
Any requests for further sustainability due diligence-related information in excess of the ESG questionnaire will have to be approved by the Supervisory Authority of Regulatory Affairs (SARA). Furthermore, if a company receives ESG data on the basis of a data request under the ESG Act, it must provide SARA with the complete data received no later than 45 days after the last day of the quarter in question.
Possibility for consolidation
The amendment provides concerned companies with the possibility to prepare a single consolidated ESG report, including information on their subsidiaries, which will further reduce the administrative burden on companies. The exempted subsidiary must notify SARA of its exemption by providing the name and registered office of the parent company preparing the consolidated ESG report.
ESG rating
Pursuant to the amendment, if an ESG rating is published or provided to a third party without the mandate and consent of the concerned company, the ESG rating provider must immediately inform the concerned company of the result of the rating and the methodology. The concerned company will have the right to lodge a complaint with the rating provider and request a re-rating. The re-rating must include an evaluation of the information provided by the concerned company.
The amendment also introduces additional conflict-of-interest rules applicable to ESG advisors, ESG auditors and ESG rating providers.
ESG software and cybersecurity certification
The ESG Act requires ESG software to hold a cybersecurity certificate or a declaration of conformity issued under Act XXIII of 2023 on Cybersecurity Certification and Cybersecurity Supervision. The current amendment, in view of the continuously evolving EU cybersecurity certification scheme, creates the possibility to accept the European certificate that will become available in case of an amendment of this Cybersecurity Act.
Next steps
The specific provisions of the amendment will enter into force corresponding to the relevant applicability date of obligations under the ESG Act. Our previous Law-Now article summarising the main obligations under the ESG Act is available here.
The final text of the amending act is available in the Official Journal here in Hungarian only.
The article was co-authored by János Bálint.
For more information on this amendment and how the ESG Act could impact your company, contact your CMS client partner or these CMS experts.
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