Significant Relief for Hungarian Companies:

ESG Reporting Obligation Postponed

A significant turn of events has occurred in reducing the administrative burdens on Hungarian companies: the Hungarian Parliament has adopted amendments to sustainability and ESG-related laws in two stages. The changes primarily aim to enhance corporate competitiveness, reduce administrative burdens, and protect SMEs.

CSRD: A Two-Year Postponement and Major Overhaul

In line with the European Union’s decision announced on April 16, 2025, Member States had to transpose into national law the two-year postponement of the further entry into force of the CSRD (Corporate Sustainability Reporting Directive). Accordingly, the Accounting Act has been amended as follows:

Large companies that are not public-interest entities will only be required to apply sustainability reporting for the first time for their business year starting in 2027, instead of 2025.
Public-interest SMEs will have to comply with the CSRD for the first time for their business year starting in 2028, instead of 2026.

Criteria and Further Amendments

To determine the obligation, at least two of the following three criteria must be met:

HUF 20 billion in revenue
HUF 10 billion in total assets
250 employees

However, the amendments are not yet complete. A review of the scope of obligated parties and the criteria is underway at the EU level. The employee threshold is expected to be significantly raised to 1,000, which will also become a mandatory condition, thereby significantly reducing the number of companies falling under the scope of the CSRD.

ESG Act: Drastic Reduction in the Number of Obligated Companies

The amendment to the Hungarian ESG Act brought even more radical changes. In the second round, starting from the 2025 business year, only those large companies will be obliged to comply with the provisions of the ESG Act that meet the following criteria:

Their annual revenue exceeded HUF 90 billion in the two years preceding the subject year.
Their average number of employees exceeded 500.
Their main activity falls into one of the 26 specified NACE code categories.

Sector-Specific Approach

An interesting development is that several sectors of major importance from a domestic perspective have been exempted from the law’s scope. For example, the following are not obligated to adopt an ESG approach:

Those active in agriculture
Those working in the food industry
Those operating in the construction industry

It is contradictory, however, that while financial services are included in the 26 selected activity categories, the very same institutions are exempted from the scope of the law in its first paragraph.

Practical Consequences

These restrictions drastically reduce the number of companies required to comply with the ESG Act. Instead of the previous 1,000+, only about 110-115 companies will remain obligated. This represents a significant administrative and cost saving for the Hungarian corporate sector.

The amendments provide the opportunity for applications already submitted but not yet assessed to be withdrawn and resubmitted under the new conditions.

European Trends and Future Outlook

The Hungarian decisions are in line with European trends, where there is a growing emphasis on reducing the administrative burdens on companies. The European Sustainability Reporting Standards (ESRS) will also be significantly simplified, reducing the number of topics and areas to be reported on, as well as the number of mandatory data points to be disclosed.

The new conditions are expected to be adopted and published at the end of 2025 or in 2026, which could bring further relief for Hungarian companies.

Source: Magro.hu, Forvis Mazars