ESG reporting and sustainability report under Act on Accounting

PS SME Info Hu 2024-5: In the European Union, more and more harmonised reporting obligations are being introduced at Member State level, such as the country-by-country report (so-called CbC report) or the report on corporate income tax information to be published together with the financial statement (so-called „public” CbC report), which we presented in one of our latest newsletter. In this publication, two new standardized reporting obligations based on EU-adopted directives and standards, effective in Hungary from 1 January 2024 are reviewed: the ESG reporting and the sustainability report under the Act on Accounting.

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ESG reporting and sustainability report under Act on Accounting – PS SME Info Hu 2024-5

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ESG beszámoló és számviteli törvény szerinti fenntarthatósági jelentés – PS SME Info Hu 2024-5

In recent years, sustainability issues have gained more and more emphasis in the European Union, as a result of which, directives and standards have been adopted (CSRD(1), ESRS(2), CSDDD(3)), thus obliging Member States to transpose sustainability-related reporting obligations into their own legal systems.

As of 1 January 2024, two important sustainability-related legislative changes have entered into force in Hungary:

pursuant to Act CVIII of 2023 (hereinafter referred to as the ESG Act), those subject to this act must carry out sustainability due diligence, including ESG reporting, and
the Act C of 2000 (hereinafter referred to Act on Accounting) was supplemented with requirements for sustainability reporting.

In this publication, for the sake of completeness of this topic, we provide an overview of the obligation under the ESG Act, but as a provider of accounting services, the main objective is to present the obligation to prepare a sustainability report as required by the Act on Accounting.

The issue of sustainability and the related obligations for businesses have opened up a new professional field with specific training needs, which has triggered the creation of a new pool of professionals (e.g. consultants, ESG certification bodies, auditors with sustainability rating). Consequently, we would like to draw attention to the fact, that fulfilling sustainability-related obligations is beyond the competence of an accountant, so we definitely recommend for the obliged companies to contact a consultant.

To read all the next chapters, please download our SME Info 2024-5 newsletter by clicking on the above links:

1 Introduction

2 ESG Act

2.1 Scope of the Act

2.2 Due diligence obligations for sustainability purposes

3 ESG reporting

3.1 Content of ESG report

3.2 Exemption from ESG reporting obligation

4 Sustainability report in accordance with the Act on Accounting

4.1 Scope of the reporting obligation

4.2 Sustainability report of parent companies or undertakings not based in the EU

4.3 Exemption from sustainability reporting

4.4 Content of the report

4.5 Auditing and publication

5 Comparison of the main characteristics of ESG report and sustainability report

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