• EMBRACING ESG
HUNGARY
MY ADVICE...
Commerce,
Sustainability is not a standalone initiative but an integral part of the core business strategy. Aligning sustainability goals with overall business objectives enhances an organisation's ability to navigate challenges and capitalise on opportunities.
firms with exemplary ESG sustainability reports can guide the initial steps toward conscious transformation to sustainable entrepreneurship. ESG is a continually growing knowledge area, with many specifics that may not be legally relevant or within the purview of lawyers. However, compliance with requirements and a deep understanding of regulations are vital to effectively assist clients with legal questions in this dynamic and evolving landscape.
legal professionals play a pivotal role. Depending on the client's business, offering comprehensive sustainability audits and developing tailored strategies to enhance resilience are key offerings. Advisors should guide clients on incorporating ESG factors into their decision-making processes, contracts, and risk assessments. Given the rapid evolution of sustainability regulations, staying informed about emerging legislation and regulations is imperative. Proactively guiding clients to adapt to new requirements helps them avoid legal and reputational risks. Professional advisors can further assist clients in implementing sustainable governance structures. The lack of knowledge and information in many large companies necessitates assistance in building organisational structures, creating documentation, and establishing contracts with ESG auditing. We often find that large companies lack knowledge and understanding. They do not know, for example, where should ESG Officer should sit in the company. Is it marketing? HR? Compliance? Educating employees and leadership teams is paramount in embedding sustainability into organisational culture. Advisors can provide training programs, including workshops on ESG best practices, legal obligations, and the business case for sustainability. Considering the obligation to establish whistleblower systems, legal advisors can assist in preparing necessary documentation and information. Acting as whistleblower
law, and ESG
Leading by example is crucial. Rather than resorting to ‘greenwashing,’ introduce
specific actions within your own firm to set a standard. Numerous examples of larger law
For non-EU companies, including private entities, ESG reporting is mandated if they have a net turnover (revenue) generated in the EU exceeding € 150 million for two consecutive financial years. Furthermore, these companies must have either a large EU or EU-listed subsidiary or a branch generating more than € 40 million in net turnover. The sustainability report produced by non-EU companies covers various ESG topics such as climate change, biodiversity, worker conditions, and human rights. Q1 How does the client and consumer demand drive ESG expectations? The heightened awareness and concern among clients and consumers regarding the environmental and social impact of businesses have catalysed a surge in demand for companies to adopt sustainable and responsible practices. Clients now actively seek products and services from companies demonstrating a commitment to ethical business practices, environmental
stewardship, and social responsibility. To navigate this evolving landscape, it is recommended to engage stakeholders comprehensively, including employees, customers, suppliers, and the local community. Understanding their expectations, concerns, and preferences related to sustainability is crucial. Regulators are responding
Dr. Jesszika Udvari Partner Budlegal Attorneys
In Hungary, as a member of the European Union, we adhere to the rules imposed by the EU on its member states. The regulatory landscape has evolved, compelling an increasing number of companies to integrate sustainability-related disclosures into their yearly financial reports, known as non-financial or sustainability reports. According to “The European Green Deal” the EU aims to transform the Union into a modern, resource-efficient and competitive economy with net zero emission of greenhouse gases by 2050, to protect, conserve and enhance the Union’s natural capital, and to protect the health and well-being of Union citizens from environmental risks and impacts. The Green Deal aims to decouple economic growth from resource use, and to ensure that all regions and Union citizens participate in a socially just transition to a sustainable economic system, whereby no person and no place is left behind. To reach these goals the European Parliament and the Council have adopted a number of legislative acts as part of the implementation of the Action Plan on Financing Sustainable Growth. To realise these goals, the European Parliament and the Council have enacted legislative acts, including the Accounting Directive (2013/34/EU), the Non-Financial Reporting Directive (2014/95/EU), and the recently amended Corporate Sustainability Reporting Directive (2022/2464(EU),
CSRD). These directives establish frameworks for non-financial reporting and disclosure standards. Under the CSRD, approximately 50,000 European companies and around 10,000 non-EU companies will now be impacted, significantly widening the scope compared to the previous NFRD. These requirements are partly directly binding and partly transposed into national law. Hungary has already transposed the CSRD into national law through the effective ESG Act, operational since January 1st, 2024. The Act places substantial obligations on businesses, including the annual preparation of an ESG sustainability report, establishing risk management systems, implementing complaint- handling procedures (whistleblowing system), developing internal responsibility strategies, conducting regular risk analyses, and fulfilling ESG data provision obligations. For EU companies, the CSRD officially came into effect on January 1, 2024. The initial reporting obligation applies to companies already subject to the NFRD, necessitating compliance with the amended regulations and reporting for the fiscal year 2024 by 2025. Other large companies not initially subject to the NFRD must commence reporting for the fiscal year 2025, starting from January 1, 2026. Small and medium-sized enterprises (SMEs) will begin reporting on January 1, 2027, for the fiscal year 2026.
to this demand by introducing or strengthening ESG regulations,
increasingly incorporating ESG criteria into legal frameworks. This regulatory environment reinforces the influence of client and consumer demand on businesses, creating a cyclical dynamic where companies are compelled to meet both market expectations and legal requirements. Q2 What should lawyers be doing now to boost resilience, in relation to sustainability, in their clients’ organisations?
Dr. Jesszika Udvari MBA, is a dynamic legal professional based in Budapest, Hungary. Since 2023, she has been a Partner and Attorney-at-law at her boutique law firm, the Budlegal Attorneys, overseeing a team of 12 dedicated individuals. Udvari specialises in Labour and Compliance Law, with expertise in Labour law advising, GDPR, Whistleblowing, and ESG matters. Fluent in German, English, and Hungarian, she brings a global perspective to her practice. Her academic journey includes studies in Germany, culminating in a prestigious MBA from ESMT in Berlin in 2022. Udvari is committed to delivering strategic legal solutions, ensuring her clients navigate the complexities of labour and compliance law with precision and foresight.
protection lawyers, they ensure compliance with the ESG Act’s requirements.
In enhancing resilience related to sustainability in clients’ organisations,
About us...
bud-legal.hu/en
Budlegal Attorneys, based in Budapest, is a leading law firm specialising in a wide range of legal services. Our expertise includes business law, corporate and M&A, civil law, real estate law, litigation, labour law, compliance law, GDPR, whistleblowing, ESG advising, and other comprehensive legal services for clients both domestic and international. With
over two decades of professional experience in international business, our dedicated team prioritises professionalism, secure legal transactions, and the delivery of high-quality, swift, and transparent legal advice. Budlegal is committed to providing exceptional legal support to meet the diverse needs of our clients.
+36 3086 812 97 jesszika.udvari@bud-legal.hu irglobal.com/advisor/dr-jesszika-udvari
18 | irglobal
irglobal | 19
Made with FlippingBook flipbook maker