ESG Glossary

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In our article, we will briefly and generally present the meaning of the main concepts of the Hungarian ESG regulation.

  • Applicable legislation in Hungary: in Hungary, Act CVIII of 2023 (commonly known as the ESG Act) and Act C of 2000 on Accounting (new provisions of the Accounting Act on sustainability reporting: Chapter III/A, Chapter VI/A, Chapter X/A) contain the obligations falling under the scope of ESG. The detailed rules for the fulfilment of certain obligations are laid down by decree, and a number of issues are determined by the President of the Regulatory Activities Supervisory Authority (SZTFH) (including the detailed rules for the fulfilment of due diligence obligations for sustainability purposes, the rules for the establishment of the risk analysis system are also laid down by the President of the SZTFH).
  • The abbreviation “ESG” is commonly used to refer to “Environment, Social, Governance“, which are the three main areas of sustainability. Environment” refers to environmental factors, “Social” to social and human factors, and “Governance” to corporate governance and management systems.
  • “ESG” is defined in the ESG Act as “ESG: a set of sustainability considerations that assesses the environmental, social and governance impacts and factors of a business from a sustainability perspective.“
  • ESG data provision means all information published on sustainability issues, including ESG reporting (i.e. ESG data provision is not a separate obligation).
  • Sustainability report: areport on information on sustainability issues, as defined in the Accounting Act, which is provided with an assurance opinion by a certified auditor of the Chamber of Auditors and which is part of the annual report and must be published together with it.
  • ESG report: means the report prepared by the company in accordance with the ESG law, which includes the fulfilment of the due diligence obligations for sustainability purposes for the previous financial year and which the company is required to have audited by an ESG certifier. The ESG report is approved by the company’s management body. The publication of the ESG report constitutes the completion of ESG disclosure.
  • ESG certifier (mandatory): an accredited conformity assessment body that certifies ESG reporting.
  • ESG rating agency (optional): an organisation that provides an opinion, score or combination of opinions on a company’s ESG characteristics and risks related to sustainability issues.
  • ESG advisor (optional): an advisory organisation that provides ESG-related corporate governance expertise and ESG data reporting, contributes to the successful and timely fulfilment of the company’s sustainability due diligence obligations, participates in the collection and analysis of data on sustainability issues, the preparation of the corporate social responsibility strategy and the implementation of rules on risk management, risk analysis and preventive measures.
  • ESG contributor: the ESG certifier, the ESG consultant and the ESG certifier. The names of the ESG contributors who have a contractual relationship with the company and the starting date of the relationship shall be notified to the ESG contributors within 15 days of the registration of the company by the SZTFH.
  • Sustainability issues (Accounting Act): environmental and social issues, human rights and governance issues, including sustainability issues as defined in Article 2(24) of Regulation (EU) 2019/2088.
  • Assurance opinion (Accounting Act): an opinion on the sustainability report or the consolidated sustainability report issued by a member of the Chamber of Auditors or an audit firm with a sustainability rating, based on a limited assurance engagement.
  • The supply chain means, for all the products and services of the company, all the activities in Hungary and abroad that are necessary for the production of goods and the provision of services, from the extraction of raw materials to their delivery to the final customer, including the activities of the company in the scope of its own business, the activities of direct suppliers and the activities of indirect suppliers.
  • ESG register: the SZTFH keeps a register of companies subject to the ESG reporting obligation, which it prepares ex officio (no registration is required). However, the company must notify the SZTFH within 15 days of any changes to the data in the register.
  • ESG management platform: an electronic platform through which a company prepares and submits its ESG report to the SZTFH for publication on a digital form and free of charge, and publishes the ESG certificate accompanying the ESG report. The ESG management platform acts as a one-stop shop for the submission of the ESG report and for the submission of relevant documents for the official control, according to the rules set out in the Regulation of the President of the SZTFH.