The ESG panic is over: Hungarian companies can breathe a sigh of relief

Two-year postponement

In April 2025, the European Council approved the "Stop-the-clock" directive, part of the so-called Omnibus package, which aims to simplify EU rules, postpone sustainability regulations and thereby increase the EU's competitiveness. Under the decision, the second and third waves of the Corporate Sustainability Reporting Directive (CSRD) will be postponed by two years for companies covered by the Directive, while the first phase of the Corporate Sustainability Due Diligence Directive (CSDDD) will be postponed by one year. Thus, large companies that were originally due to start reporting under the CSRD in 2026 will now have to report for the first time in 2028 for data for the financial year 2027, while for listed SMEs the start of reporting will be postponed to 2029. The application of the sustainability due diligence (CSDD) obligations for the largest companies will be postponed to 2028.

As part of the Omnibus package, the European Commission has also proposed changes to the content of the CSRD and CSDDD, which aim to simplify the rules and reduce the administrative burden on companies. However, these proposals are still under negotiation and are expected to take longer to finalise.

Implications for Hungarian companies

EU member states have to transpose the revised deadline CSRD Directive into their national legislation by 31 December 2025 at the latest, which means that the domestic ESG law will change accordingly in the near future. The transposition of the CSDD into Hungarian law should be completed by 2027.

The deferrals will give companies in Hungary the opportunity to prepare more thoroughly for sustainability reporting and due diligence obligations, which is very good for companies, as many Hungarian companies are significantly behind in their compliance. This period provides an opportunity to properly develop the necessary internal processes, data collection systems and reporting structures. It is important to note, however, that deferrals do not mean the abolition of obligations.

Companies are still recommended to proactively prepare for the implementation, development and reporting of sustainability aspects. This is particularly important for companies that are involved in international supply chains, as their partners may already expect sustainability data to be made available. Large international companies are increasingly demanding sustainability data from their suppliers, so the Hungarian companies concerned should also start producing ESG reports. In addition, ESG reporting is increasingly crucial for access to capital and favourable financing terms. Investors who take ESG considerations into account prefer companies that are transparent and compliant from a sustainability perspective. Furthermore, sustainable companies may also benefit from EU and government subsidies.

Targets for Hungarian companies

For Hungarian companies, the current deferrals therefore provide a "breathing space", but to ensure lasting competitiveness and compliance, it is recommended to start preparing for sustainability reporting and due diligence obligations now. This is particularly important as integrating an ESG approach into corporate operations is a complex and time-consuming process. The development of an appropriate reporting structure is not only a technical but also a strategic task, which requires awareness raising, capacity building and internal collaboration. Deferral is therefore not only an administrative facilitation, but an opportunity for real, informed preparation.

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