Skip to main content

In recent years, the European Union’s sustainability goals—particularly those related to ESG (Environmental, Social, and Governance) criteria—have been a key policy priority. The regulatory framework around sustainability has aimed to ensure that companies take environmental and social impacts, as well as transparent corporate governance, into account in their operations. However, in response to growing international competitiveness challenges, the EU has decided to delay certain sustainability compliance deadlines. While sustainability remains a central objective, the timeline for meeting these obligations has been extended to allow more time for companies to prepare.

Two-Year Delay for Reporting Requirements

In April 2025, the European Council approved the “Stop-the-Clock” directive as part of the broader Omnibus Package. This legislative package aims to streamline EU regulations, postpone certain sustainability requirements, and thereby enhance the bloc’s global competitiveness. Under this decision, the implementation of the Corporate Sustainability Reporting Directive (CSRD) has been postponed by two years for companies in the second and third reporting waves, while the first phase of the Corporate Sustainability Due Diligence Directive (CSDDD) has been delayed by one year.

As a result, large companies that were originally expected to start reporting under the CSRD framework in 2026 will now begin in 2028, reporting on data from the 2027 financial year. For listed small and medium-sized enterprises (SMEs), the start date for reporting has been pushed to 2029. Meanwhile, sustainability due diligence obligations under the CSDDD for the largest companies are now set to take effect in 2028.

Alongside the postponements, the European Commission has also proposed substantive amendments to both CSRD and CSDDD, aiming to simplify the regulations and reduce the administrative burden on businesses. These proposals are still under negotiation and are expected to take some time before they are finalized.

Impact on Hungarian Companies

EU Member States are required to transpose the revised CSRD deadlines into national legislation by December 31, 2025. Consequently, Hungary’s domestic ESG legislation will soon be updated to reflect the new timelines. The transposition of the CSDDD into Hungarian law must be completed by 2027.

These delays offer Hungarian companies a valuable opportunity to better prepare for the upcoming sustainability reporting and due diligence obligations. This extension is particularly beneficial given that many Hungarian businesses are currently lagging in their readiness to comply with ESG requirements. The extra time can be used to develop internal processes, implement data collection systems, and establish effective reporting structures.

It is important to note, however, that these postponements do not equate to the abolishment of obligations. Companies are still strongly encouraged to take a proactive approach in integrating sustainability considerations into their operations and preparing for reporting requirements. This is especially critical for businesses involved in international supply chains, where partners may already require the availability of ESG data. Increasingly, large international corporations demand sustainability data from their suppliers—prompting affected Hungarian firms to begin developing their ESG reporting practices now.

Moreover, ESG performance is becoming a decisive factor in accessing capital and securing favorable financing conditions. Investors who prioritize ESG criteria tend to favor companies that are transparent and compliant in their sustainability practices. In addition, companies operating sustainably may benefit from preferential treatment in the allocation of EU and state subsidies.

Recommended Actions for Hungarian Companies

The current deferrals grants “breathing spell” for Hungarian companies, yet long-term competitiveness and compliance will require action well before the new deadlines. Preparing for ESG reporting and due diligence is a complex and time-intensive process that involves more than just technical setup—it requires strategic alignment, capacity-building, and a shift in corporate mindset.

Establishing effective ESG reporting frameworks is not merely a regulatory task; it is a strategic undertaking. Internal cooperation, awareness-building, and systemic planning are essential. The delay should therefore not be seen solely as an administrative reprieve, but as a crucial opportunity for thorough and well-founded preparation.

Elemzés szerzője