Hungary Ranked 13th in KPMG Net Zero Readiness Index
Artist’s rendering on the Well-certified Corvin Innovation Campus by Futureal.
Of the 32 countries featured, Hungary was placed just behind Spain and just ahead of the United States. Poland, the only other Central and Eastern European state included in the index, was placed in 19th spot.
“Hungary has a net-zero target in place, and its financial sector is working to stimulate the flow of capital to decarbonization efforts. Much of its electricity is generated by nuclear power, and it is developing solar capacity, energy efficiency and use of electric vehicles,” said István Szabó, a senior manager at KPMG Hungary.
Buildings currently represent 17% of emissions, agriculture land use and forestry 16%, industry 21%, transport 23%, and electricity and heating 23%, according to the Big Four consultancy.
“The Net Zero Readiness Index (NZRI) is a tool that compares the progress of 32 countries in reducing the greenhouse gas emissions that cause climate change and assesses the preparedness and ability to achieve net zero emissions of these gases by 2050. I am optimistic with regard to real estate in Hungary due to the number of offices achieving BREEAM and LEED accreditation,” comments Pál Dános, head of real estate advisory and business at KPMG Hungary.
Hungary’s government has accelerated work on carbon reduction over the last two years, according to Szabó.
“It is one of the five countries that receive the highest score on contribution to global net zero, partly as a result of its June 2020 climate protection law that includes a 2050 net zero target. The government is trying to decarbonize transport through tax benefits and cash support for electric vehicles, and encouraging intermodal freight junctions for cities so that containers can be transported mostly by rail with road used for the last few kilometers,” he notes.
“Regarding industry, a number of multinational manufacturers have large Hungarian factories, which are run to high environmental standards, and the country’s EU membership means all have to meet its standards. Domestically focused companies can potentially benefit from available EU funds and green lending products to make a smooth transition in the following years,” Szabó added.
In comparison, Poland stands 19th in the index; indeed, the country is currently the lowest placed EU member state in the NZRI. This is partly because of its heavy use of coal, which is used to generate 52% of its electricity.
“The country has not committed to a net-zero target and faces a huge challenge to shift away from coal, including softening the impact on mining areas. It has adopted an energy strategy to escalate the shift to renewables, including wind power,” KPMG comments.
Further Hungarian optimism comes from the fact that as much as 47% of class “A” Budapest office stock, or 1.5 million sqm, is accredited by an independent third-party sustainability organization such as BREEAM or LEED, KPMG says. This is expected to rise to 50% relatively quickly, given the standard and size of the Budapest development pipeline.
“It is not conceivable that a real estate fund would buy an office project that is not sustainability certified. Further, most new buildings are occupied by companies operating in the global market and therefore need to locate in sustainability classified buildings,” says Dános.
“This situation could easily be transferred to the logistics sector, as it is attracting investors and buildings are less complex than offices, and therefore savings on energy are easier to achieve. In this way, branding through sustainability accreditation is an advantage, in addition to savings on energy consumption,” he adds.
The top five in the index are, in descending order, Norway, the United Kingdom, Sweden, Denmark, and Germany. More information on the NZRI can be found on the KPMG website.
KPMG is increasing its dedicated environmental, social and governance staff as the consultancy strives to become an ESG partner to groups in all major sectors of the economy.
Increasing use of WELL Accreditation
Ten office projects in Budapest are now WELL sustainability pre-certified, with documents submitted to the appropriate authorities. The accreditation is increasingly becoming the norm alongside BREEAM or LEED third-party sustainability accreditation. The two projects already certified are the Corvin Technology & Innovation Park by Futureal and the Nordic Light Trio by Skanska. Other projects would probably be able to attain the status, but there are problems with air quality around the buildings that impacts internal air quality, analysts say. Hungary also has specific issues with the lead content in its water, and it could take 15 years to rectify the situation.
Szervita Square Wins 2 World Gold FIABCI Prix D’Excellence Awards
The Szervita Square Building by Horizon Development, a Central Business District office development in Budapest, has won two World Gold FIABCI Prix D’Excellence Awards for Best Mixed-Use Development and Best Sustainable Development. According to Horizon, the 12,500 sqm project has received a LEED “Platinum” environmental rating, making it the first mixed-use property in CEE certified to this level. The complex is a rare high-end office development in the historical center of Budapest with additional high-end retail and residential space.
Benchmarking for EU Taxonomy Established
There is already an elaborated and standardized EU Taxonomy requirement list available for various business sectors that defines what is considered sustainable business activity within the European Union, says Zsombor Barta, president of the Hungarian Green Building Council (HuGBC). This is a crucial step towards a more transparent and standardized benchmarking methodology within the union, especially as certain financial benefits are or will be connected to the taxonomy compliance conditions. “We are very proud and happy as the Hungarian Green Building Council collaborated with the National Bank of Hungary on the adaptation of the EU Taxonomy for the real estate sector in Hungary. Further, the HuGBC can also verify taxonomy compliance in this sector, which is, again, an important milestone related to the third-party verification of EU Taxonomy compliance.”
This article was first published in the Budapest Business Journal print issue of July 29, 2022.
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