New Definition of ESG Adapted to Hungarian Conditions


Nordic Light Trio, by Skanska, has been awarded WELL accreditation.

There has been no centralized guideline for ESG criteria that everybody accepts and can adopt. Therefore, a clear definition and framework are necessary, it was argued at the Green Future Conference 20022, organized by the Hungarian Green Building Council (HuGBC).

“This is not like LEED or BREEAM, which are already set frameworks. Everybody knows that the value of the stamp from LEED and BREEAM is the same in London or Budapest,” explains Zsombor Barta, president of the HuGBC.

“Because there was no centralized framework for the meaning of ESG and sustainable economic activities, the EU has attempted to define the meaning of sustainable economic activity with EU Taxonomy regulations and a specialized framework for each economic sector. Essentially, how to measure sustainability,” he says.

“Indeed, this is different from classical ESG benchmarking or ratings because the EU has ambitious targets related to climate change, CO2 emissions and the Paris Agreement. The EU considered that if it is putting a framework for sustainable economic activity together, then, of course, it should also serve at the same time the ambitious targets related to climate change and CO2 emissions. This was how EU Taxonomy was born in May 2021,” the president argues.

“The National Bank of Hungary asked us to cooperate with them to elaborate the adaptation of the EU Taxonomy regulation with regard to new buildings, renovations, and existing buildings in Hungary. The result is that this collaboration adapted EU Taxonomy to the Hungarian market; EU Taxonomy requirements are hard to fulfill as they are very ambitious frameworks and targets,” Barta adds.

WELL Accreditation Increasing

As many as 38 office complexes in Hungary are now registered to the WELL Building Standard. This performance-based sustainability accreditation system monitors and certifies elements of the built environment that affect health and wellbeing. From this total, owners of 10 complexes have handed in the documentation to complete the certification process. WELL accreditation has so far been awarded to two Budapest office projects: Corvin Technology & Innovation Park by Futureal, and Nordic Light Trio, by Skanska. Two or three more complexes are expected to be awarded WELL accreditation in the near future. The standard of air quality in a given location remains a concern for many projects.

Skanska Recognized as European Climate Leader

Regional developer Skanska has gained international recognition by being included in the “Europe Climate Leaders 2022” list published by the Financial Times newspaper and data insight firm Statista.

“At Skanska, we have a long-term experience in taking measurable actions for sustainable development,” says Jacob Møller-Nielsen, executive vice president of the center of excellence at Skanska commercial development CEE.

“ESG aspects are embedded in the full lifecycle of our projects, starting from considerations before purchasing land, through the selection of climate-smart building materials and design that includes circular economy rules, to installing environment and user-friendly fit-outs and ensuring efficient efficiency operations of the projects. Sustainability is part of Skanska’s strategy: it is one of the enablers of greater value creation,” he adds.

“Skanska’s office buildings are designed and built in accordance with ESG principles. The company develops office spaces that support the health and safety of users and visitors, applies the highest ethical standards, requires the same from its subcontractors and suppliers, implements climate-smart solutions at each stage of the building lifecycle, contributes to the development of local communities and supports their needs,” Møller-Nielsen concludes.

Most Investors say ESG Important in Decision-making

More than 79% of investors believe that ESG-related risks are an important factor in investment decision-making, according to Cushman & Wakefield. Its report “Why ESG Matters” finds that climate change and global sustainability challenges are some of the greatest accelerants facing CEE portfolios. The consultancy concluded that companies with well-managed ESG strategies could expect cost reductions, reduced regulatory interventions, and increased employee retention, attraction, and productivity. An ESG strategy must include evaluating how an organization addresses social impacts. Having strong social capital is critical to driving high yield returns.

Hungary on way to Becoming Bicycle Manufacturing Heavyweight

Hungary is on the way to becoming a bicycle manufacturing center, says the Hungarian Investment Promotion Agency. According to Eurostat, Hungary ranks 13th in Europe according to the number of bicycles manufactured, a situation that will improve as domestic manufacturers are ramping up production and the Taiwanese-based Giant, the largest bike manufacturer in the world, is scheduled to produce one million units annually at its production unit in Gyöngyös (80 km northeast of Budapest by road). The good environmental news is that the demand for bikes is at an all-time high.

About 43% of Budapest Offices Sustainability Certified

CBRE Investment Management has traced 43% of the quality end of the Budapest office market as being sustainability accredited to a third-party accreditation organization. Of this, 79% are certified to the U.K.-based BREEAM system and 35% to the U.S.-based LEED. Several office complexes are accredited to both. The recent acquisition of the BREEAM “Excellent” accredited Szervita Square Building by Union investment from Horizon Development is seen as an illustration of the central importance of sustainability accreditation for investors today.

EU Wants Increased use of Solar, Wind Energy

The EU is planning to increase the use of solar and wind power in addition to a short-term boost for coal to end reliance on Russian oil and gas as quickly as possible. The EU Commission has stated that the EU needs to find an extra EUR 250 billion over the next five years to finance the phasing out of fossil fuels and speed up the switch to green energy.

KPMG Appoints Sustainability Verifier

KPMG Hungary has appointed an “approved verifier” for green securities through the Climate Bonds Initiative. “Investors greatly appreciate those organizations that certify their operations with standards based on transaction criteria,” said Ágnes Rakó, KPMG partner responsible for ESG.

This article was first published in the Budapest Business Journal print issue of June 3, 2022.

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