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Elevating Climate Protection as a Key Funding Priority

Elevating Climate Protection as a Key Funding Priority

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In the past, banks have predominantly relied on financial metrics to guide their funding strategies. However, with the prominence and importance of ESG (Environmental, Social and Governance) principles, a paradigm shift is underway. Sustainability metrics are gaining prominence in the decision-making process for financing companies or projects.

In Hungary, sustainability is in its early stages and has not yet become a central concern for a considerable portion of the population. For most people, financial factors and the prospect of savings remain the primary driving forces behind their actions in this context. When it comes to contributing to climate protection, the most substantial efforts from the populace are directed toward renovating their real estate. However, the primary motivation behind these renovations isn't rooted in environmental concerns but rather stems from the desire to reduce energy expenses.

The situation is somewhat different for companies. In general, the corporate sector is just embarking on its path toward greater awareness of ESG principles and sustainability practices. This holds true for both smaller enterprises and larger corporations. While there's a recognized imperative to engage with issues related to climate neutrality and sustainability, the actual translation of these intentions into tangible actions remains quite limited. Recognizing that companies that do not address this issue will be at a strong competitive disadvantage when competing in the same market as Western European companies, there is already a sense of activity among larger companies.

Furthermore, in light of the Corporate Sustainability Reporting Directive (CSRD) adopted earlier this year, there are reporting obligations that companies must adhere to. These obligations, depending on the size of the company, will require reporting to commence either in 2025, 2026 or 2027. As a result of these regulatory changes, it is expected that large multinational companies will progressively factor sustainability metrics into their procurement decisions in the upcoming years.

The shifting landscape towards sustainability in banking and corporate practices represents a promising transformation. Companies worldwide are awakening to the call of ESG principles, navigating through a nuanced blend of incentives, steering funds away from environmental harm and propelling eco-friendly sectors forward. ESG programs help businesses attract investors, build customer loyalty, improve financial performance, make operations sustainable and gain a competitive edge. This journey is propelled by financial institutions reshaping their strategies, businesses recognizing the competitive edge of eco-consciousness, and individuals and companies planting the seeds of change.

By Eszter Kamocsay-Berta, Managing Partner, KCG Partners Law Firm

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

Firm's website.

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