Budapest Business Journal 3116

Green Business

Developers Call for More Transparency and Improved Benchmarking

ESG-compliant features and procedures in real estate are increasingly the norm, exemplified by accreditation to a recognized third-party sustainability system for high-end office and industrial developments.  11

ESG Offers Sustainable Future for Living and Working in Budapest

A prime issue facing Budapest is how the infrastructure, look and feel of the city can and should be improved in line with ESG and sustainability priorities, whether from a real estate business, environmental quality or architectural perspective.  18

Sustainability: Walk the Talk

SOCIALITE

Viewing Renoir: A Different Kind of Challenge

It can be fun to go to an exhibition by an artist you know little about or don’t like much. That’s why David Holzer is looking forward to “Renoir: The Painter and his Models” at the Museum of Fine Arts in Budapest, beginning September 22.  30

Q2 Contraction Extends Hungary’s Economic Recession

While inflation continued its downward trend during the holiday period and enabled a further reduction in interest rates, poor secondquarter GDP data spoiled any summer party.  3

Landlords have a vital role in raising sustainability awareness among staff, tenants and society and establishing communication with regulators, says Mátyás Gereben of CPI Hungary.  7

Egészsége-dreher! Brewery Invests for the Future

Like much of the local market, the venerable Hungarian beer producer Dreher, now owned by Japan’s Asahi, is battling to recover from COVID and cope with the inflationary environment.  8

EDITOR-IN-CHIEF: Robin Marshall

EDITORIAL CONTRIBUTORS: Luca Albert, Balázs Barabás, Zsófia Czifra, Kester Eddy, Bence Gaál, Gergely Herpai, David Holzer, Gary J. Morrell, Nicholas Pongratz, Gergő Rácz.

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The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress. Reproduction or use without permission of editorial or graphic content in

EVEN ATHLETES NEED A HOLIDAY

Even if it feels like a long time since your holidays, I hope you were able to take some much-needed time off for rest and relaxation and to recharge your batteries. Not that Prime Minister Viktor Orbán seemed to be taking much of a break this summer. There was what seemed at times like an endless stream of regional right-wing allies he invited as guests during the highly successful World Athletics Championships Budapest hosted over nine days from August 19-27.

Just about the only people busier than the PM were the competitors themselves, as they put on a show to remember at the impressive and purpose-built National Athletics Center on the eastern banks of the Danube River. The atmosphere around the stadium was undoubtedly electric. I was in the fan zone outside for the sprint relay races on the final Saturday evening. The roar that greeted the sound of the starting pistol was remarkable.

According to a November 2020 story posted on thestadiumbusiness.com, documents published by the government showed that HUF 204 billion (EUR 556.5 bln) of public funds had been made available for the center. At the end of January this year, HVG put the cost at HUF 246 bln. But what now? The facility could hold 35,000, according to the worldathletics.org website. The idea is to remove the temporary upper tier and reduce that capacity to 15,000, leaving a space “which can be filled with publicly available leisure areas,” the website says. But what comes down can go back up.

He added, “I can’t remember a better atmosphere at a world championships.” Speaking on the final day of the event, Lord Coe also thanked Orbán for his support and noted that more than 95% of tickets had been sold.

“This is a country that has a long-term ambition for sport, and sport that goes way beyond nine days of competition,” Coe said. He described Orbán as “a prime minister that really does get sport, adding, “we couldn’t have a better supporter at a local and national level.”

How Orbán must have enjoyed that. He has long used sport as a political tool in what some critics have likened to a modern-day reimagining of the Roman Empire’s “bread and circuses” approach. Coe wasn’t done yet, however. He called Budapest and Hungary “ambitious,” adding, “I have no reason to doubt they would put up a very credible bid if it was entertained by the International Olympic Committee.”

On the back of the successful 2022 World Aquatics Championships and now the athletics, Hungary is thought to be mulling another tilt at hosting the Summer Olympics, possibly in 2040. In 2013, the country launched a bid for the 2024 games but eventually pulled out in the face of calls for a public referendum that seemed sure to oppose it. Is the dream still alive? It seems unlikely Orbán, a man who “really does get sport,” will have given up on it.

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I wasn’t alone in noting that atmosphere. Sebastian Coe, former middle-distance Olympic and European champion and world record holder, former MP for the U.K. Conservative Party, former frontman for the 2012 London Olympic bid, and now the president of the global governing body World Athletics, described it as “electric and addictive.”

Robin Marshall Editor-in-chief

P.S. We hope to see many of you at our Back to Business BBJ Sundowner, run in conjunction with the Budapest Marriott Hotel on Thursday, September 14, from 6 p.m. Please register online and come along to welcome in the new business term with us.

THEN & NOW

In the color photo from state news agency MTI, Mayor of Csepel Lénárd Borbély speaks at the opening ceremony of the renovated Eötvös József Primary School in Csepel on Thursday, August 31, 2023. In the black and white picture from the Fortepan public archive, pupils and teachers gather for the ceremony opening the academic year in 1955 at an elementary school in Budapest’s District VIII.

Photo by Tibor Illyés / MTI

Photo by Pál Berkó / Fortepan

Q2 Contraction Extends Hungary’s Economic Recession to a 4th Quarter

While inflation continued its downward trend during the holiday period and enabled a further reduction in interest rates, poor second-quarter GDP data spoiled any summer party.

Hotelier Lukas Koller has been having a good season. The managing director of Est Grand Hotel Savoy, a four-star “superior” hostelry near Blaha Lujza tér in Budapest, says August in particular was a “splendid month” with major events such as the World Athletics Championships boosting occupancy to “a bit above 86%,” a significant improvement on the 73% of last year.

On top of this, room rates were raised by 16% this year. The cherry on the cake then? Not quite, as Koller cautions. “This might sound like a lot, however, it does not cover the effects of the soaring inflation rate entirely.”

Nonetheless, tourism, most especially that segment attracting up-market foreign visitors, is likely to prove one of the better performing elements in an economy which otherwise continues to suffer from the highest inflation in Europe and was, at the last count, still in overall recession.

Granted, headline inflation in July came in at

17.6%,

an encouraging improvement on January’s peak of 25.7% and a result enabling the central bank’s Monetary Council to continue trimming the key overnight deposit rate by 100 basis points to 14% later in August.

However, Hungary’s Consumer Price Index is still more than three times the eurozone rate, which registered a 5.2% increase in prices in July.

Poor Q2 Figures

Whatever, any spirits raised by the inflation numbers of early August were soon dampened by the surprisingly poor economic figures for the second quarter, which revealed the economy had contracted by 2.4% year-on-year and 0.3% monthon-month, meaning the Hungarian economy had shrunk for the fourth consecutive quarter. The first estimates were confirmed in a detailed analysis by the Central Statistical Office (KSH) this week.

“This [preliminary] data caused a major negative surprise compared

Volume of Retail Trade in Hungary, 2021-2023 (July)

Calendar-adjusted volume index of retail trade (same period of previous year = 100)

Nonetheless, agriculture still holds out promise in the short term, Virovácz argues.

“Preliminary crop yield results suggested a nice improvement in the sector, although it seems that this will not be felt until the second half of the year,” he says.

‘Disturbing’ Contraction

In other sectors, negative results are continuing to emerge, and while the fall off in domestic demand and the yearly and quarterly drops in value added in industry (at -5.7% year-on-year) and construction (-6%) were largely expected, Virovácz deems the 2.4% contraction in services “really disturbing.”

“It seems that the start of the tourism season wasn’t enough to salvage the tertiary sector during the second half of the year. With dropping production in industry and construction and with the shrinking purchasing power of Hungarian households, retail, logistics and leisurerelated services collapsed,” he reasons.

Not all analysts are so downbeat, however. At OTP Bank, senior analyst Győző Eppich notes that while many economists interpreted the second quarter results as “very bad news,” lowering their forecast as a result, “we think the data is not as bad as it first seems.”

Source:

to the market consensus. The vast majority of the market, including ourselves, expected the technical recession to end after three quarters. We were all disappointed,” Péter Virovácz, senior economist with ING, wrote in an analysis after the data was confirmed. Delving into the various sectors, the outstanding numbers were related to agriculture, where output surged 67.9% year-on-year, a seemingly stellar performance. However, as KSH itself

was quick to note, this was largely the result of a very poor base quarter in 2022.

“Last year was purgatory for the sector, due to the impact of the Ukraine war, the related energy crisis and bad weather. So, such a huge annual improvement was always going to be on the cards,” Virovácz wrote.

Indeed, this year’s second quarter agricultural performance was, if anything, disappointing, since it represented a contraction on the first three months of 2.3%, contrary to the widespread expectation of a boom.

For Eppich, the structure of the second quarter figures compared to those of the first three months “painted a more favorable picture about underlying growth,” with numerous one-off effects, both positive and negative, complicating the overall assessment.

However, after filtering out these effects, he argues that, after the sharp decline in the first quarter, underlying GDP in fact “roughly stagnated on a quarter-onquarter basis” in the second three months.

For sure, the outlook for Hungary remains mixed. While inflation is on a downward path, the forint has seemingly stabilized in the HUF 380-385 range and both the trade and current account balances have recovered strongly this year on the back of low global energy prices. However, fiscal concerns persist, with the seven-month budget deficit at 86% of the annual target, a worrying factor in the second half of the year.

Moody’s Affirmation of Sovereign Rating Welcomed, but Controversial

In a piece of positive news for Hungary, Moody’s, the U.S.-based international ratings agency, affirmed the country’s Baa2 sovereign rating with a stable outlook in its scheduled review on September 1. The rating is in the investment grade category, two notches above so-called “junk status.”

The agency said the ratings “balances” Hungary’s credit strengths and challenges, arguing the country’s medium-term growth outlook is “solid driven” by a combination of labor and product market factors, including the availability of skilled workers, one of the highest wage adjusted labor productivities among EU countries, a solid infrastructure, one of the lowest corporate income tax rates in the EU, and its integration into European manufacturing production networks.

It also noted thee country’s “robust” fiscal strength, with “a moderately high debt burden and relatively strong debt affordability.”

On the downside, Moody’s said Hungary’s main credit challenge relates to weaknesses at the institutional level, “which have been at the origin of a contentious relationship with the EU,” which, in turn, “induces uncertainty about the disbursement of financially significant amounts of EU funds.”

However, the agency expects the government to eventually secure the majority of its EU funding, although this will be what it calls a “step-by-step, noisy process.” The impact from any delay in transfers on economic growth and public finances will be “limited” and “Hungary’s economic strength is expected to remain robust in light of significant investments,” the agency concludes. But not all are so sanguine on the country’s near-term future.

“Moody’s latest decision on Hungary gives [a] false sense of security,” ING’s Péter Virovácz cautioned in his assessment of Moody’s analysis, arguing that while the affirmation of the rating came as a positive surprise, it “could lead decision-makers to become complacent.”

“We are not entirely comfortable with their argument, particularly the balanced risk assessment,” he says. Virovácz also disagrees with Moody’s assessment of the risks facing Hungary. “We believe the risks are tilted to the downside, hence our earlier expectation of a downgrade to the outlook. In our view, the recent decision provides a false sense of security and may lead policymakers to become complacent at a time when growth prospects are deteriorating, and fiscal problems are mounting. These risks have led us to be more downbeat overall [on economic developments],” he wrote.

In the project’s next stage, the Liberty Hotel, Hungary’s first purpose-built dual-branded hotel, is expected to open by the end of the year. Development of the north wing is underway with 20,000 sqm of Breeam “excellent”

certified office area and is expected to open in the first half of 2024; office spaces are still available according to Wing.

The complex includes 650 parking spaces, bicycle racks and changing rooms, and an inner garden and green area between Liberty and the Telekom HQ building Wing previously developed on the site.

“With the handover of the office areas in the south wing, Liberty, our largest development at the moment, has reached a major milestone,” says Gábor Angel, deputy CEO for office development at Wing.

“The next step will be the opening of the dual-branded hotel, where the finishing touches are underway. Once that is done, Liberty will officially become a multifunctional building. Based on market demand, the final work of the north wing is currently being prepared with a further

20,000 sqm, in which there is ongoing potential tenants’ interest,” he says.

“Our aim was to create a distinctive and innovative building that will define the Budapest cityscape and will

A biweekly look at real estate issues in Hungary and the region

Liberty Development’s South Wing Receives Use-permit Real Estate Matters

reflect modern property market trends. We are building a people-oriented, multifunctional complex with a range of services and green solutions,” Angel adds.

Intersection Location

Liberty is located in District IX, at the intersection of Albert Flórián út and Könyves Kálmán körút. The first phase includes 10,000 sqm of Breeam “excellent” office space on four floors in addition to the hotel, which shares branding between the three-star Ibis Budapest Stadium and the four-star Tribe Budapest Stadium. There are retail units on the ground floor and floors 5-8.

The development was penned by the Hungarian firm DPi Design, and HBM conducted the civil engineering. Swietelsky Magyarország was responsible for completing the structure, and Bernecker is the general contractor for the final works.

Wing, an established Hungarian developer and investor, has projects across multiple commercial market sectors in addition to large-scale residential developments. Office projects by the company include the Magyar Telekom, Ericsson and Siemens-Evosoft headquarters.

In the industrial sector, Wing operates the East Gate Business Park and developed the Wizz Air Training Center in the vicinity. The company also has several hotel projects, including the Ibis Styles Budapest Airport Hotel and B&B Hotel Budapest City. In the retail sector, Wing has opened the refurbished and rebranded GoBuda Mall, which is Hungary’s first sustainable and green-certified shopping center, according to Wing.

The renovation of the Liget Center office complex is about to reach another milestone with a new building, Liget Center Vitrum, which will join the existing Liget Center Classic and the Auditorium. At the same time, the visual identity of Liget Center, the umbrella brand of the buildings, is being updated: it will be modern and distinctive while reflecting the history of the building complex, according to Wing.

The developer has extended its activities to the Central European real estate market and is now present in two other countries beyond Hungary. It is the majority owner of Poland’s Echo Investment and Bauwert, one of the leading German residential and commercial real estate developers.

Finding the Key to Mobility Solutions of the Future

The Budapest Business Journal talks with András Kárpáti, the president of Hungary’s Future Mobility Alliance, about sustainable corporate transport solutions, micromobility, and more.

BBJ: How does one make company cars more sustainable?

BBJ: The right combination of efficiency, cost optimization and sustainability are vital to the success of any business. How can companies optimize costs while implementing green mobility solutions, and how can the alliance help them?

András Kárpáti: The Future Mobility Alliance helps members and those seeking our professional advice with a knowledge base and a toolbox of experience that presents a wealth of practical, immediately applicable solutions. The aspects can work simultaneously; it is a misconception that sustainability is an extra cost burden. Efficiency and cost optimization go hand-in-hand because, to use a hackneyed phrase, time is money. Those who build their daily lives efficiently are less stressed, can focus more, and end their days with more sense of achievement. That is the privilege of motivated employees over the long term, which also goes hand-in-hand with a high level of well-being.

AK: In many cases, a company car is not only a work tool but also part of the benefit package, as the employer may offer it for private use. However, it is not certain that a large car is something an employee needs every day. Of course, the trunk of a compact car will not be sufficient for a two-week family holiday, but the extra space is likely to be used only for two-to-four weeks a year. We have a partner where half of a fleet of 12 diesel estate cars has been replaced by compact, fully electric vehicles of the same make (so the fleet discount is not lost). Most employees use the cars within the city, the company can charge these vehicles at its premises and during holidays, employees traveling with their families can take the estate cars. For those allowed to keep their estate cars, the only condition was that they swap cars a few times a year with those going on leave.

The key to making systems work is predictability and design. Sometimes, certain constraints are needed to operate more efficiently. Transport

options and mobility solutions are no exception. The alliance can help design and implement such systems, including customized approaches.

BBJ: How does the alliance envisage integrating alternative solutions, such as micromobility, into corporate strategies?

AK: Corporate responsibility is essential in many areas, as solutions that work well in this environment are consciously and sometimes instinctively

incorporated into the private sphere. As I said, a company car can be part of a benefit package. This does not mean that we drive everywhere. A few years ago, it would have been unthinkable for me not to make trips to the countryside by car, and for 10 years, I drove to Vienna biweekly on official business. Today, I would never think of driving to Vienna, Debrecen or any other big city in the countryside, especially when traveling alone. MÁV’s first-class ticket, including seating, costs a few thousand forints within the country, and apart from the fact that fuel costs would be many times that amount, I can also spend the time in a useful way.

BBJ: What about urban areas?

AK: In the city, either public transport or my e-scooter is perfect. Micromobility is the ideal solution for urban transportation. On average, we rarely travel more than 8-10 km within a city. We can even use bikes for commuting, especially if we can shower at work. If you have to get to a meeting where your appearance is important, you don’t sweat on an e-scooter, which is easily portable when folded. It can also be combined with a car-sharing service. An added advantage is that zone limits are no longer a constraint, and the scooter functions perfectly as a so-called “last mile” device. In my experience, this could mean 1.5 hours saved per day in Budapest in traveling and parking time.

The south wing of Wing’s mixed-use Liberty development has received its use permit, and the first office tenants, eMag and Geodis, have moved in. The 360 sqm Absolute Teamsport Focivilág sports store is also now open on the ground floor.

BENCE GAÁL

András Kárpáti

Mixed Messages Continue in Hungary-Ukraine Relations Roundup Crisis Ukraine

President Katalin Novák paid an official visit to Ukraine last month, celebrating Hungary’s national holiday with ethnic Hungarians there, visiting a center for children’s rights, and working with Ukrainian President Volodymyr Zelensky towards greater cooperation between Hungary and its beleaguered neighbor.

On the first public stop on her trip on August 22, Novák attended an ecumenical service marking Saint Stephen’s Day at

a Catholic church in Berehove, just across the Hungarian border in Ukraine, where ethnic Hungarians make up roughly half the population. In her address to the congregation, the Hungarian president said it was good to celebrate with the Transcarpathian Hungarians despite all the difficulties and prayed for peace.

The next day, Novák went to Kyiv and met with the Ukrainian parliament’s commissioner for human rights, Dmytro Lubinets, at the Center for the Protection of Children’s Rights. Later, she visited a kindergarten and school being rebuilt with a contribution from the Hungarian government under the coordination of»Hungarian Interchurch Aid in nearby Zahaltsy.

Lubinets thanked Hungary for its aid and being among the first countries to shelter and provide for Ukrainian refugees. Their discussion also touched upon the issue of the educational and linguistic rights of the Transcarpathian Hungarian minority, during which Lubinets acknowledged that “everyone has to take care of the rights of their citizens.”

Cross-border cooperation and joint initiatives in the Transcarpathian

region were the focal points of talks with Ukrainian President Volodymyr Zelensky, whom Novák met on August 24 as part of the third Crimea Platform Summit. In a statement issued on his website, Zelensky thanked Novák for her participation at the meeting, adding that Hungary’s “support for the territorial integrity and sovereignty of Ukraine is very important to [Ukraine].”

A New Chapter?

Following their meeting, President Novák detailed their talks in an interview with Index.hu published on August 28.

“We agreed to open a new chapter and take meaningful and concrete steps in the interest of the Hungarians in Transcarpathia,” Novák said. “The Ukrainian president said Ukraine is prepared to give the members of the Hungarian minority in Ukraine the same [rights] that the members of the Ukrainian minority get in Hungary. That’s not a bad starting point,” she added.

Yet, despite the apparent greater cooperation outlined at this meeting,

lingering disagreements between the two countries persist. For instance, Hungary, along with Poland, Romania, Slovakia and Bulgaria, remains adamant about extending the European Union ban on imports of wheat, maize, rapeseed and sunflower seed from Ukraine to neighboring member states, which is set to expire on September 15.

“We support a ban on imports into our countries until the end of the year,” Polish Minister of Agriculture Robert Telus told a news conference on August 25. “I want to say that even if it [the EU ban] fails, some countries will introduce their own restrictions,” he added.

The following day, at the Tranzit festival in Tihany (130 km southwest of Budapest), Minister of Agriculture István Nagy said that Hungary would do just that, re-introducing a national ban on imports of several Ukrainian farm products if the current EU restrictions are not extended. He added that the ban would apply to a broader range of agricultural products, some 24 items included in the original Hungarian prohibition rolled out earlier in the spring.

Yettel Aims to Protect Smartphones With NetPajzs

The Budapest Business Journal talks with Máté Pomezanski, Yettel Hungary’s digital products director, about the company’s cutting-edge security app, NetPajzs.

the latest phishing addresses and data from more than 20 databases to identify and block different phishing attacks.

BBJ: NetPajzs is capable of blocking suspicious websites and filtering unwanted content. Can you explain the technology behind it?

Máté Pomezanski: NetPajzs provides protection on Yettel’s network using a filtering system integrated at a network level. We are working with an internationally recognized partner who can filter suspected phishing websites relying on a database updated every 3-5 minutes. Yettel’s networklevel filtering means that when a customer uses a phone on the mobile network or uses Wi-Fi with Yettel’s home service, OtthonNet, we can provide this protection.

BBJ: How does NetPajzs protect against phishing attacks?

MP: NetPajzs monitors and filters the address of the visited website, or more precisely, the IP address behind it. The filter engine built into our network will not let the customer through to the website if it is identified as a phishing site. The engine is a kind of intelligent system within NetPajzs that actively monitors and analyses websites visited by customers. This system is constantly updated with

BBJ: NetPajzs was launched in November 2022. How many Yettel customers have adopted the service so far?

MP: The NetPajzs service has proved to be very popular, perhaps due to the many product benefits in addition to its low price. Once activated, you don’t need to worry about updates; just enjoy the protection it offers. Unlike traditional apps, NetPajzs does not drain your phone battery or slow the device down, as it runs on the network, not the phone. Since its launch, NetPajzs has been activated by nearly 220,000 customers, with a very low churn rate, meaning that most customers continue to use it after the free trial.

BBJ: What are the most common threats that you see NetPajzs protecting Hungarian users against?

MP: Phishing attacks are by far the most common threat these days. “Your parcel has arrived,” “Immediate bank details required,” “You’ve won a luxury holiday;” everyone is likely to have received such suspicious messages. These are usually sent via SMS, but scammers

have also targeted social messaging platforms and online marketplaces. E-mail-based phishing attempts are also widespread. Typically sent in the name of utility companies or banks, they look deceptively genuine. Such messages are often sent to randomly generated phone numbers and e-mail addresses. Sometimes, previous phishing victims are called by fraudsters posing as being from a bank, who know their personal data and gain their trust and even access to a specific bank account. NetPajzs helps ensure that customers are as unlikely to fall into the first trap as possible.

BBJ: Your recent survey revealed that people don’t protect their smartphones as much as computers. Why do you think that is the case?

MP: Smartphones operate in a far more secure environment than computers. It’s often said that the biggest IT security risk is people: the careless, ignorant users who either click the wrong way or install software from an uncontrolled source. For smartphones, Apple only allows verified applications to be published on its marketplace. Android does the same, but it also allows people to install apps from external sources, making it easier to receive malware that can steal data. Overall, computers are more vulnerable than smartphones when used by the average user. Although you hear about smartphone attacks, the public is less pressured to get extra protection.

BBJ: What other digital security products or services can we expect from Yettel?

MP: NetPajzs is less than a year old. It was launched shortly after our 5G-based home internet service, OtthonNet Pro. Recently, we have also launched Yettel TV, which offers a complete home TV service. We have been very busy and constantly ask for, listen to and process customer feedback while keeping an eye on market trends. We also see an opportunity to develop NetPajzs further, but I don’t want to give more details now, so there will be more of a surprise when the time comes.

Máté Pomezanski

BENCE GAÁL

NICHOLAS PONGRATZ

Igor Prerovsky Takes Over as Yettel Hungary CEO

As of September, Igor Prerovsky takes over as CEO of telecommunications at Yettel Hungary.

“I’m looking forward to the challenge of managing one of Hungary’s leading telecommunications companies. [...] The possibility of strengthening the Yettel brand with innovative wireless services is beyond exciting,” comments Prerovsky on his new position.

“First of all, I would like to thank Peter Gazik for developing Yettel Hungary through creating one of Hungary’s largest 5G networks and introducing home internet and TV service developed into one service provider,” Sharma Balesh, CEO of PPF Telecom Group, notes.

“By appointing a new CEO in place of Peter, it creates an opportunity for PPF to work with Igor once again, who has previously had a successful career with us. This appointment gives the PPF Telecom Group new momentum in its efforts to provide our customers with cutting-edge telecommunications and provide online services,” he explains.

Managing Director at FrieslandCampina Hungary

Ferenc Szecskó took over as managing director at FrieslandCampina Hungary on August 1, the company tells the Budapest Business Journal

“I wish Ferenc Szecskó success with his new job. In him, the Hungarian producers, our trading partners, representatives of the sector and the company employees can find a partner with a prepared and constructive, innovative approach,” emphasizes Péter Szautner, outgoing managing director.

headed the commercial area of the Hungarian subsidiary, and from October 2019 until now, he also managed the Romanian branch.

“The digitization of the energy sector is crucial for our future. With the new technologies, we can use the produced energy significantly more efficiently and integrate our renewable energy sources into our systems,” Racsek says of his promotion.

“Thanks to this, we can reduce the effects of natural disasters or geopolitical events on the energy supply. I am convinced that the best energy is what we don’t use, but in order to make our energy use more efficient, we need accurate data,” he explains.

“This appointment is a great honor for me; although it represents a serious challenge, I believe that the market increasingly demands the opportunities that our product portfolio offers,” Racsek adds.

PPF Telecom Group, the majority owner of Yettel Hungary, announced that Prerovsky will take on the duties of CEO of the Hungarian organization, as well as heading PPF’s telecommunications branch.

The expert returns to the PPF group after working at various locations in Europe and the Middle East, focusing on digital business development at Creative Dock Group as a financial manager in the fintech area of telecommunications projects. He also assumed a senior position at Home Credit, PPF Group’s global retail finance business, from 2006 to 2009. He managed services in the United States, Vietnam and China.

“It is a pleasure to, once again, be working with my PPF colleagues. Together we can develop various areas at the company based on our expertise, such as telecommunications and digital mobile services,” Prerovsky says.

He succeeds Peter Gazik as CEO of Yettel Hungary, who held the position from 2021.

FrieslandCampina Hungary has been manufacturing Hungarian products for decades, including the Pöttyös and Milli brands.

Szecskó has been a member of FrieslandCampina’s management team since 2011. He has previously

His predecessor, Szautner, took over as the head of FrieslandCampina Hungary in 2013. He has taken an active role in the work of various organizations, such as being vicepresident at the Association of Responsible Food Producers (formerly the National Association of Food Processors) and a board member and co-president of the International Milk Association and Product Council. He continues his career as managing director of the FrieslandCampina subsidiary responsible for the Belgian and French markets.

“I congratulate Péter Szautner on his new position and wish him success. Thanks to your expertise, dedicated work and professional team, I am taking over the management of a company with outstanding performance. It is an honor for me to be able to participate in this development, and the related business value creation at the head of a team of professionals,” shares Szecskó.

Hungarian Named VP of Digital Energy at Schneider Electric

Dániel Racsek was appointed vice president responsible for digital energy in Southeast Europe for Schneider Electric as of June 1. The 36-year-old is the youngest person to receive such an appointment in the region, the BBJ was told.

He joined the Schneider Electric team shortly after obtaining his economics degree and has worked for the multinational company in energy management and industrial automation solutions for more than 10 years. In his new position, the specialist is responsible for introducing the company’s digital solutions supporting energy management in the region.

Previously, Racsek worked as the business development director of the company’s EcoStruxure branch, pioneering solutions such as automated energy advisory services based on self-learning intelligence.

In the future, Racsek will introduce digital solutions to market participants in the region, implement the company’s best practices, and draw attention to the opportunities available to increase energy efficiency.

Igor Prerovsky

Ferenc Szecskó

Péter Szautner

Dániel Racsek

2 Business

CPI: Developers Must Walk the Sustainability Talk

Landlords have a critical role in raising sustainability awareness among their staff, tenants and the broader society and establishing two-way communication with regulators to shape meaningful and enforceable legislation, according to a leading Budapest property developer.

Mátyás Gereben is country manager of CPI Property Group Hungary, which has long regarded itself as a pioneer in real estate sustainability.

“For quite a while, we have had a sustainability framework with exact goals on our website. By 2030, we must reduce CO2 emissions, water consumption, and so on, but set amounts,” he tells the Budapest Business Journal.

“We’re working hard on putting an action plan behind that, which is not only words and goals that sound good, but is followed up by the actions through which we can achieve that.”

Too many corporate plans are little more than hot air or “greenwashing,” he suggests. CPI, on the other hand, is investigating the amount of green capex it is investing in its buildings and what the tangible reduction in emissions will be.

“If we change an air handling unit, or if we change the building management system to a smart one that can communicate between all the functions in the building and save energy, what does it do to our emissions and our plans to reduce them? We are doing this calculation building by building.”

If landlord investments are one part of the story, tenant education is another and just as important, the CEO insists.

“Most of our energy is consumed by the tenants. We can be super smart, but if they cannot utilize this knowledge or the tool we’re giving them, it becomes very difficult to save,” Gereben explains. “So, we have to educate them. We’re preparing symposiums, communicating through multiple

channels to help them understand what they have in their hands, how to use the resources of the office building or the shopping center correctly.”

Evolving Market

Alongside that are “green leases,” a two-way contract between landlord and tenant to explore ways to become more sustainable. That can help tenants achieve a better ESG score that may help them achieve more financing. It is another example of what Gereben sees as an evolution of how the market operates, although more so in the office sector than retail.

“Right now, it’s going through a vast change compared to the last 20 years. Tenants would like to see their office space as a service, not as a concrete structure within which they can operate.

Here, I believe CPI has enormous opportunities to differentiate itself as a service provider. How we respond to those needs from the tenant side will help the tenant believe our services are lasting and professional.” Crucial to that is flexibility, not in terms and conditions but around space.

“This is a risk on our side, but it also offers a great advantage if we’re able to communicate that tenants sign for 20% less than they think they require, and the rest, we control as it is needed.” Another idea is the promotion of networks within the CPI tenant community as an opportunity to find new partners and business. The goal is that such a flexible and serviceorientated approach will help attract new tenants and retain existing ones.

The need to embrace sustainability and ESG principles seems like a given now. We often hear developers and landlords are being driven toward being greener by the twin pressures that come from regulators and tenants. But Gereben sees a more nuanced picture.

“Today, I would assume that tenants who are opening up towards these kind of initiatives would be 30-40% of all our clients,” he says. He is quick to point out that the figure is a “guestimate. [….] It’s very difficult to say, but while the numbers are increasing in Hungary, I see it’s a slower process than in other countries in the CEE region.”

Much of the emerging regulatory framework comes from the European Commission, but that still needs to be localized. Gereben identifies that as a problem when asked why companies might be less engaged in Hungary than the rest of the CEE.

“It’s a lack of regulations or less obligations. I’m speaking against myself because obligations and regulations always mean costs, expenses, and thus lower profit. But if we invest in being green now, maybe it gives us the chance to benefit from it in the future,” Gereben says.

Cost Worth Paying

“It is a cost that I believe, and CPI believes, is worth spending. But if you don’t have the right framework from the regulatory side, companies and organizations will stretch only as far as is necessary,” he warns. However, Geregen also says developers must engage with authorities through platforms like the Hungarian Green Building Council.

“It is not only the regulators’ responsibility to develop smart packages for how companies should be sustainably responsible. I think it also requires us, the big developers who are the main characters in forming the urban environment,” he argues. “We do have responsibilities to work together with those guys ‘up above’ and make sure that they understand what we’re doing, and we understand what they want to achieve.”

One example of this illustrates another developing trend that is only “in a very preliminary stage at the moment in Hungary:” reusing renovated furniture and fittings rather than buying new. It is much more established in Scandinavia, where it is becoming a marketing tool.

“Moving into an office where you use renewed materials is much more posh or trendy there than moving into a newly fitted-out office,” Gereben says.

CPI did precisely that when moving into its new offices in its Balance Hall building. But there are still roadblocks. Otherwise perfectly useable modular carpeting cannot be moved from one building to another to be given a second life because it is currently impossible to get fireproofing certification for reused carpets. Again, it highlights the need for good communication channels with the authorities.

Gereben has one final thought to share, which circles back to that point about greenwashing and the need for actions that back up aspirations. He says it is not enough to tell the market what to do; you must “walk the talk.”

“Personal education and employee involvement in this process is essential. I’ll tell you one example. In our kitchen, we have a compost robot, a compobot. There is a competition between the employees to see who’s using it most efficiently, who is ‘feeding’ it with the most compost,” he explains.

“People have started to bring composite waste from home to be part of the race, which before they would have dumped in the normal trash. Taking the time and energy to separate it into some bags and bring it in, most of this is fun. But, at the same time, it’s also a change of mindset.”

ROBIN MARSHALL

Mátyás Gereben, country manager of CPI Property Group Hungary.

Egészsége-dreher! Brewery Invests for the Future

Cost-saving Investments

Given that these developments took place in a fast-changing inflationary environment when energy and raw material costs were rising dramatically, this is a noteworthy performance, helped by cost-saving investments.

From 2019 to last year, Dreher invested some HUF 5.6 bln in a clutch of modernization projects, topped by another HUF 7 bln outlay for the inauguration of a new line this year, which has raised the total production capacity for canned beer from 50,000 to 110,000 cans per hour.

Ask Brian Bartram, beer aficionado, ardent traveler and a retired railway manager from Bedford, England, which beverage he associates with Hungary, and the answer is immediate.

“Dreher is the one that comes to mind,” he replies, with no additional prompting.

“Seem to remember I had a dark and light beer [when visiting Hungary].”

It’s a response that must be music to the ears of Gábor Békefi, chief executive of Dreher Brewery, who exudes pride when speaking about the venerable beer maker.

“We are Hungary’s market-leading brewery, with significant leadership versus others. [….] Dreher is

170 years old, the second-oldest in Hungary and the only one in Budapest,” he told foreign journalists on a visit in August.

“A commitment to quality, taking care of employees, taking care of sustainability, these are the principles that the [founding] Dreher family used, and that’s what we apply these days [to the business],” he continued.

Located in the suburb of Kőbánya, about eight kilometers east of central Budapest, many of the public are more likely to have seen the brewery complex from the air (it’s directly beneath one of the flight paths to Ferenc Liszt International Airport) than from the road that passes outside.

Changing Hands

Dreher emerged from the Socialist era to be privatized to South African Breweries in 1993 and was acquired by Asahi, one of the world’s largest breweries, in 2017. Headquartered in Japan, Asahi Europe and International operates in 90 markets on five continents with 10,000 employees. Naturally, Dreher is a small part of that operation, with a stable workforce of some 570 people. Nonetheless, this represents more than one-third of the total headcount of 1,617 employed in 2022 by the five members of the Hungarian Breweries Association, including the four with production sites in the country: Borsod Brewery,

Heineken Hungária (Sopron Brewery), the small Pécs Brewery, and Dreher. However, when asked for details to back up his claim that Dreher was Hungary’s leading brewery, Békefi sought to skirt the subject.

“Depending on what statistics you look at, there is no one source of information on the market share in Hungary,” he said, declining to go on record with any specific percentage.

Given that Dreher sold some 2.285 million hectoliters of beer last year, when the total sales of the Hungarian Breweries’ Association members amounted to

6.463 million hectoliters, this indicates Dreher holds a 35% slice of the market, although these numbers include imported beers

sold by the respective Hungarian subsidiaries. Total domestic production in Hungary last year amounted to 5.567 million hectoliters, barely changed from 2021.

(Until a few years ago, the Hungarian Breweries’ Association released market share information on an annual basis, which repeatedly revealed the three largest beer producers almost neckand-neck, each with a 31-34% slice of the market, leaving Pécs Brewery with around 5%.)

As the subsidiary of a listed company, Dreher officials decline to speak about the brewery’s financial details, but from publicly available data, revenues rose some 17%, from HUF 63.4 billion in 2021 to HUF 74.2 bln last year, while the aftertax profit climbed from HUF 2.59 bln to HUF 3.08 bln, up almost 19%.

Packaging of Choice: The Can-do Trend

Quizzed about packaging trends for beer, Gábor Békefi revealed that, in Hungary at least, the aluminum can is conquering the market from the returnable bottle.

“When I look at the retail business, more than 80% of products are sold in cans, and the remaining part is split up between glass [returnable] bottles and PET [plastic] bottles,” he told the Budapest Business Journal Indeed, the trend towards cans continues to grow, largely driven by discount retailers such as Aldi, Lidl and Penny, which refuse to sell returnable bottles.

Intriguingly, in the Czech Republic and Slovakia, while sales in cans have surged in recent years, returnable bottles still maintain important market shares. Dreher’s sister company, Plzeňský Prazdroj (Pilsen Brewery), also part of the Asahi

group, reports that returnable bottles accounted for nearly 40% of sales in the Czech Republic and 33% in Slovakia.

“Different countries, different habits [...] Lidl and Aldi are responding to the consumer environment, but also they are driving consumption habits by allowing the returnability of certain containers,” Békefi said.

The deposit system for returnable bottles certainly works well across Central Europe, with exceptionally high rates of return reported.

“The rate of return across the whole market exceeds 90% on average, and [for] large breweries around 96%. In the case of Plzeňský Prazdroj, the rate of return has been as high as 98% over the long term,” a spokesperson for Pilsen Brewery told the BBJ . Since returnable bottles have a lifetime of six-to-seven years

Despite these developments, the Hungarian beer market is still struggling to recover from the impact of the COVID pandemic, a process impeded by the worst bout of inflation for 25 years over the past 12 months. Indeed, Dreher’s 2022 sales were down 115,000 hectoliters, or almost 5%,

on the 2.4 million hectoliters sold in 2019, the last year before the pandemic hit.

“We still haven’t fully recovered from the pandemic,” Békefi admitted.

Curiously, while Dreher makes relatively significant investments in marketing its premium brands domestically, the company appears to make no effort to promote its wares to the non-Hungarian-speaking market, including the tourist trade.

For example, in contrast to the policy under its previous owners, even the company website lacks an Englishlanguage version, leaving visitors like Brian Bartram to rely on Wikipedia should he wish for further information on his favorite Magyar brew when on his next visit to Hungary.

and will be refilled on average up to 22 times, does this make glass bottles more ecologically friendly than aluminum cans? Békefi is non-commital.

“Each one has a different angle to it. A can is good because it can be recycled as many times as you want. A glass bottle does not need to be renewed in each cycle, [...] but a returnable glass bottle has added cost and complexity; you need to wash it with hot water, then rinse it, and you have to use various chemicals to clean it. So, each one has a different impact on the CO 2 footprint, but glass bottles and cans are the two best forms [of packaging],” he said.

“I’ll tell you what is the worst: the non-returnable glass bottle. It’s a huge energy consumption for creating the bottle, and they typically end up in landfill because you can’t recycle them.”

Like much of the local market, the venerable Hungarian beer producer Dreher is battling to recover from COVID and cope with the inflationary environment.

Catl Producing new Batteries in Germany, Hungary

According to international wire Reuters, Catl will produce its upcoming fastcharging Shenxing battery at its plants in Germany and Hungary alongside China, principal engineer Gao Pengfei said at the IAA Munich car show on September 4. The battery will be massproduced in China from late 2023 and available in electric vehicles from 2024. Gao declined to provide a timeline for European production and said no offtake agreements had been finalized with regional customers yet. Catl kicked off operations at its plant in the central German state of Thuringia in December 2022 and is building Europe’s largest battery plant in Debrecen (225 km east of Budapest), Hungary, intending to start production in two-to-three years.

O-I Hungary Investing EUR 1.5 mln in Recycling

U.S.-owned O-I Hungary, which makes glass bottles and jars, is investing EUR 1.5 million to boost the ratio of recycled glass at its plant in Orosháza (180 km southeast of Budapest) from 40% to 50%, cutting back on gas consumption and reducing emissions. Managing director Péter Fekete told the state news agency MTI on September 4 that the investment is set to finish by next January. Zsuzsa Papdi Ördög, another O-I Hungary managing director, said the firm had limited exposure to the energy crisis as the company gets gas under a long-term contract from a local gas field. Since the outbreak of the war in Ukraine, glass made in Hungary has been filling a gap after several glass factories there were shut down, leaving orders of around 30,000 tonnes to be filled, she said. O-I Hungary’s annual production capacity is 110,000-120,000 tonnes, while domestic demand is about 170,000 tonnes, she added. Papdi Ördög acknowledged the construction of a glass plant in Kaposvár (185 km southwest of Budapest)

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by a Turkish investor and said O-I Hungary had plans in place in case it resulted in a loss of business but added that management “trusts it won’t come to that.” O-I Hungary exports about half of its output, mainly to Italy. According to public records, the firm had a net sales revenue of HUF 24.3 billion last year.

Andrada Group Building HUF 10 bln Battery Recycling Plant

Slovenia’s Andrada Group is building a HUF 10 billion battery recycling plant in Alsózsolca (185 km northeast of Budapest), Minister of Foreign Affairs and Trade Péter Szijjártó said on August 29, according to autopro.hu. The government is supporting the investment, which will create 200 jobs, with HUF 4.7 bln, the minister said. The project is the most significant Slovenian investment in Hungary to date, he added. The plant will have the capacity to recycle 10,000 tonnes of batteries a year, Szijjártó said. Andrada Group has committed to environmental standards that are “four times as strict” as Hungarian rules, he added. The country is set to become the second-largest producer of batteries in the world, thanks to big projects by Asian investors, Szijjártó noted.

Jiecang Executives Showcase HUF 60 mln Investment in Hungary

Executives of China’s Jiecang Linear Motion Technology, which makes linear actuators for healthcare and home applications, presented a project for the construction of a EUR 60 million factory in Kaposvár (185 km southwest of Budapest) on August 21, according to azuzlet.hu [The Business]. The plant, which will also serve as Jiecang’s European distribution center, is expected to start operating by the end of 2024. Sun Honguang, who is heading the project in Hungary, said the new plant would generate EUR 80 million of revenue a year and create more than 200 jobs. Jiecang head Hu Renchang pointed to “great

CEO Breakfast Briefing

German

Are the tides changing for German companies in Hungary? For decades, German-Hungarian economic relations have thrived to the benefit of all parties. But a string of recent articles in German, Austrian and Hungarian media have suggested that, if not over, a sea change is in sight. A relatively weak Hungarian economy, high inflation, and restricted access to EU funding, with no sign of an end to that particular roadblock, are also not helping. The German-Hungarian Chamber of Industry and Commerce has identified through its research a dichotomy between sectors in Hungary: Some sectors still enjoy state support and subsidies, while others face much tougher restrictions

growth potential” in the European market. Because of Hungary’s central location on the continent and good transport links, Jiecang picked the country as the site of its new factory alongside those in the United States and Malaysia, he added.

Sunwoda Building HUF 580 bln Plant in Nyíregyháza

Chinese battery maker Sunwoda will build a HUF 580 billion plant in Nyíregyháza (240 km northeast of Budapest), Minister of Foreign Affairs and Trade Péter Szijjártó announced on July 27, according to origo.hu. Sunwoda,

and special taxes. What do German companies, especially those close to Hungarian customers and market sentiment, think? Is change coming? Is it survivable? Should German investors consider cutting and running, or is it better to tough it out, hoping for a better tomorrow? On the other hand, are these tensions simply an overreaction amplified by a lack of understanding at the bilateral political level? These and other areas will be discussed at a moderated discussion with business representatives led by Robin Marshall, editor-in-chief of the Budapest Business Journal To register, visit the German chamber website.

one of the top 10 battery makers in the world, will invest HUF 93 bln in the initial phase of the investment, which will create “several thousand” jobs, Szijjártó said. The plant, Sunwoda’s first in Europe, will meet growing demand from European car makers, he added. He noted that the investment was the biggest announced so far this year and the third with a value of more than EUR 1 bln, paving the way for FDI to double from last year. Competition to attract the investment was “extraordinarily fierce” and pitted Hungary against several other countries known for their automotive industries, he said. Hungary is the fourth largest producer of EV batteries in the world.

Prevention

Relaxation and investment in our own future

Panel discussion on whether the tides are changing for German companies in Hungary September 21, 2023

Chamber CEO Breakfast Briefing with the BBJ

What Makes Hungary the EU's Runaway Inflation Leader?

Finance Matters

According to a Eurostat data release on July 19, Hungary had by far the highest inflation in the Eurozone, and not by a little; it is roughly triple the EU average and almost double the next highest countries (Poland, the Czech Republic and Slovakia).

The inflation chart shows Hungary as such a massive outlier that analysis will be of apparent interest to those doing business here but also to nonHungarian readers.

Here, we don’t look at general reasons for inflation, only at factors that make exceptionally high inflation a “Hungaricum” (in other words, a uniquely Hungarian feature). We outline six elements here that are either unique to Hungary or where it has, sadly, been a category “winner.”

Devaluation as a Strategy for Competitiveness

Hungary is an open, export-driven economy, exporting primarily to the EU. Hungarian productivity growth (at about 0.8% per annum between 2010 and 2022) was roughly half the EU average. Hungary’s competitiveness rankings (according to the International Institute for Management Development or IMD) plummeted last year from 39 th to 46th place.

The Hungarian government has done little in the form of long-term investment into competitiveness, with severe underinvestment in education and healthcare. Hence, the government seems compelled to allow a continuous downward drift of the HUF to maintain competitiveness. Rather than declare a target exchange rate, the HUF is subject to unexpected market forces and speculation.

Given that the forint fell by about a quarter over the past five years, quite a few percentage points of inflation were imported every year.

Annual Inflation Rates (%) in June 2023

Deficit Spending

In 2020, an increased deficit was arguably justified by COVID19. The 2021 continuation of high deficit spending, tax decreases and generous subsidies is best explained as electioneering for the 2022 elections. The 2022 budgetary deficit remained unjustifiably high, at 6.2% of GDP.

Money Supply

This has grow rapidly over the past five years, except for a dip over the past 12 months.

Malinvestment

While investment usually has the effect of improving productivity, this does not apply where resources have been misallocated, such as in:

a) Government “prestige” investments such as soccer stadiums, or acquisitions of banks or telcos, or

b) Private sector investments that have been distorted by grant criteria or cheap loans.

National Bank of Hungary (MNB) Losses

The MNB recently announced massive losses (HUF 400 billion in 2022, with HUF 2 trillion forecast for 2023), stemming from its balance sheet. There are a myriad of programs with heavily subsidized loans, while debt service costs have risen inexorably. The government recently declared its intention to rewrite central banking law to ensure losses are not borne by the central budget, allowing the MNB several years to reverse these losses. A central bank may function

with losses or even negative capital, but this may erode trust in monetary authorities, particularly in a country with a BBB/BBB-minus risk rating.

Corruption is Inflationary.

Transparency International has just ranked Hungary the most corrupt country in the European Union. The government pays a corruptioninflated price for much of its procurement.

The government’s three main explanations for inflation are disingenuous:

• The War in Ukraine: This affects all V4 countries. It cannot possibly serve to explain why inflation in Hungary is higher than that of its group peers.

• High Energy Prices: At close to recent peak energy prices, Hungary locked into long-term energy contracts with Russia. (The details of the contracts themselves are confidential). While wholesale energy prices tumbled throughout Europe over the past sixto-nine months, retail natural gas and electricity prices have remained distressingly high in Hungary.

• Multinationals Price Gouging: Once again, multinationals are also present in other V4 and EU countries, hence this cannot explain why inflation is so much higher in Hungary. (multinational food retailers and energy firms in Hungary do, however, pay punitive sector taxes which contribute to inflation).

The government seems to have one foot on the accelerator (continuously high deficit spending), another on the brakes (the central bank’s interest rates rising to over 15%), and no clarity as

to who is driving the vehicle. High uncertainty contributes to inflation. Meanwhile, core inflation (excluding the most volatile prices such as energy and food) remains at 20.8% as of June 2023, meaning that inflation is becoming “baked in.” Wage growth is at 17.9% as of May, meaning that real wages declined in the first half of the year, a socially painful component of ongoing slow disinflation.

The poor who, by definition, spend a higher percentage of income on foodstuffs and energy prices, are seeing their paychecks decimated by 29% food inflation and record energy prices. Retirees see their savings destroyed. As in most instances, it is the proverbial man-in-the-street who pays the price for poor governance.

We do not see a reversal of any of the above factors in the foreseeable future. Hence, inflation in Hungary is likely to trend at a considerable premium to the EU. Nor does the government’s objective of reaching a single digit inflation rate this year seem realistic.

Source: Eurostat

columnist Les

Nemethy

and economics professor Péter Ákos Bod, a former governor of the Central Bank of Hungary, look at why high inflation has become a “Hungaricum.”

Green Business 3Special Report

Developers Call for More Transparency and Improved Sustainability Benchmarking

ESG-compliant features and procedures in real estate are increasingly the norm. That is exemplified by accreditation to a recognized third-party sustainability system by high-end office and industrial developers being a fundamental market requirement from tenants and to meet regulatory expectations from the EU and national governments.

GARY J. MORRELL

This is becoming a prerequisite in all stages, from planning and permitting and financing to construction, leasing strategy, property and facility management and an exit with a sale to investors.

Analysts say there is a need for more transparency, improved benchmarking and accountability and the integration of sustainability criteria into EU Taxonomy. This would enable developers to share a standard definition of economic activities that can be considered sustainable by the broader market. The essential aim is to help investors to make sustainable business choices and to prevent “greenwashing.”

“As ESG is more requested by business stakeholders, successful developers need to focus on elaborated sustainability criteria, which must also be embedded into their business strategies and policies. Therefore, I would say that successful and forward-thinking businesses implement ESG criteria into their strategies and policies,” comments Zsombor Barta, founding partner at the sustainability consultants Greenbors Consulting.

Many regional and national Hungarian office developers have sustainability or ESG policies in place and seek third-party accreditation systems such as the U.K.-

based Breeam or the U.S.-based Leed.

From an interior and staff-orientated perspective, Well accreditation is increasingly used, and developers are also utilizing building access accreditation systems such as Access4You.

“Breeam has already extended the certification platform to show compliance with EU Taxonomy requirements,” Barta notes.

“The certification schemes from the U.S. (Leed and Well) are currently not integrating EU Taxonomy compliances, although, especially for European projects, this would be of high importance. I think that European certification schemes, like Breeam, will focus more on EU Taxonomy incorporation and compliance in the near future,” he adds.

Highest Score

The first 27,000 sqm phase of H2Offices has been awarded “Platinum” Leed Core and Shell version 4 certification with 84 points, currently the highest score yet awarded in Hungary, according to its developer, Skanska. The building also obtained the top Access4You rating at “Gold.”

Skanska says it is also committed to achieving Well Health and Safety certification for the building. Various solutions were implemented to ensure the well-being and comfort of building users, including good quality indoor air, noise-reduced workspaces, warm and friendly lighting, natural materials, easily accessible recreational facilities, and a range of services. The project’s designers are Denmark’s Arrow Architects and Hungary’s Studio IN-EX.

“Certified accessibility information is becoming more relevant for developers, landlords and owners,” comments Regina Kurucz, an architect and Well assessor. “Access4you is a certification scheme for the accessibility of the built environment. Based on their standardized assessment, it provides reliable and detailed data on the locations’ accessibility to people with special mobility, visual, hearing, and cognitive needs for free. This is good for business and a benefit for society,” she says.

Another leading Budapest office developer, Atenor, is set to deliver its latest office project, the

15,500RoseVillesqm

located in Óbuda. Designed by the Hungarian studio Artonic Design, the building is certified to Breeam “Excellent” and Access4You “Gold” levels and is ESGcompatible. Atenor was one of the first landlords in Budapest to sign so-called “green leases” in the project, according to Máté Galambos, director of leasing.

Green leases are “sustainability agreements” between landlords and tenants that provide the ability to monitor and give feedback. They aim to collaboratively reduce the environmental impact of the building and its leasable areas. Atenor isn’t alone in using them in Budapest.

“We formulate common goals and important proposals based on mutually shared values and sustainability aspirations,” says Henrietta Budai, sustainability director at CPI Property

Group Hungary. “Together, we monitor and give feedback on whether the targets set in the agreement are being met,” she adds. She sees the critical component as energy consumption around heating and air-conditioning, and water use.

Breeam is, by a clear margin, the third-party accreditation system of choice with office developers in Hungary and across Central Europe.

Top Level

The first 25,000 sqm phase of the 65,000 sqm Budapest One project by Futureal has achieved Well “Platinum” certification, the highest category in the system. Hungary’s six other Wellaccredited offices are all at the secondbest “Gold” level. This brings the total of Well-accredited space to 167,000 sqm.

“In line with the highest Well requirements, we create unique office areas that enable tenants to create attractive, healthy and creative workplaces for their employees while they can improve their ESG performance and, therefore, their competitiveness,” says Gábor Radványi, chief architect of Futureal Development.

Sustainability accreditation is also becoming the norm in the industrial sector, with developers and park operators delivering more highly specified Breeam- and Leedaccredited complexes. As with the office market, environmental factors and market demands are acting on players at the same time.

To give just one example, the second

45,000 sqm

hall (MG3) at HelloParks Maglód is completed with the developer, HelloParks (part of the Futureal group), aiming to achieve Breeam New Construction “Outstanding” certification, the highest category available.

In another certification, previously reported in the Budapest Business Journal, the common areas of Ferenc Liszt International Airport Budapest’s Terminal 2 have achieved a Well Health-Safety Rating.

“Budapest Airport became a pioneer in Europe, opening the way for travel and leisure facilities to get certified and show their commitment to social responsibility, health and safety on a large scale,” comments Kurucz.

“The Well Health-Safety Rating is designed to support business owners and operators in protecting the health of staff, visitors and other stakeholders. The inspection covers five areas: cleaning and sanitization procedures, emergency preparedness programs, health service resources, air and water quality management, stakeholder engagement and communication,” she explains.

The first phase of H2Offices has been awarded Leed “Platinum” Core and Shell certification with the highest score yet given in Hungary. The building also has the top “Gold” Access4You rating.

Adherence to new EU Regulations Paves way to More Sustainable Banking

of MBH Bank and shaping employee attitudes. We aim to achieve this by maintaining energy-efficient operations and organizing activities that actively reduce carbon emissions. Our goal is to actively involve employees, letting them experience firsthand how their volunteer work contributes to achieving net carbon neutrality and supports biodiversity in the area.

BBJ: How is MBH navigating green financing in the current interest rate environment?

GySz: In such a high-interest rate environment as we have here, our bank is working on ESG issues to invest the funds needed to do more green lending in the future. Green lending is not an activity that we can introduce overnight because it requires the development of IT systems and policies. International and national regulations now set strict standards on what can be called green and when.

BBJ: How is MBH preparing for the Corporate Sustainability Reporting Directive (CSRD)? What challenges do you anticipate?

György Szege: As a first step, we will focus on an assessment and gap analysis. We will evaluate our current sustainability reporting practices and compare them to the requirements outlined in the CSRD to identify gaps and improvement areas. To achieve this, we need to enhance our data collection processes to ensure the accuracy and reliability of our ESG performance data.

Regarding data availability and quality, there are many challenges in collecting consistent and reliable ESG data, especially for some less quantifiable metrics. To fully meet the CSRD requirements, we must integrate ESG considerations into our business strategies and decision-making processes. We already began this process when we adopted our ESG strategy, but the CSRD presents a new chapter for us as we must now address ESG in every area. If some banks are quicker or more successful in implementing sustainable practices, others may face competitive pressures to keep up.

BBJ: What significant achievements and challenges did last year’s Sustainability Report highlight?

GySz: Challenges include identifying the most significant sustainability issues relevant to our organization and our stakeholders, and information on how sustainability is governed within the organization, including the roles and responsibilities of key personnel and board oversight. Fortunately, we have had a central ESG department since the beginning of 2022, and we have also selected ESG ambassadors to help us achieve our goals.

We need clear targets and key performance indicators for sustainability objectives and progress towards achieving them. Collecting this accurate and relevant data across various operations and departments can be challenging, especially for large

and complex organizations like ours. Keeping up with evolving sustainability regulations and reporting frameworks can be a challenge for financial institutions, as can quantifying and measuring the social impact of the activities of an organization due to the intangible nature of some social metrics.

BBJ: How does MBH ensure that it listens to its employees?

GySz: Ensuring that a bank listens to its employees is crucial for fostering a positive work environment, promoting employee engagement, and making informed decisions that align with the goals and values of the company.

For example, we conduct regular surveys to gather feedback from our employees and, through our ambassador program, we gain firsthand access to the latest information in frequent meetings and receive support from senior managers.

We also have several internal programs to support our employees at different stages of their lives, such as the MBH Baby+ or the MBH Active+ programs. At the same time, we do not forget our new starters, whom we support

through our fusion trainee programs, and we reward excellence through our Employee Recognition Program. We actively seek and value feedback from our employees to create a more inclusive and supportive work environment while shaping our policies and strategies to better align with the needs and aspirations of our workforce.

BBJ: How does MBH’s treeplanting program align with your sustainability goals?

GySz: This spring, we planted 10,000 saplings in southern Transdanubia. We also want to contribute to creating a more livable future and a greener environment. During the initiative, 140 employees of the banking group who wanted to actively participate in achieving our goals related to the carbon neutrality and attitude-shaping pillars of our ESG strategy, planted native trees. A local professional organization helped our workers with the planting, thus ensuring expert care of the plants.

In the summer of 2022, we presented our ESG strategy with two main elements: reducing the carbon footprint

Last year, we completed a major project to assess the ESG risk of the entire portfolio of our former member banks (how much of the portfolio is low, medium, and high ESG risk) and to develop a process to assess ESG risks for most loan proposals. This is just the beginning of green lending, as we need to be clear about where we start and where we need to improve our portfolio.

Through all these means, we can play a role in raising public awareness about green financing and the benefits of sustainable investments. Educating customers about the positive impact of green projects may increase demand for such financing options.

BBJ: How do you see the role of digital transformation in enhancing MBH’s sustainability efforts and employee engagement?

GySz: Digital transformation is pivotal in enhancing the company’s sustainability efforts and employee engagement. Integrating digital technologies can lead to more efficient and effective sustainability initiatives while fostering a culture of engagement and collaboration among employees.

Digital transformation contributes to reforming various areas of the bank in different ways. For example, digital tools enable banks to collect and analyze vast amounts of data related to their environmental and social impact. This data-driven approach allows banks to identify areas of improvement, set meaningful sustainability goals, and monitor progress toward achieving them.

Digital transformation also facilitates remote work and flexible work arrangements. Allowing employees to work remotely can reduce commuting and office energy consumption, contributing to the sustainability efforts of a financial institute. It also enhances employee engagement by providing a better work-life balance and accommodating individual preferences.

In addition, digital platforms facilitate e-learning and training programs on sustainability topics for employees. This empowers colleagues to understand the importance of sustainability, equips them with relevant knowledge, and encourages them to participate actively in the bank’s sustainability efforts.

The Budapest Business Journal discusses sustainability, digital transformation, green financing, and ESG with MBH Bank’s György Szege, head of ESG at MBH Bank.

György Szege, head of ESG at MBH Bank.

Embodied Carbon Gains Ground in the Construction Industry

The real estate segment must prepare for ever stricter regulations as market players will need to keep track of and push down their carbon footprint resulting not only from the operation of the buildings but also production, transportation and build-in of building materials. As a result, only the highest quality will prevail.

The game is on when it comes to reaching Net-Zero, and the pressure is increasing on stakeholders from all walks of life to do their part for the cause. The real estate segment is particularly concerned, not least because the built environment contributes 47% of global greenhouse gas emissions, according to the data of Architecture 2030.

The European Commission’s “Fit for 55” target, which aims to cut emissions by at least 55% compared to 1990 levels by 2030,

was just the start. The EU’s Energy Efficiency Directive and the Renewable Energy Directive have raised the bar, introducing new standards for energy performance to decarbonize the building sector.

The office development sector should have fewer problems adapting to this elevated level of legal rigor, given that the market already puts pressure on building owners, András Klopfer, sustainability consultant of Denkstatt Hungary,

tells the Budapest Business Journal

The residential sector, in turn, may need substantial subsidies to comply with the new regulations.

One of the most pressing issues in this regard is so-called embodied carbon, i.e., the emissions related to the manufacturing and transportation of building materials as well as the construction of buildings. With operational energy efficiency on the continuous rise, embodied carbon is expected to account for nearly 50% of the total carbon footprint of newly built real estate between 2020 and 2050. Hence, regulators have been long overdue to respond to this threat.

Neglected Area

“Indeed, embodied carbon has been neglected on the regulatory front. Whole-life cycle carbon calculations are just getting off the ground here, but in some countries, they are already part of the building process,” Klopfer points out. In Sweden, for instance, building permits are dependent on them. What is more, by 2027,

the legal amount of embodied carbon will also be capped by the Swedes.

On the other hand, this is not only novel but also complex territory, meaning no accurate local benchmarks exist as yet.

“Big pressure will be put on building material manufacturers as they are going to need to provide product-specific information for contractors, and they are going to require lots of data for that,” the expert explains.

This is where the Environmental Product Declaration (EPD), based on the life-cycle assessment (LCA) of building materials, comes into the picture. Such a document will be essential. Without it, building material manufacturers won’t be able to file proposals for procurement procedures in the EU. In France, it already has wide-ranging implications.

“There, the whole-life cycle carbon figures must be part of the design process, and ever since the introduction of this rule, the number of EPDs has skyrocketed,” Klopfer notes. “We are going to see this trend all over Europe.”

EPD Specialists

Stakeholders might wonder what they need to watch out for when considering getting an EPD and how long the process takes. As the expert explains, it takes around five-to-six months to obtain it, although projectspecific LCAs can be done by the manufacturers themselves. In addition, consultants can also manage the project. In fact, the market already recognizes certified EPD specialists. It is essential to have an updated version of the document; projectspecific data on the production is needed, and the calculations must comply with the standards.

“Embodied carbon has been neglected on the regulatory front. Whole-life cycle carbon calculations are just getting off the ground here, but in some countries, they are already part of the building process.”

In Hungary, buildings can be notoriously outdated in terms of energy efficiency; less than 10% of the building stock can be deemed as “at least somewhat modern” (close-to-modern, modern, or better) according to an analysis by MBH Jelzálogbank, part of MBH Takarékbank (MBH Mortgage Bank) in its housing price index, using data from Q3 2022.

The classification scheme that assesses buildings and homes by their energetics quality and C02 emissions is to change this year. From

2024

on, only Nearly Zero Energy Buildings will get a use permit. The implementation will be a massive step forward since the restriction date has been pushed back several times.

“Revising the rules on building energetics couldn’t have come at a better time, as the requirements were already quite outdated,” Klopfer agrees. He is not worried, though, that the stringent regulations will make buildings unaffordable.

With COVID ushering people to the home office in droves, however, it begs the question of how much demand there will be for offices. Klopfer believes there will still be a need, albeit with restrictions.

“Only the best buildings will be needed, and yes, some projects will need reconsideration or should be stopped before construction even starts,” he concludes. That’s definitely encouraging from the environmental perspective.

András Klopfer, sustainability consultant at Denkstatt Hungary.

Market Talk: Showcasing the Positive Examples of Sustainable Policies

The term “Green Business” suggests that successful actors in the various commercial real estate sectors are adapting their business practices to meet market pressures concerning sustainable practices and space, meeting international carbonemission reduction regulations, and acting under the EU Taxonomy. Market players and analysts see the need for improved benchmarking, accountability and transparency throughout the market process.

GARY J. MORRELL

While there are many successful real estate business practices, I believe we have to admit that the only way forward is more sustainable development and asset management strategies. There is a general understanding that commercial properties still produce a large chunk of total carbon emissions. But, with regulatory forces and shifts in the mindset of industry professionals, there is a common aim to decrease our footprint as much as possible; after all, we all live on the same planet that we dearly love and wish to protect.

We have been developing Breeam “Excellent” certified office buildings from the start, and in our experience, with the technologies we are using, we can decrease operational costs significantly. It would be difficult to estimate the percentage savings, but where we can help our tenants save is mostly in the electricity bill for heating and cooling through heat pumps, lighting through energy efficient LED fixtures with motion sensors, water consumption through the utilization of rainwater and groundwater and much more

Máté Galambos

Director of leasing, Atenor Hungary

There is no commercial success without implementing certain ESG practices in the commercial real estate business. All new office building developments, and now logistics buildings too, hold green building certifications, as tenants are conscious of it. These are supplemented by Well or Access4you certifications addressing the social impact. The majority of potential buyers and tenants are interested in the developers’ own ESG commitments as well, in addition to the building.

The percentage savings for developers and tenants depends on what the baseline is and what the policy includes. ESG strategies usually target somewhere around 5% reduction year-on-year or a specific reduction target by a particular year. The goal of the majority of companies is carbon-neutral operation by 2050;

however, several organizations, such as ourselves, have the aim to be carbon-neutral by 2030. Another example, the EU Taxonomy-aligned target for building renovation, is for a 30% reduction in primary energy demand.

Norbert Szircsák

Head of ESG strategic advisory services, Colliers Hungary

ESG is increasingly determining market success driven by the requirements of tenants (who already have ESG liabilities of their own or will do so sooner or later), investors and banks, but also employees. The answer to these new and complex aspects can only be implementing new business operations, long-term strategies, and a fresh corporate culture. Besides the market demand, the requirement

to meet the EU Climate Neutrality goals by 2050 and other regulatory obligations push businesses to take immediate ESG action. Those that have already started to act definitely enjoy an advantage. A company’s success is not judged exclusively by financial criteria anymore. Evaluation of ESG performance will be taken into account to the same extent in the very near future.

I would not actually use the phrase “green business;” I would use “responsible business” instead. In this context, it is not enough that the real estate owner or property or facility management tries to run their properties in an environmentally conscious manner; all stakeholders should take responsibility. CPI Hungary has been introducing green lease agreements since last year. These mean we intend to cooperate with our tenants (and indirectly with our and their suppliers) to reduce the negative environmental impacts of our properties.

Henrietta Budai Sustainability manager CPI Hungary

Photo by Oasishifi / Shutterstock.com

Máté Galambos

Norbert Szircsák

Henrietta Budai

The benefits for developers and tenants of adopting sustainable policies can be calculated and showcased relatively easily and transparently. However, as sustainability has such a broad and holistic approach, there are some benefits and savings that can only be calculated and measured in a more general manner. For example, a wellinsulated and managed building, which runs using renewable energy produced on-site, will have a significant percentage of operational cost savings compared to buildings that are poorly managed, have poor insulation and use natural gas.

Benefits on the emission side can also be measured, especially if carbon emissions are monetarized. Savings on carbon emissions (including embodied carbon) are also a hot topic. Again, low carbon design and operation can easily be demonstrated if this is monetarized.

The overall benefits for the health and well-being of the people, and for the planet and future generations, are more difficult to count with concrete percentages; however, investors and banks are indirectly also considering these (positive) effects with their green investments, funds, incentives, etc. Therefore, the positive impact of sustainable policies can be showcased very broadly, and many facets of savings can be presented.

Zsombor Barta Founding partner, Greenbors Consulting

Human health is material to an organization’s bottom line, and the application of Well criteria at scale makes that connection clear. By applying Well at scale, organizations can measure and improve their health performance across multiple locations. Using our robust set of Well features and our proven process, organizations can map, measure and quantify their health and well-being efforts. With this data, they can measure their impact on people while also comparing their progress internally and against industry peers.

Most people spend about 90% of their time indoors, so all buildings have a meaningful influence on our daily lives. Architects and interior designers have a huge impact on how we behave in the spaces, how we get around, how we feel, and how we decide.

Regina Kurucz Architect and head of the Well Working Group, Hungarian Green Building Council

Currently, the total available office space on the market is approximately 450,000 sqm, but, in my opinion, only half of that can be considered “modern”

space. A very small percentage of the stock of office space would fulfill the sustainability requirements of the large corporates.

New developments are significantly more likely to fulfill the sustainability needs and, therefore, the submarkets where most new developments take place are the “usual suspects”: the Váci Corridor, South Buda and South Pest. But there can be examples in other submarkets as well.

Valter Kalaus Managing partner, Newmark VLK Hungary

Zsombor Barta Valter Kalaus

Regina Kurucz

Sustainability Central to High-end Investment Deals

In addition to a market correction, with yields moving out from the current 5.25% for office and 5% for industrial, the other major ongoing issue for the investment market is the need for both purchasers and vendors to conclude deals based on ESG criteria in accordance with the EU Taxonomy.

GARY J. MORRELL

This is particularly the case with investors seeking core product with international tenants and carbon-neutral goals and currently less so concerning value-add acquisitions.

The importance of ESG will keep growing for investors and occupiers in 2023 and become a more critical element in the pricing of assets, says Benjamin Perez-Ellischewitz, principal at Avison Young Hungary.

“ESG investing (the integration of environmental, social and governance factors into the acquisition and exit process) is increasingly a concept and code of practice that has been adopted by investors as a central part of their investment strategies, due to pressure from shareholders and legislators and a wider need to be seen to be investing in a sustainable way,” says Perez-Ellischewitz.

“Investors obviously have yields and their return on investment as a central priority, although commercially successful investmentstandard buildings tend to have

attained sustainability accreditation, sustainability expectations are now obviously an integral element of the leasing process and asset management,” he adds. Others agree with that assessment.

“I would have to say that all aspects of ESG and EU Taxonomy are important, and our Colliers ESG specialists across the region are seeing greater demand for ESG/EU Taxonomy due diligence and reporting from investors and owners, alongside regular technical due diligence,” comments Kevin Turpin, head of CEE at Colliers.

Performance is Key

“Similarly, our new energy services team is also in high demand as energy efficiency and/or performance is key, along with the ability to demonstrate a building’s compliance or commitment. This may all potentially come with additional capex that needs to be budgeted or financed and therefore has an impact on the overall case for acquisition/profitability and eventual exit,” he notes.

“The level of importance of ESG and the EU Taxonomy to the various investor types will vary, depending on their individual commitments, reporting and related ability to raise debt and equity, amongst others,” Turpin adds.

Well Projects in Selected European Countries

In this way, developers and asset owners must include sustainability features in projects with a longer-term view of a possible exit strategy.

“On the cost side, there is a lot of room for improvement in sustainability that cannot be ignored today. We can say that those who develop with lower energy consumption will be more competitive in the market,” comments Noah Steinberg, chairman and CEO of Wing.

“I would have to say that all aspects of ESG and EU Taxonomy are important, and our […] ESG specialists across the region are seeing greater demand for ESG/EU Taxonomy due diligence and reporting from investors and owners, alongside regular technical due diligence.”

“This has always been a central issue for us because, at Wing, we are committed to creating sustainable buildings that go beyond the expectations of today’s world, respect the environment, or even contribute to improving the comfort of employees through peoplecentered services,” he says.

“Alongside the development and operational areas of sustainability, we now also have the areas of corporate governance and social guidelines, or ESG. Meeting these requirements will soon become a requirement rather than an opportunity, and investors will increasingly take this into account alongside growth potential,” Steinberg adds.

ESG, in general, requires a lot of comprehensive, transparent and traceable data monitoring. This is necessary for almost all stakeholders. Strategies and future actions can only be developed successfully if reliable data is available. Projects with elaborated and traceable ESG policies and reports will provide investors with enough confidence that the investment is of low financial risk, comments Zsombor Barta, founding partner at Greenbors Consulting.

High-end Need

The view among analysts is that ESG elements within any asset are currently more essential to high-end institutional investors than non-core or value-added investors.

“There are different expectations, and the perceived value of ESG compliance varies in some cases, but generally, investors that are after core products and international tenants with carbonneutrality goals are only seeking assets that are fully in line with EU Taxonomy and generally high ESG standards,” says Máté Galambos, head of leasing at Atenor Hungary.

More opportunistic, value-add buyers will still go for first-generation assets with less favorable ESG attributes, he believes.

However, value-add acquisitions are being concluded with investors renovating and redeveloping historical buildings, especially, in line with sustainability accreditation. To give an example, the Europa Capital fund purchased what was the Akadémia Business Center in District V, in partnership with ConvergenCE as asset manager, and has undertaken a redevelopment of the Danube riverside building into the 10,500 sqm Academia office center.

“From the drawing board, we strived to combine our client-centric thinking and services with solutions that differentiate the Academia office center from the rest of the market,” says Csaba Zeley, managing director of ConvergenCE.

“We are aiming to achieve Well ‘Platinum’ certification for the first time in the city center, and we are the first to obtain a WiredScore rating in Hungary. To comply with sustainability initiatives, we do not create new buildings from the ground but focus on value-added developments of existing buildings that require refurbishment,” he adds.

“Investors are definitely exploring a lot of the sustainability efforts of an investment product; therefore, I would say these will soon apply to all investment deals in addition to institutional acquisitions. We are not aware of green clauses showing up in SPAs [sales and purchase agreements] yet, but the due diligence reports certainly include ample details on sustainability features,” concludes Atenor’s Galambos.

The Budapest One development by Futureal has both Well and Breeam accreditation.

ESG is a Mindset, Says Atenor: ‘Why not do it if you Can?’

“This is the first project in Budapest that will be completely supplied by geothermal energy. I’m not aware of any other projects using geothermal on such a scale,” Borbély says.

“The heating and cooling pipes are embedded in the concrete slabs. That means that there will be no noisy equipment. There is no dust or condensation. We are again doing something that is a huge experiment. Of course, the technology has been tested on a smaller scale and functions very well.”

The development also has a social part in terms of livability. Rather than handing the project over to just one design studio, four were hired to create different looks and styles.

“I read in an article somewhere that roughly 60-70% of companies do not have any idea what ESG is,” says Zoltán Borbély, CEO of Atenor Hungary.

“Maybe one quarter already knows, but if you ask, ‘What are the major aspects of ESG?’ everybody talks about waste management and the lifecycle of the materials,” he says.

“Okay, that’s important. But this is just a fraction of ESG. It starts with the environmental issues, but then there’s the “social” and “governance” parts. We are at the very beginning of this learning curve,” Borbély adds.

That said, it is a learning curve the real estate industry, indeed, society as a whole, must climb.

“It has to be done. Otherwise, we die out; the whole idea of human beings will disappear from the earth,” Borbély argues. “ESG is not only about environmental issues, but also many others, and this is the beauty of it, that you do it in such complexity that you have to deal with all of these issues, and you cannot ignore one or the other.”

He accepts that it was a similar story with the introduction and acceptance of green credentials previously.

Atenor’s history with such third-party certification goes back 20 years. Borbély says the first project, in particular, was made much more complex by it.

“Like all the learning curves, it starts with a painful exercise,” he laughs. At first, the engineers, project managers, and designers saw it as an additional administrative burden. “But this is just a normal human reaction. I don’t think there is any love of regulation in human DNA,” he says.

“Slowly, we started to understand the essence of the whole idea. Planning that first project lasted one year. For 12 months, we were suffering to make Váci Greens ‘A’ compatible with the rules, but we did such a good job that we got a Breeam ‘Excellent’ rating,” Borbély says.

“By the end of that first year, we understood what we must do, the major points and the essence of this whole

exercise. All our buildings have Breeam ‘Excellent’ ratings; the last building was designed one-and-a-half years ago, and [green certification] planning took less than three months. I think this is a great achievement; the whole team knows why we are doing it. It became a normal standard.”

Creation Story

ESG builds on green certification, adding broader, more comprehensive requirements that will similarly need to be learned, but that does not nullify the significance of what has gone before. To illustrate the point, Borbély tells the 10-year creation story of one feature at the heart of Váci Greens.

The projects share a common area where there was once a road, still available for emergency vehicles but now closed to public traffic. Importantly, though, the communal space is not closed off to pedestrian traffic. The landscape gardeners were instructed not to lay turf (grass is resource-wasteful, requiring regular watering and cutting) and came up with a design featuring 100 different shrubs and trees where something is in flower from spring to fall.

That ticks an urban biodiversity box, which is part of ESG, but also provides a social function.

“Go today, and you will find what we always wanted to achieve: people working there and people living nearby are mixing and using this area as a part of their everyday life. For 20 years, it was a wasteland. It looked terrible, and nobody could use it. Now, mothers are coming so their kids can ride

their bicycles safely. It is not a money issue because we had to have a garden anyway to fulfill the greenery criteria. Financially, it made a tiny additional burden for the company. But to those who live there, it’s a huge change in their everyday life.”

More recent projects will offer similar additional benefits. E.ON will move to the BakerStreet office Atenor is building in south Buda. Together, developer and tenant are working on a rooftop photovoltaic (solar) mini-power plant.

“Four years ago, when we started, it was not part of the project, but there was such a significant change in the EV car industry that E.ON and we decided that it is now a ‘must,’” the developer says.

The majority of the 250 vehicles that will be able to park in BakerStreet will charge slowly throughout the day and receive more energy than they use on the daily commute.

“Why not do it if we can do it? We have to jump on these opportunities and show that the daily commute of a company with more than 200 cars can be powered by sunshine. We were the first in 2009 to get a Breeam ‘Excellent’ rating. If 10 years from now, all office buildings would have a tiny solar power plant, then Budapest could have the cleanest air on the globe.”

Going Geothermic

Solar energy isn’t the only renewable energy source Atenor is investing in. In February 2021, it acquired a site previously owned by a now-bankrupt builder in southwest Buda, where it is developing Lake11 Home & Park, its debut residential project.

“I’m super happy we did that because, even now – it’s in the structural phase and we are starting to put up the external envelopes for the first 260 units – if you stand in the middle of the street, it’s already like a small town with all that variety. It might be that these are small things, but these buildings will be there for 50 years or maybe 100, so I think it matters.”

As the name implies, there will be freely available parks and green areas, inviting people to stroll or sit on a bench in traffic-free spaces. Several children’s playgrounds, each catering to a different age group, will feature, and there are even talks with the district about providing a simple, free soccer pitch. (One is nearby but must be rented by the hour.)

Another element of livability is the housing density. The site covers eight hectares, on which Borbély says the regulations would allow up to 1,500 homes; Atenor is planning 900 across three phases. Handover for the first 260 will start at the end of spring/beginning of summer 2024. The project is expected to be completed in three or four years.

“It is next to a small lake, which comes from this small creek that goes from Budaörs to the Danube River, and is a very nice environment. In the green belt, it has great views and excellent public transportation and is also easily accessible by car.”

While “environmental” issues are widely understood by society, the acceptance of the “social” and “governance” aspects of ESG are very much a work in progress, according to one of Hungary’s leading developers.

ROBIN MARSHALL

Zoltán Borbély, CEO, Atenor Hungary

Roseville by Atenor.

ESG Offers Sustainable Future for Building, Living and Working in Budapest

sustainability ratings. The scoring systems of these certifications are very complex and demanding, and whichever building is recognized with a high score in Leed or Breeam must be very efficient and therefore less harmful to its environment,” comments Máté Galambos, director of leasing at Atenor Hungary.

“In Well accreditations, building owners even have to consider the emissions of built-in materials, which automatically means healthier staff, and that generally increases satisfaction,” he points out.

“In terms of transport, there are many ways that certifications support a healthier planet, be it from the perspective of the procurement of building materials or the transportation of tenants in an effort to support soft mobility. We also pay special attention to the green perspective in architectural aspects during the design stage of our buildings. The most simple tiny consideration can save lots of energy by the right shading, glazing or even due to the distance of pillars; it is an extremely interesting subject,” Galambos adds.

The priority is that these factors make the city attractive for companies and investors while simultaneously improving Budapest’s quality of life,

Why furniture selection is important in ESG?

Considering ESG factors, the environmental standards under which furniture is manufactured hold paramount significance.

Actiu stands out for the Environment with its exceptionally sustainable production method called Cool Working, which means they have a Well and Lead Platinum Certification.

Equally vital is the creation of an ideal work environment, to be appropriate for the Social part and in this regard, adjustable height tables like Actiu’s Talent series, contributing to a healthier and more eco-conscious workplace.

www.europadesign.hu

Törökvész út 71-75. Budapest, 1025 Showroom

amenities, and infrastructure and maintaining the historical legacy for inhabitants and visitors.

“I believe that everyone could only benefit from buildings achieving high

With the difficulty of sourcing office plots in the historic core of Budapest and the resulting lack of one established coherent Central Business District, developers are undertaking projects in a number of out-ofcenter locations, such as the Váci Corridor, South Buda and Central Pest.

Prime locations require direct transportation links and must allow office projects to be integrated into

A prime issue facing Budapest is how the infrastructure, look and feel of the city can and should be improved in line with ESG and sustainability priorities, whether from a real estate business, environmental quality or architectural perspective, writes the Budapest Business Journal ’s real estate editor, Gary J. Morrell.

The BakerStreet development by Atenor.

their wider urban environment to provide direct reciprocal access to local utilities for office users and residents in the immediate vicinity. In this way, Budapest now has several distinct business districts across both the Buda and Pest sides of the city.

“The principles of sustainability in terms of location are pretty simple: an urban office district is best located when easily and quickly accessible from residential and retail areas and where there are means of public transport that support commuting to these destinations, all while being cost and energy-efficient,” Galambos says.

A Better Commute

Regina Kurucz, architect and head of the Well working group at the Hungarian Green Business Council (HuGBC), argues that to really lure employers and employees to work in the office, “placemaking” is essential, as is doing whatever is possible to make the commute a better experience. People want to commute actively by bicycling, running, or walking, but if a building does not provide secure and ample parking, lockers, showers, changing rooms, and easy access, then increasingly, that building will become outdated.

“We can mention reducing the urban heat island effect, promoting alternative transportation by providing cyclist amenities or electric car chargers, increasing biodiversity, renewing former brownfield areas and many other direct and indirect effects. It usually comes with Well certification that the building itself educates its occupants.”

“The bicycle infrastructure is evolving fast. Buildings have to keep up with the growing demand of in-city long- and short-term bicycle storage,” Kurucz says. “To stay competitive, real estate developers, owners, and landlords need to provide an exceptional tenant and user experience, and as active transportation grows in Hungary, providing an active travel facility is no longer a nice-to-have; it’s a must-have,” she says.

Considering Well criteria in the context of urban, architectural and locational issues, it is advantageous if the building has a strong connection to nature. For example, there is a registered Well project in Budapest that is close to a nature reserve in Buda, where occupants can access walking trails and mentally recharge.

Another Well project in South Transdanubia (in southwest Hungary) is close to a wooded area where employees can stroll during breaks and reconnect with the natural world. According to the Well Building Standard Feature, enhanced access to nature and outdoor green or blue (water) spaces should be within a

200-meter

walking distance, and the total combined green space must be at least 0.5 of a hectare (1.2 acres).

“All of these assessment systems are designed to promote environmentally friendly and people-centric approaches. Each of them focuses on slightly different aspects,” says the developer CPI.

“If we take Breeam as an example, it encourages architects to design buildings with a focus on minimizing energy consumption, water usage, and carbon emissions. It also promotes consideration of ecological factors and preservation of biodiversity,” the company explains.

Well-served Developments

“Breeam also assesses the accessibility of buildings and their proximity to public transportation options. This can encourage developments in areas wellserved by public transit, reducing the need for car travel. Breeam-certified developments contribute to a reduced carbon footprint, improved resource efficiency, and enhanced indoor environmental quality,” CPI argues.

Breeam, Leed and Well accreditation certainly contribute to improving the architecture, transport and livability of the city, according to Norbert Szircsák, head of ESG strategic advisory services at Colliers Hungary.

“We can mention reducing the urban heat island effect, promoting alternative transportation by providing cyclist amenities or electric car chargers, increasing biodiversity, renewing former brownfield areas and many other direct and indirect effects. It usually comes with Well certification that the building itself educates its occupants,” he says.

Zsombor Barta, founding partner at Greenbors Consulting, makes the case that reusing existing stock, if appropriately done, is much better for the environment.

“Refurbished older buildings can be seen as more sustainable since there is a reduced need to produce and transport materials. The material usage, life cycle assessment and embedded carbon values are all much better for an existing building than for a new one,” he argues.

“Architects have to leave behind designing ‘statues’ and have to understand how a building operates. Architects feel relieved when a building is finished and occupied because [they feel] their work is done,” says Kurucz.

“In reality, the life of the building starts with the occupancy, and architects have to understand and foresee the operational and maintenance issues of their design. They have to design the whole lifecycle of the building and prepare the building for the circular economy,” she concludes.

1st set of European Sustainability Reporting Standards is out Now

On July 31, the European Commission adopted the first set of European Sustainability Reporting Standards (ESRS). These will play a crucial role for companies subject to the reporting obligations under the Corporate Sustainability Reporting Directive (CSRD). The ESRS are still subject to approval by the Council and the European Parliament.

The CSRD entered into force in January 2023, setting out sustainability reporting obligations for large companies and small- and mediumsized listed undertakings (other than micro undertakings). Certain companies already subject to the Non-Financial Reporting Directive will be required to report under the CSRD for the financial year 2024 in 2025, while large undertakings will have to file for the first time in 2026 for the year 2025. Under the CSRD, companies will have to comply with extensive ESG reporting requirements, according to ESRS. The first set of the ESRS applies to all companies regardless of business sector. Additional sets of standards are expected to be adopted during the summer of 2024 that will outline sectorspecific reporting standards as well as particular standards for SMEs and third-country companies. This adopted ESRS consists of 12 separate standards, which can be divided into two categories:

(i) two cross-cutting standards that set forth the general requirements (ESRS 1) and general disclosures (ESRS 2); and

(ii) 10 topical Environmental, Social and Governance standards (ESRS E1-5, ESRS S1-4 and ESRS G1), which include specific reporting requirements supplementing the cross-cutting standards (i.e., standards related to climate change, pollution, water and marine resources, biodiversity and ecosystems, resource use and circular economy, workforce, workers in the value chain, affected communities, consumers and end-users, and business conduct). To comply with the reporting obligations under the ESRS, companies must first assess their operation to identify all material impacts, risks and opportunities

affecting the company from a sustainability perspective. Reporting will be based on the “double materiality” principle, meaning that the company must not only consider the actual and potential impact of the company on people and the environment (including upstream and downstream value chains) but also all sustainability matters that could be considered material if they have, or could reasonably have, a material financial impact on the company itself. The company’s materiality assessment should identify all such material impacts, risks and opportunities.

Although the materiality assessment is necessary to comply with the reporting obligations, companies applying the ESRS will also have to disclose the information required by the cross-cutting standards, irrespective of its materiality. However, regarding the second category of measures (dealing with ESG), companies will only have to disclose information under the given ESG standards if such sustainability matter is material based on the materiality assessment to the company. If the company concludes that any sustainability matter or topic under the ESRS (for example, water and marine resources) is not material to it, then it must disclose a detailed explanation of the result of the materiality assessment regarding that issue.

To summarize, compliance with the sustainability reporting requirements is a time-consuming exercise, and companies should as initial steps:

(i) determine when the reporting obligations under CSRD will apply to them;

(ii) perform a double materiality assessment to identify relevant impacts, risks and opportunities from an ESRS perspective; and (iii) perform a gap assessment regarding the ESRS requirements and the information available to the company and its existing reporting procedures. Companies subject to reporting under the CSRD need to commence preparation of the above to ensure compliance in due time.

CMS

dr. Gábor Czike

FRICS - Partner, Head of Real Estate and Consruction & ESG

CMS

dr. László Jókay

Senior associate, Real Estate and Construction & Environmental law

U.K.’s Breeam Accreditation Dominates CEE Office Markets Green Matters

The U.K.-based Breeam is the thirdparty sustainability accreditation system of choice with office developers in Central Europe, according to Colliers CEE research. This is followed by the U.S.-based Leed, with the two systems dominating the regional markets. Analysts argue that a more standardized approach or framework is needed, the direction for which is already being set within the new EU Taxonomy framework.

GARY J. MORRELL

“To provide an overview of where we stand today in terms of green centers in the regional capital

Mobility Assoc. Pushes Fast Rollout of EV Charging Points

The Future Mobility Association has urged a faster buildup of charging infrastructure to keep up with the sharp increase in the number of electric vehicles on Hungarian roads, according to state news agency MTI. The association noted that there were 2,147 public charging stations in Hungary at the end of 2022, 14% more than a year earlier. During the same period, the number of EVs climbed close to 50%, it added.

Business Park Achieves Breeam ‘Very Good’ Accreditation

Developer Wing’s East Gate Pro Business Park has achieved a Breeam “Very Good” new construction rating for the A1-B1 buildings, representing the first fully let phase of the

city markets, we have analyzed the split of Breeam, DGNB, Edge and Leed certifications that have been obtained in Bratislava, Bucharest, Budapest, Prague, Sofia and Warsaw,” says Colliers in its publication “The Journey Towards ESG Compliance 2022-2023.”

Breeam dominates Leed in all markets, with the exception of Sofia. In Bratislava, Breeam represents 68% of office accreditations compared to 32% Leed. In the Hungarian capital, 74% of office centers are Breeam, compared to 26% Leed. Warsaw is also highly

industrial development. Wing has emphasized the sustainability of the materials used in construction and energy usage at the complex. Sustainability accreditation has now become the norm at the higher end of the industrial market across Hungary and the CEE region, as was already the case in the office market, in response to tenant demand and EU environmental regulations. East Gate Pro consists of 60,000 sqm of space in three halls at the junction of the M0 and M3 motorways.

Well ‘Platinum’ Target for Academia Center

ConvergenCE is aiming to achieve Well “Platinum” certification for its 12,5000 sqm Academia office renovation and redevelopment. The office and common areas have been designed, and technical provisions in the project match sustainability expectations and

weighted towards Breeam, with 78% of offices having obtained its certification against 22% for Leed. “Looking at the distribution of green certification schemes in each capital city, we notice that Breeam is currently most preferred in Warsaw, followed by Budapest, Bratislava and Prague. Sofia is an exception, with approximately 60% of the office buildings being Leed certified, while in Bucharest, there is a fine balance between them.”

Overall, Bucharest has the greenest office market in terms of certified stock, followed by Budapest and Warsaw.

regulations, according to the company. “From the drawing board, we have strived to combine our client-centric thinking and services with solutions that differentiate the Academia office center from the rest of the market. We are aiming to achieve the Well ‘Platinum’ certification for the first time in the city center, and we are the first who obtained the WiredScore rating in Hungary,” said Csaba Zeley, managing director of ConvergenCE.

Sunwoda Invests in new Battery Manufacturing Plant

Chinese battery manufacturer Sunwoda is investing HUF 580 billion in a new battery-making factory in Nyíregyháza that will create several thousand new jobs. The firm is one of the top 10 battery manufacturers in the world, and Hungary is now the fourth largest producer of EV batteries globally.

A monthly look at environmental issues in Hungary and the region

76,000 EVs Registered in Hungary

As of the summer, there are now 76,000 electric vehicles registered in Hungary with green number plates, according to the Ministry of Energy. Launched in 2015, the green number plate scheme applies to vehicles that are fully electric and hybrids, depending on the distance they can travel. As of July, full EVs accounted for half of the registered green number plates, according to the ministry. Based on the latest data from the Ministry of the Interior, the number of purely electric passenger cars was close to 40,000 by the end of July, and there were also nearly 2,500 purely electric trucks and more than 400 environmentally friendly motorcycles running in the country. The share of EVs among new autos in Hungary rose to 6% in the first quarter, compared to 2.4% in the Czech Republic, 3.3% in Poland and 1.8% in Slovakia. According to the European Automobile Manufacturers Association, the proportion of EVs in Europe has risen to 12%. Norway is the EV capital of Europe: 79% of new cars sold in 2022 were EVs.

Agora Achieves ‘Gold’ Well Precertification

Hungarian and Central European office developer HB Reavis has achieved Well “Gold” precertification for its 68,000 sqm Agora Tower and Agora Hub located at Göncz Árpád tér. “To succeed, both buildings had to fulfill strict requirements relating to the quality of air, water, nourishment, light, active design, mind, comfort and community measurements, including checks on water quality, ensuring enough fresh air and a high quality of food in the restaurants. Agora Budapest was also the first commercial building in Budapest to receive Breeam Communities certification, proving the high level of our interest in not only nourishing business and other communities around the project but making them as inclusive as possible,” said HB Reavis.

Volánbusz Adds 100 EVs to its Fleet

The Hungarian bus company Volánbusz has added 100 EVs to its fleet. According to the company, it aims to replace around half its almost 6,000 vehicles with electric buses.

The Port7 office building developed by Skanska in Prague. Skanska uses the Leed accreditation system in its portfolio.

Brief News

LG, Magna JV Setting up Plant in Miskolc

LG Magna e-Powertrain, a joint venture of South Korea’s LG and Canada’s Magna, will set up its first plant in Europe in Miskolc (180 km northeast of Budapest), Minister of Foreign Affairs and Trade Péter Szijjártó said in a video message posted on Facebook on September 3. The factory will have a total floor area of 26,000 sqm and be operational by 2025. The plant will produce components for electric vehicles, Szijjártó said, adding that the HUF 20 billion investment would further strengthen Hungary’s role in the electromobility transition. The government is supporting the investment, which will create 200 jobs, with HUF 6 bln, he added.

Astrasun Solar Completes Hybrid Solar Plant in Romania

In line with its regional expansion strategy, Astrasun Solar Nyrt. completed the construction works for a hybrid solar power plant with an output of almost 130 kWp in Timișoara, Romania, according to

an announcement on the website of the Budapest Stock Exchange. At the beginning of this year, Astrasun started construction on an almost 2,500 sqm plot that was in poor condition, full of debris, and unsuitable for agricultural land. During the implementation of the project, the company used a piling technology, as opposed to the creation of traditional solar systems, meaning the barren area can once again be taken over by green vegetation.

Hungary Boosting Subsidies for Corporate Investments

Hungary will make it easier for companies to tap generous subsidies as Prime Minister Viktor Orbán looks to trigger a recovery in the recessionhit economy, according to Bloomberg News. From August 7, the government lowered the investment value needed outside of Budapest to qualify for state aid to HUF 1.2 billion (USD 3.4 million) from HUF 4 bln, Minister of Foreign Affairs and Trade Péter Szijjártó said in a Facebook post. Firms can ask for grants of up to 50% of the investment

cost, he said. Additionally, companies operating in Budapest will be eligible for subsidies after renewable energy investments. A new state aid plan will also take effect for all firms that help the country’s green transition.

3rd National Biodiversity Strategy Adopted

The 3rd National Biodiversity Strategy provides a comprehensive framework for the long-term survival of domestic wildlife and natural resources and

defines the objectives to be achieved by 2030, as well as the measures to achieve them, the Ministry of Agriculture said upon its adoption in August, according to profitline.hu. The strategy prioritizes topics such as the network of protected areas, the suppression of invasive alien species that damage natural and near-natural ecosystems, sustainable agriculture, and forestry, game and fish management. The priority tasks of the plan also include halting the decline of pollinators, improving the resilience of ecosystems to climate change, developing elements of the green infrastructure network, and mitigating pollution that threatens biodiversity, the statement said.

Gov’t Considering Solar Panels in Parking Lots

At the initiative of industrial players, the government would rationalize the installation of solar panels in parking lots, the Ministry of Economic Development said in a release on its website in early August. The ministry is launching a social consultation on installing solar panels in parking lots, strictly in compliance with tree planting requirements, which will simultaneously help the green transition, further strengthen the competitiveness of businesses and contribute to the protection of jobs and the restoration of economic growth.

Centerpoint - your new destination on the Váci út office corridor

Centerpoint is a 75,000 m2 state–of–the–art office development in the heart of the office quarter, delivered by GTC in two phases: a complete refurbishment and re-imagination of the existing iconic building and a brand new adjoining development, completing 2024.

Centerpoint connects sustainability, flexibility and efficiency.

For more information on the offices and the conditions of leasing, please contact GTC Leasing Team at leasing@gtc.hu or at +36 1 412 3680.

2051 Biatorbágy, Sasbérc út 1. (1) 382-7560 (70) 370-6666 meszarosg@ topark.hu

1051 Budapest, Széchenyi István tér 7–8. (30) 654-5393 holub.erika@ iconrem.hu

1134 Budapest,

1103

1117 Budapest, Neumann János utca 1. (1) 888-4120 ingatlan@ diofaalapkezelo.hu

4 Socialite Viewing Renoir: A Different Kind of Challenge

It can be fun to go to an exhibition by an artist you know little about or, in some cases, don’t like much. This is why I’m looking forward to “Renoir: The Painter and his Models” at the magnificent Museum of Fine Arts in Budapest, beginning September 22. I want to challenge my ignorance and preconceptions.

DAVID HOLZER

Spanning 70 compositions, this is said to be the first comprehensive and representative showing of Renoir’s work in Hungary.

The exhibition is organized in cooperation with Paris’ Musée d’Orsay and Musée de l’Orangerie.

Pieces have been loaned from more than 20 public collections and focus on his depiction of figures.

Featuring masterpieces such as “The Swing” and “Dance in the Country,” the exhibition is arranged chronologically and thematically around portraits, modern life, and nudes.

The portraits show how Renoir’s approach changed depending on whether he was painting his family, friends or clients. Modern life explores his interest in what fashionable Paris did for fun. The nudes section traces

his move away from just being interested in the play of light and shadow on bodies to unified, painterly solidity.

Renoir’s last masterpiece, “The Bathers,” dating from

1919,

has a section to itself. I’ve never seen this painting. I’m keen to experience all that intense color in the flesh, as it were.

Easily one of the most famous Impressionists, Pierre-Auguste Renoir (1841-1919), was one of the founders of a movement that revolutionized painting at the time.

Impressionism was about trying to record the shifting effects of light. It was partly a response to science discovering that matter wasn’t solid and also to photography, which seemed to render realist painting irrelevant.

It’s hard to imagine the Impressionists as radical, but they were. They broke the rule of academic painting by putting colors before lines and contours, painted realistic scenes of modern life and often worked outside. Comprised of short brush strokes, their style aimed to reproduce intense vibrating color.

Abstract Pathway

Impressionism began the process that led to the breakdown of interest in painting “reality” accurately and, ultimately, to abstract painting.

Aged 40, inspired by Renaissance and French Rococo masters, Renoir moved away from Impressionism. He created a new, modern tradition as a “painter of figures,” inspiring Picasso and Matisse with his dedication to experimentation, innovation, and sheer hard work.

It has to be said that Renoir’s influence in Hungary is not that great as Anna Zsófia Kovacs, head of the museum’s Department of Fine Art After 1800, tells me.

“I don’t think that many Hungarian artists were directly and deeply inspired by Renoir. Most of them discovered him and Impressionism in general only after the turn of the century,” she says.

Pierre-Auguste Renoir: “Dance in the Country or Dancers (Bougival),” 1883 | © Paris, Musée d’Orsay, RF 1979 64 | Photo © RMN-Grand Palais (Musée d’Orsay) / Hervé Lewandowski

“The most obvious parallels are with the works of István Csók. János Vaszary has a few paintings exploring similar themes and techniques as the Impressionists, notably ‘Breakfast in the Open Air’ (1907).”

Researching this article, I asked a painter friend of mine what he thought of Renoir.

“I’ve always had an aversion to old Auguste because of the overly sentimental subject matter,” he said. “But when I see him crippled with arthritis in old age, painting with his brushes taped to his hands because he’s lost his grip, I’m impressed.”

Whatever you think of Renoir’s work, his sheer persistence has to be admired. He started out as a porcelain painter earning money to support his family, developed his talent by copying artworks in the Louvre and, aged 21,

enrolled in the prestigious École de Beaux-Arts.

Next, he began doing portraits while painting with his contemporary Claude Monet in the open air, going against the academic tradition of painting inside.

Returning from serving in the FrancoPrussian war in 1871, Renoir built up a successful portraiture business.

Change of Approach

At 40, an age when he could have been expected to rest on his laurels a little, Renoir changed his approach as he began exploring classical painting. In 1883, on holiday in the English Channel island of Guernsey, he painted a series of landscapes that seemed to return to his Impressionistic style. In the 1890s, he concentrated on painting his family and scenes from what, by now, appeared to be a bourgeois French life.

In 1907, suffering from arthritis, Renoir moved to Cagnes-sur-Mer on the French Riviera. It was here that he painted “The Bathers,” an artwork that gets odder the more you look at it, and was completed the year Renoir died.

In recent years, Renoir’s once transcendent reputation has taken a bit of a beating. On the Art UK website, in a piece titled “Revered or Reviled: Do We Still Like Renoir?” posted on December 2, 2019, Lydia Figes writes: “The artist’s brushstrokes, once considered expressive, are now viewed as ‘ponderous staginess,’ according to the New York Times art critic Roberta Smith. His sentimental subject matters, once deemed charming, now nauseate people with their syrupy, saccharine qualities.”

Figes goes on to mention “Max Geller’s ‘Renoir Sucks at Painting,’ an Instagram account which snowballed into a quasiserious protest movement named ‘God Hates Renoir.’ In 2015, anti-Renoir ‘activists’ could be seen standing outside American national museums to protest the artist’s inclusion in their collections.”

There are several reasons why some now detest Renoir. Apart from criticism of his style and subject matter, which ignore the context in which he painted, hostility comes from those who regard his nudes as voyeuristic and politically incorrect.

Leaving aside the question of whether it’s right or wrong for men to paint nude women, I’d say that the problem some people have with Renoir is that his paintings appear to be only about pleasure. But as the man himself said, “Why shouldn’t art be pretty? There are enough unpleasant things in the world.”

In these dark and troubled times, I’m ready for a bit of provocative pleasure.

“Renoir: The Painter and His Models” is at Budapest’s Museum of Fine Arts (Dózsa György út 41, Budapest 1146) from September 22 to January 7, 2024. A standard weekday ticket is HUF 5,200, and the museum is open Tuesday to Sunday: 10 a.m.-6 p.m.

Pierre-Auguste Renoir: “The Swing,” 1876 | © Paris, Musée d’Orsay, RF 2738 | Photo © RMNGrand Palais (Musée d’Orsay) / Hervé Lewandowski

Chamber of Commerce Corner

Swiss-Hungarian Chamber of Commerce (Swisscham)

Swisscham’s first event this fall season will be a reception on the Duna korzó (Danube Promenade), where you can chat with business friends and make new connections in a relaxed atmosphere. Cozy surroundings and delicious food will be provided by Swisscham sponsoring member InterContinental Budapest and ARZ-Lebanese Restaurant. • When: September 21, 6-10 p.m. • Where: InterContinental Budapest – ARZ Lebanese Restaurant, Apáczai Csere János utca 12-14, 1052 Budapest.

• Cost: Swisscham members, HUF 15,000 (0% VAT); non-members: HUF 25,000 (0% VAT)

Also, save the date for Switzerland in Pécs, SwissHungarian Business Talks on the circular economy for a sustainable future. • When: October 4. • Where: Pécs.

Canadian Chamber of Commerce in Hungary (CCCH)

How can innovative “intelligent energy services” solutions help control and predict energy costs? What IT solutions can assist in implementing energy cost-saving measures quickly and effectively while maintaining an optimal investment level? In this turbulent economic environment, many companies face challenges with sudden spikes and high volatility in energy costs due to hasty transitions towards green energy and geopolitical impacts. While a few years ago, optimizing energy usage was only a part of a company’s medium to long-term strategy due to low and predictable energy prices, today, extremely high energy costs can significantly impact profits, eroding ROI for energy-related investments. CCCH will hold a Business Breakfast session this fall to look into this. The presenters will be Zsolt Hoffmann (CEO/BMD, Smart Digital) and Gábor Bényász (CEO/CTO, EKT Solutions Kft.). • When: October 10. • Where: BuildEXT, Zen Garden Offices, Horvát u. 12-14, 1027 Budapest • Cost: Members HUF 11,900 (incl. VAT); non-members: HUF 20,900 (incl. VAT)

British Chamber of Commerce in Hungary (BCCH)

The BCCH’s longest-running marquee series, CEO Dinners, returns on September 19 at the W Hotel Budapest (a new chamber member), where Melanie Seymour, head of global client service at BlackRock and a former managing director of BlackRock Hungary, will be the guest speaker. BlackRock is a giant of the financial world, one of the best-known names in the field. More information on the talk topic will follow soon, but guests will have the chance to enjoy a luxurious three-course dinner with wine and welcome drinks while hearing the views of a foremost professional on recent developments and current affairs. The U.K. Ambassador to Hungary Paul Fox, and BCCH chairman Duncan Graham will also make opening remarks. • When: September 19, 6-8 p.m.

• Where: W Hotel Budapest, Andrássy út 25, 1061 Budapest • Cost: Members HUF 25,000 (incl. VAT); non-members HUF 35,000 (incl. VAT)

The Netherlands-Hungarian Chamber of Commerce (Dutcham)

Culture, creativity and innovation still need in-person interaction; therefore, the office must support collaboration and connection for long-lasting, memorable experiences. At the same time, it also raises practical questions. How fast can your office adapt to the rapidly changing way of working? What are the primary triggers behind future office space trends? Join Dutcham’s upcoming Workplace Renaissance event on October 4 to get insights into this “mission critical” area.

German-Hungarian Chamber of Industry and Commerce (DUIHK)

For SMEs today, threats from cybercrime and the rapid developments in artificial intelligence pose existential challenges. The DUIHK seminar “Netzwerk Digital: Data Security and Artificial Intelligence - Impact on my Company” informs company leaders about the latest trends, gives practical instructions for action and helps better recognize potential dangers in your own company to be able to set the right priorities. In English, German and Hungarian, with translation. • When: September 27, 9 a.m.  • Where:  DUIHK office, Lövőház u. 30, 1024 Budapest. • Cost: HUF 19,500 + VAT / person Meanwhile, the German chamber’s first Jour Fixe event after the summer break again offers excellent opportunities for networking and the introduction ofnew members, as well as dinner. The venue is W Budapest Hotel, located in the historic Drechsler Palace, formerly home to the Hungarian State Ballet Institute.

• When: September 28, 6 p.m.

• Where:

W Budapest Hotel, Andrassy út 25, 1061 Budapest

• Cost:  Members HUF 25,000 (+ VAT)/person; non-members HUF 48,000 (+ VAT)/person.

French-Hungarian Chamber of Commerce and Industry (CCIFH)

The CCIFH, in cooperation with the Bán, S. Szabó, Rausch & Partners Law Firm and the Belgian Business Club (Belgabiz), will hold a Hungarian-language conference and round table discussion on “Business Partner Due Diligence and Risk Reduction Prior to Signing a Contract.” • When: Tuesday, September 26, 9-11:30 a.m. • Where: Párisi Udvar Hotel Budapest, Petőfi Sándor utca 2-4, 1052 Budapest. • Cost: Members HUF 14,900 (+ VAT); non-members HUF 21,900 (+ VAT).

The topic for the next CCIFH Businesswomen Lunch is the vision for and challenges facing public transport in Budapest, with Dr. Katalin Walter, CEO of the Centre for Budapest Transport (BKK). • When: Wednesday September 27, noon-2 p.m. • Where: Kempinski Hotel Budapest, Erzsébet tér 7-8, 1051 Budapest – on • Cost: Members, HUF 26,900 (+ VAT); non-members, HUF 39,900 (+ VAT).

American Chamber of Commerce in Hungary (AmCham)

After a short summer break, AmCham resumed activities on September 1 with a Business Forum hosting Hungarian Ambassador to the United States Szabolcs Takács. The event provided a unique platform to address pressing issues affecting a wide range of U.S.-bound businesses around the current dynamics, challenges, and opportunities of the bilateral relationship, the termination of the double tax treaty, the war in Ukraine, and the limitations of the Visa Waiver Program.

As for AmCham’s upcoming fall events that are open to the public, you can expect a rich program, including two business forums with Minister of the Interior Sándor Pintér at the end of September and Minister for Regional Development and Utilization of EU Funds Tibor Navracsics in October respectively. AmCham’s flagship event, the Business Meets Government Summit, will follow on October 19, jointly organized with the Hungarian Investment Promotion Agency.

Joint Venture Association (JVSz)

For the 12th time, JVSz is organizing its annual Autumn Macro Conference to provide business leaders with up-to-date economic forecasts, renowned experts and valuable knowledge sharing. The half-day conference aims to help business leaders plan for the year ahead and prepare for the challenges they may face in the period ahead. The event’s keynote speaker will be Minister of Finance Mihály Varga and the co-chair of the JVSz.

• When: October 3, 8:30 a.m.-2:30 p.m. • Where: ELTE University Congress Center, North Block, Gömb Aula, Pázmány Péter Sétány 1/A, 1117 Budapest. • Cost: In-person for members, HUF 14,900/person, or online only HUF 7,900/person; non-members in-person HUF 19,900/person, online only HUF 12,900/person

In the context of the current European geopolitical scenario, the CCIU, together with Lajos Law Firm and Peter & Kim, are working to create a seminar to analyze the emerging trends, challenges to be faced, and what the future

holds in the resolution of disputes within Europe. Speakers will be Flavio Peter and Konstantin Christie, partners at Peter & Kim (a leading international arbitration firm) in Geneva and Zurich, and Levente Lajos, managing partner

at Lajos Law Firm, which represents local and international investors in Hungary. He will also take care of the translation of any subject discussed in Italian.

• When: September 21, 10:30 a.m.

• Where: CCIU Offices, Lónyay utca 18/a, 1093 Budapest • Cost: Free to members; not open to non-members

This regular section of the Budapest Business Journal features news and events from various international business chambers. For further information and to register for specific events, visit the website of the organizing chamber. If you have information for inclusion on this page, send an email in English to Annamária Bálint at annamaria.balint@bbj.hu

Italian Chamber of Commerce in Hungary (CCIU)