Belgian companies today are still not in compliance with the 2014 Non-Financial Reporting Directive (NFRD). Now is the time to catch up and get ready for the much more elaborate, newly proposed Corporate Sustainability Reporting Directive (CSRD), possibly already by 2023.

The 2014 Non-Financial Reporting Directive (NFRD) requires very large public interest entities (PIEs) to report environmental, social and employee, human rights, anti-bribery and corruption information on an annual basis. This Directive was transposed into Belgian law in September 2017 and Belgian companies in scope of the legislation had to meet these reporting requirements for the first time as of fiscal year 2017.

At the end of 2019, the European Commission committed in its European Green Deal communication to review the NFRD as part of their strategy to strengthen the foundations for sustainable investment. On 21 April 2021, the Commission adopted a proposal for a Corporate Sustainability Reporting Directive (CSRD).

Corporate Sustainability Reporting Directive (CSRD)

The CSRD significantly amends the existing requirements of the NFRD and aims to be applicable as of fiscal year 2023. The few principal novelties of the CSRD are:

  • To extend the scope of reporting requirements to all large companies and all companies listed on regulated markets (except listed micro-enterprises). The NFRD had some 10 thousand European companies in its scope; the CSRD would have nearly 50 thousand companies in its scope;
  • To require assurance of reported sustainability information. This was not a requirement under the NFRD - it was an option left to the discretion of individual Member States. France was one of the few countries that already implemented this requirement;
  • To introduce more detailed reporting requirements, including a requirement to report according to mandatory European Union (EU) sustainability reporting standards;
  • To require companies to digitally ‘tag’ the reported information, so it is machine readable and feeds into the European single access point envisaged in the capital markets union action plan.


In the run-up to this significant reform, KPMG Belgium performed a study on the status of non-financial reporting of Belgian companies in scope of the non-financial information legislation, covering fiscal year 2019. Are Belgian companies already in compliance with the current legislation and are they prepared for the next step in reporting on non-financial information, taking into account the more stringent requirements of the CSRD? In comparison to the 2018 study covering the fiscal year 2017, some quantitative and qualitative improvements in reporting are observed. However, several gaps and quality issues still remain in the non-financial reporting of Belgian companies in scope. 

Non-financial reporting

Mike Boonen, Partner at KPMG Belgium, explains: "Our 2020 study indicates that still not all companies in scope of the 2014 NFRD are reporting on non-financial information as required. While the reporting requirement exists since fiscal year 2017, a reporting rate of only 93% is observed regarding fiscal year 2019. It is striking that still not all PIEs in the current scope are reporting on non-financial information, especially given the fact that the CSRD will be broadening the scope to all large companies, including  non-PIEs. This means it is expected that in just three years from now the number of companies that will need to report is multiplied by five in Europe, and even by ten in Belgium also because our country has implemented only the strictly required minimum of the NFRD into national law,  so looking forward to the CSRD Belgium will need to make a significant catch up effort.”

Olivia Van Heuven, Consultant at KPMG Belgium continues: “Our 2020 study also clearly indicates that many improvements are necessary on the methodological front. Just 64% of the organizations referred to a European or international framework on which they modeled their reporting, a slight increase of 8% compared to the 2018 study results. Nonetheless, this is also a legal obligation. The Global Reporting Initiative (GRI Standards) is the reporting framework most commonly used by the majority of Belgian organizations. Often there is only limited fulfillment of the basic principles of such frameworks. This is particularly important to improve since the CSRD will introduce mandatory sustainability reporting standards endorsed by the EU.

Meanwhile, our 2020 study showed some improvements in the content and quality of the reporting, especially in the field of social and environmental issues, in a more moderate way in the field of diversity and anti-bribery and corruption, but rather a status quo in terms of human rights. Despite these improvements, we still see that, overall, companies are reporting too little on human rights and anti-bribery and corruption, compared to diversity, social aspects and environmental aspects. Also here it is important to catch up as the CSRD will bring even more elaborate disclosure requirements.”

Steven Mulkens, Manager at KPMG Belgium adds: “As another quality measure, the amount of reports that so far have obtained assurance on part(s) of the non-financial information (26%) is still very low, despite the modest increase (+9%) compared to the 2018 study results. This low assurance rate has several implications for the data robustness and reporting quality of the non-financial information statements. Also, considering the specification of mandatory assurance in the CSRD, this means that major steps still need to be taken in order to be compliant.  

On the other hand, when referring to the audit reports, our study determined that although most auditors (86%) include a non-financial statement in their audit report, only a small minority (3%) of these auditors formulated a qualification about the completeness of the information – even though part of the required information was clearly missing in a significant number of the reporting reviewed in-depth.”


Harry Van Donink, CEO of KPMG Belgium, explains that the 2020 KPMG research observes a modest increase in Belgian companies’ reporting on diversity compared to the previous study of 2018.  “Overall, eight out of ten companies included a diversity statement, an increase of 7%. However, we see that disclosing the objectives of the policy is still a challenge for almost half of the companies (44%), with a decrease of 8% in reporting compared to our last study. Furthermore, still only six out of ten companies report on the implementation and the results of the diversity policy. Regarding the quota of 1/3 gender diversity in the Board of Directors, also only about 62% comply with the Directive by disclosing the efforts made to maintain or reach this quota.” 

Social and personnel issues

Regarding social and personnel issues, companies are clearly reporting more extensively on this topic compared to fiscal year 2017, especially with regard to risks and results of policies. The KPMG study found that nine out of ten companies disclosed information on their social and personnel policies and due diligence, an increase of 9%. Eight out of ten companies are reporting on the results of their policies (+25%) and the related risks (+45%). Approximately 69% also disclosed performance indicators (+18%) in their non-financial reporting statement.

Environmental issues and reporting on climate change

“Reporting on environmental issues and climate change has seen an immense shift in the past two years,” Mike Boonen explains. “Nine out of ten companies report on their environmental policies (+6%) and almost six out of ten acknowledge climate change to be a significant risk for their business (+32%).  Our study showed that almost 86% of the companies report on the results of their policies (+16%), approximately 69% include the main risks faced (+39%), and about 81% report on performance indicators (+18%). While there is an increase in climate risk acknowledgement, companies still mostly report on it in a general narrative form instead of analyzing and disclosing the quantitative potential impact. Only 17% of the companies refer to the TCFD (Taskforce for Climate-related Financial Disclosures) in relation to climate risks (+8%).

The CSRD will provide more guidance and insight on this topic through new disclosure requirements and the mandatory sustainability reporting standards that will incorporate the climate reporting recommendations of the TCFD.”

Anti-bribery and corruption

Steven Mulkens elaborates on the NFRD required reporting on anti-bribery and corruption which is showing a somewhat higher reporting quantity and quality. “This is, however, clearly still far below par when it comes to being compliant with the legislation. Although eight out of ten companies disclose information on their policies and due diligence regarding anti-bribery and corruption policies (+9%), not even half of the companies (4 out of 10) report on the results of their policies (+11%), 50% of the companies include the main risks regarding this topic (+20%), and merely two out of ten companies disclose performance indicators (+7%) relating to anti-bribery and corruption.”

Human rights

For the last mandatory non-financial topic of the NFRD, Olivia Van Heuven regrets that the study did not find a lot of improvement in the quality of reporting on this topic in the last two years. “Almost seven out of ten companies report on the human rights policies and due diligence (+0%). However, only three out of ten companies report on the results of their policies (+2%) and the related risks (+11%). Only 14% of companies in scope include performance indicators in their reporting (-3%). The critically poor reporting rate and quality does not correspond to the significant risks Belgian companies run in relation to this topic. There are many human rights related risks and considerations regarding human resources management, supply chain management, resourcing, international activities in developing countries, and much more. But the CSRD will expectedly provide more guidance with the mandatory European sustainability reporting requirements on the social and governance factors.”


KPMG Belgium concludes that not all Belgian companies are in compliance with the current NFRD after three years of application. Although the study shows an improvement in reporting in some areas (e.g. diversity, social and personnel, environmental), other areas are still being underreported (e.g. human rights, anti-bribery and corruption), whilst reporting on all of these topics remains a legal obligation. Regarding the quality of the reporting (i.e. reporting on results, risks and including performance indicators) the study found significant increases for social and environmental topics, but the other topics - diversity, anti-bribery and corruption, and human rights - are still critically underperforming.

Meanwhile, the new CSRD will extend the EU's sustainability reporting requirements to all large companies and all listed companies. This means that, probably by fiscal year 2023, the majority of nearly 50 thousand companies in Europe will need to follow detailed EU endorsed sustainability reporting standards and obtain independent auditor assurance over the quality of their reporting.

The time is now for Belgian companies to get up to speed on the currently applicable NFRD - because the newly proposed CSRD will be applicable very soon and with it comes many additional increased requirements and companies in its scope.