Sustainability has become a defining element of corporate strategy. In Belgium too, companies are under increasing pressure—from regulators, investors, and society—to demonstrate how their environmental, social, and governance (ESG) ambitions translate into measurable results. One of the most effective ways to anchor sustainability in daily decision-making is by linking it to executive and broader employee remuneration.
Our recent benchmark study of 375 companies across 15 countries reveals that 78% already integrate ESG metrics into board-level pay. This marks a clear shift: ESG is no longer a peripheral concern, but a core performance driver. Amid evolving EU disclosure requirements and heightened stakeholder expectations, Belgian companies are finding that the question is no longer whether to integrate ESG into pay—but how to do so meaningfully.
A practical ESG remuneration strategy starts with clear, measurable targets:
- Environmental metrics: reduction in energy use, paperless operations, sustainable mobility, waste management, …
- Social metrics: workplace safety, employee well-being, cybersecurity awareness, inclusive learning, …
- Governance: board diversity, tax transparency, ethical leadership, …
To ensure credibility and avoid greenwashing, targets must be underpinned by robust data collection and reporting systems. Short-term goals (e.g. safety compliance) can be combined with longer-term ambitions (e.g. emission reduction).
Belgian employers are also exploring more sustainable reward models—like electric-only company cars, mobility budgets, second-hand IT incentives, and tailored cafeteria plans—all while maintaining cost neutrality.
By aligning ESG with remuneration in a thoughtful, transparent, and locally grounded way, companies not only meet stakeholder expectations but also drive genuine cultural and behavioral change across their organization.
Key findings
- 78 percent of the companies included in this research consider sustainability in their senior executives’ pay.
- Among companies that specify the sustainability targets used in their board members’ pay, 88 percent align these to ESG topics that are material to their businesses, although this varies widely by country.
- ESG targets included in executive remuneration are most commonly linked to climate change and a company’s own workforce. On climate change they typically refer to reductions in greenhouse gas emissions, while those on a company’s own workforce often refer to employee engagement, the percentage of female managers and injury rates.
- Of the 274 companies that measure board performance based on sustainability-related targets and that provide information on how these are included in variable remuneration, 37 percent include ESG targets in both short-term and long-term incentives, 23 percent include such targets only in long-term incentives and the remaining 40 percent use them only in short-term incentives. Use of both short-term and long-term sustainability targets is more common in EU countries.
Methodology
This report is based on data from 375 publicly listed companies, the 25 largest based on market capitalization in June 2024 from each of the following 15 countries: Australia, Austria, Belgium, Canada, China, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, the United Kingdom (UK) and United States (US). Nine are EU member states and the other six have significant numbers of companies that would have needed to comply with CSRD according to its original scope before February 2025’s Omnibus directive.
For each company, KPMG professionals examined its 2023 annual report and if required the compensation report, sustainability report and the company’s website to answer five questions:
- Is the board of management’s remuneration linked to sustainability-related performance targets?
- If yes, which sustainability matters and what key performance indicators are included in the remuneration policy?
- How closely does the remuneration policy reflect the material sustainability matters identified by the company in its reporting?
- What is the balance between incentives based on short-term sustainability performance targets (one year) vs long-term targets (more than one year)?
- What is the balance in variable remuneration between financial and non-financial/sustainability performance?
KPMG carried out the research in July and August 2024. The findings are based purely on analysis of publicly available information and no information was submitted directly by companies to KPMG firms.
This report builds on ‘Time to take a broader view’, a report published in May 2024 by KPMG in the Netherlands, which asked the same questions of the 50 largest listed companies on the Amsterdam Stock Exchange and the 25 largest listed companies in Germany, Sweden and the UK. It used annual reports published during 2023, meaning many would cover the financial year before those used in this report, and covered twice as many companies from the Netherlands. However it produced similar results, with for example both sets of research finding that 88 percent of companies in the Netherlands use sustainability in working out boardroom pay.
Recommendations for Belgian companies
Recommendations on how to integrate sustainability indicators into management board remuneration.
- Derive KPIs from corporate strategy, aligned with Belgian and EU requirements
Select key sustainability indicators that are relevant and suitable to remuneration. These should be closely linked to the corporate strategy. For large companies in Belgium, alignment with the materiality assessment under CSRD and the governance principles of the 2020 Corporate Governance Code will be particularly important. - Select relevant, suitable, and reliable data
It is advisable to focus remuneration on a small number of suitable sustainability indicators that are truly decisive for business success. Suitable key data must be controllable and it should be possible to determine them for shorter intervals than a year. They should be part of continuous reporting for the management board to enable performance to be managed in the first place. However, the availability of data during the year is often a challenge, particularly in the case of sustainability indicators. It is advisable to start small - with one or two key pieces of data - while developing data availability and internal reporting to use for future improvement. - Define the shares of the remuneration system and scope, including executives beyond the board
We recommend determining the relative share of sustainability-related targets in the short-term and long-term variable remuneration components. Belgian practice shows that such performance indicators are often extended to the executive committee and even employees, not only the board. Belgium also offers several tax-efficient instruments to reward sustainability KPIs, such as warrants and the “CAO 90” non-recurring bonus. The latter is particularly suited to introducing sustainability incentives at both executive level and for employees in general or specific staff categories. Regardless of the level at which sustainability KPIs are introduced, it is advisable to embed them in a structured bonus plan, while respecting the applicable Belgian language legislation. - Provide transparency and ensure reliability of data
For capital markets in particular, information on financial incentives for the management board is a decisive valuation criterion for companies, as it has an influence on the opportunities and risks that board members consider in their operational activities. In Belgium, the remuneration report must be submitted annually to the general meeting of shareholders and is subject to a “say on pay” vote, making transparency not only a best practice but a legal requirement. The reliability of remuneration-related sustainability indicators is often ensured by external auditing. - Consider the broader reward package and fiscal incentives
Beyond pure incentive plans, Belgian companies increasingly focus on “greening” their employee benefits, whether or not through a cafeteria plan. Examples include the shift towards electric company cars, the offering of refurbished smartphones or laptops, or other sustainable perks. When designing such packages, it is relevant to consider the various tax incentives provided by the Belgian government to stimulate sustainable choices.
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