Sustainability reporting growing, but urgent progress by Belgian and global companies still needed

Brussels, Belgium, 27 October 2022 – This year’s edition provides analysis of the sustainability and Environment, Social and Governance (ESG) reports from 5,800 companies across 58 countries and jurisdictions. The findings show that there is still a disconnect between the urgency of addressing climate change and social equity, and the ‘hard results’ provided by businesses.

The results demonstrate that sustainability reporting has grown steadily. The world’s top 250 companies – known as the G250 – are almost all providing some form of sustainability reporting, with 96 percent of this group reporting on sustainability or ESG matters.

Meanwhile, there is a steady and consistent increase in reporting from the Belgian N100 (the top 100 countries in each country). The reporting rate of Belgian N100 companies rose from 72 percent in 2019 to 84 percent in 2021 compared to 79 percent for the N100 global average (up from 77% in 2019). However, improvement is still necessary, especially compared to the reporting rates of the largest 250 global companies (G250), which is 96 percent (stable compared to 2019) and considering all large undertakings will need to report on their sustainability performance following the upcoming Corporate Sustainability Reporting Directive (CSRD) adoption, as proposed by the European Commission.

With the upcoming CSRD, companies will need to comply with sustainability reporting standards and apply a double materiality assessment to identify and report on their material topics and impacts. In Belgium, reporting standards application can still be improved significantly. The adoption of the Global Reporting Initiative (GRI) Standards shows a consistent increase for the G250 and Global N100 companies. Meanwhile in Belgium, a decline of 5 percent (from 37% in 2019 to 32% in 2021) was reported. Both for the global N100 and the G250, GRI reporting rates are still considerably higher. Further, only 51 percent of the N100 companies in Belgium identify material topics in their reporting. Compared to the Global N100 companies (56%) and G250 companies (74%), Belgian companies also continue to lag in this respect.

Looking into the quality and reliability of the reported information, barely one-third of Belgian N100 companies that report on sustainability are obtaining third-party assurance on their reporting, which is an increase of a mere 4 percent compared to 2019. The Belgian assurance rate remains significantly lower than the average global N100 companies (47%) and the G250 (63%) reporting on sustainability. To meet the ever-growing request from stakeholders and investors for the availability of reliable, robust, and comparable sustainability information, assurance rates should increase. Additionally, for companies in scope of the upcoming CSRD, mandatory assurance on the sustainability information reported will be applicable.

The latest findings reveal that businesses are recognizing that they have a role to play in helping to achieve climate targets. 64 percent of the Belgian N100 companies report on carbon reduction targets (+21% vs. in 2019) compared to 59 percent of global N100 and 76 percent of G250 companies. Globally, most companies recognize that they must reduce emissions to achieve their carbon targets rather than rely solely on carbon credits.

The report also reveals key areas where faster progress is required. Globally, only 64 percent of G250 companies formally acknowledge that climate change is a risk to their business. In Belgium, the figure is lower, where only 52 percent of companies formally acknowledge climate change as a risk. Additionally, less than a third of companies worldwide and only 25 percent of Belgian N100 companies currently recognize biodiversity loss as a risk.

This year’s report has also highlighted some further challenges the world’s major companies are facing reporting on ESG. Among the thousands of reports analyzed, less than half of the world’s largest companies and 43 percent of the Belgian N100 address social risks (e.g., health & safety; diversity, inclusion, and equity; community engagement; and labor issues), despite an increasing awareness of the link between the climate crisis and social inequality.

At the same time, less than half of companies worldwide and 41 percent of the top 100 Belgian companies disclosed their governance risks (e.g., corruption bribery and anti-corruption, anti-competitive behavior, or political contributions). 

In addition, only one third of global and Belgian N100 companies have a dedicated member of their leadership team responsible for sustainability. The survey also revealed that one third of these Belgian companies integrate sustainability targets and metrics into the compensation of the Board or leadership (compared to less than a quarter of global N100 and 40 percent of G250 companies).

ESG disclosures continue to be overwhelmingly narrative-driven, rather than publishing quantitative or financial data regarding impacts. This is clearly an area of improvement for companies in Belgium and around the world.