"Belgian companies need to get with the program."
BRUSSELS - Quite a few Belgian companies need to improve their reporting on Corporate Social Responsibility, as says a study conducted by KPMG. Although our country is evolving towards the global trend of increased CSR reporting, we have yet to do what's needed to get with the program. This, despite the fact that the reporting of "non-financial data" has, for many companies, been legally mandated for the past year. On a positive note, Belgian companies increasingly comply with the United Nations' Sustainable Development Goals (SDGs), but there is definitely room for improvement regarding risk analyses of climate change and human rights reporting.
Koen Maerevoet, CEO of KPMG in Belgium: "Corporate Social Responsibility consists of businesses paying enough attention not just to economic achievements, but also to the social and ecological impact of their activities, and acting to address these issues. Companies are increasingly aware that 'non-financial data' also impact their business model in the short and long terms. That is why it is important for companies to communicate appropriately and transparently. Not only is this a legal obligation in our country, and has been for the past year, but high-quality reporting also strengthens social trust within the business community."
Although CSR is nothing new, and international guidelines on what governments can expect of companies have been around for a while now, it is only recently that this has become a legal obligation in Belgium. Mike Boonen, Sustainability partner for KPMG in Belgium: "The European guideline from 2014 on the reporting of non-financial data has been incorporated into Belgian law. This means that, starting in the fiscal year 2017, many companies are legally obligated to report their non-financial data. And this is where we have clearly hit a snag. We see a cautious increase in reporting by our companies, but we remain far behind European and global averages."
KPMG's figures show that only 62% of the 100 largest Belgian companies (N100) currently report on CSR, a mere 3% improvement over 2015 (59%). The European and worldwide averages clock in much higher at 77% and 75% for the N100, while the reporting percentage for the 250 largest companies worldwide (G250) even reaches 93%.
Within the area of sustainability, the measurement and quantification of goals and achievements are becoming increasingly important. Mike Boonen: "The new law clearly stipulates that relevant achievement indicators be published. At a global level, various initiatives and objectives are pre-determined. These include the United Nations' Sustainable Development Goals and the objectives set by the Paris Climate Accord. These objectives are meaningless without robust measurement of achievements and their evolution over time."
Both the quantity and the quality of the reporting could be improved. Boonen: "At the moment, many investors and other users are groping in the dark. Only 37% of the Belgian N100 companies allow an external party to verify their non-financial data or their sustainability reporting. A third party attestation strengthens the social trust in the quality of non-financial data." The 37% mentioned here is again significantly lower than the worldwide N100 average of 45% or the 67% percentage for the G250.
The study conducted by KPMG shows that only 16% of the Belgian N100 companies consider climate change a financial risk to their business. The figure worldwide is quite a bit higher: for the N100, the average is approaching 28%. For the G250, it is at 48%. Mike Boonen explains: "Out of all the companies that define climate change as a financial risk, there are only a few that also quantify its potential impact. There are barely any Belgian companies in the sample. Nonetheless, climate change is a risk that appears ever more probable and it demands quantified reporting. In any event, under the leadership of Michael Bloomberg, clear direction is provided regarding this reporting at the international level." The former mayor of New York is leading a worldwide work group that deals with financial stability as it relates to climate change risks companies face.
Our companies also score significantly more poorly than other countries when it comes to human rights reporting. Worldwide, 73% of companies report on human rights. The percentage for the G250 is at 90%. But barely 50% of the Belgian N100 currently include human rights in their CSR reporting.
But there is good news for Belgium. In September 2015, the United Nations approved 17 development goals, or SDGs. Half of the Belgian N100 companies that issue CSR reports now voluntarily tie their CSR activities and targets to the SDGs. This is where the Belgian companies score quite a bit better than the worldwide average for the N100 (39%) and, indeed, better than that for the G250 (43%). There is still room for improvement, though. "Half of these companies (52%) refer to the SDGs in general terms, but companies should explain which SDGs are particularly relevant to our companies' activities and why," Boonen declares.
KPMG conducted the tenth edition of its CSR worldwide study in 49 countries and, in each country, the hundred largest companies, the N100, were analyzed based on publicly available information as well as annual financial statements and sustainability reports. Therefore, 4900 companies worldwide were included in this study on their CSR reporting. In addition to the N100, the largest 250 companies worldwide, the G250, were also referenced in the study. This is the third time that Belgium has been included in the report (the previous time was in 2015). KPMG in Belgium provides independent attestations for a company's sustainability reporting. KPMG also helps companies decide upon a sustainable growth strategy and then implement this strategy, along with any reporting required. KPMG in Belgium itself also follows a sustainable growth trajectory, consciously adhering to six specific SDGs.