Belgium has officially transposed the European Corporate Sustainability Reporting Directive (CSRD) into national legislation. And not a moment too soon, as from 1 January 2025 the first CSRD-compliant companies must have a report ready on their sustainability performance. The Belgian law specifies a few more points, and here we summarize them for you.
Some 2,300 Belgian companies have to comply directly with the rules of the CSRD. Indirectly, the CSRD affects many more companies: small- and medium-sized enterprises in the value chain of major players are also increasingly asked for environmental, social, and governance (ESG) data. Pressure on policymakers to adopt this piece of legislation before the start of 2025 has increased in recent months.
Belgium has chosen not to ‘gold plate’; the transposition is limited to the explicit CRSD requirements, without ambitious extras. Our country did opt for:
1. Explicit protection for SMEs
SMEs are protected from excessive demands concerning CSRD obligations from their stakeholders in two ways.
2. Role of the corporate council
Every Belgian company with an average of at least 100 employees is required to set up a corporate council. According to the Belgian CSRD law, that corporate council must be given information and be able to provide advice on sustainability reporting before the general meeting where the annual accounts are submitted for approval. Thus, Belgium chooses to explicitly involve employee representatives in sustainability reporting.
1. Official language of the place of business
A company’s annual report, including an ESG report, must be submitted in the national language (or one of the official languages) of the country where the registered office is located. This makes sense, as the sustainability report accompanies the financial report, and must therefore follow the same rules. In addition, the report may be translated into one or more other official languages of the European Union.
2. Auditing: by company auditors and independent providers
For the first few years, only auditors will be allowed to conduct the mandatory ESG audit. Most companies are likely to have their financial and non-financial reports audited by the same party. Belgium also provides for the possibility for Independent Assurance Service Providers to apply for accreditation, beginning three years after the law comes into force. From that date, companies will be able to choose from a larger number of parties for their ESG audit.
3. Safe harbour principle
In exceptional cases, a company can omit information about ongoing developments or negotiations from the annual report. Such a safe harbour clause is also built into the European CSRD text. It is only allowed 1) if reporting a specific development could seriously harm a company’s commercial position, and 2) if its omission does not adversely affect the true and balanced picture of the company and its activities.
4. Sanctions: fines are possible
The Belgian government provides for the possibility of punishing CSRD violations with fines and even imprisonment, by analogy with fines for failure to file or late filing of annual accounts. Fines can range from €50 to €10,000. Prison sentences are possible only in cases of fraud.
Does your company also need to comply with CSRD requirements? Avoid surprises and get guidance from our experts! We can be reached at mail@pantarein.be
