The current disclosure requirements of non-financial information in Belgian law | Fieldfisher
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The current disclosure requirements of non-financial information in Belgian law



In the pursuit of a robust corporate social responsibility framework, the European Union took a significant step in 2014 by embracing the Non-Financial Reporting Directive 2014/95/EU. This directive served to compel specific companies to divulge non-financial information. Following suit, the Belgian legislator incorporated the directive into the national legal system in 2017 and subsequently embedded it within the Belgian Code on Companies and Associations in 2020. In January 2023, the European legislative body ushered in a more stringent directive aimed at the disclosure of sensitive data by companies. This directive, known as the Corporate Sustainable Reporting Directive (2022/2464/EU), supersedes the NFRD 2014/95/EU. It's worth noting that the full enforceability of the CSRD 2022/2464/EU in Belgium is still a work in progress.

1. The adoption of the Non-Financial Reporting Directive (NFRD 2014/95/EU)

The initial directive to tackle the issue of opacity of non-financial information within companies is the NFRD 2014/95/EU, which aimed to increase transparency on Environmental, Social and Governance (ESG) aspects among market participants and financial institutions. In this way, the NFRD 2014/95/EU introduces for the first time a notion of ESG responsibility for companies, over and above their economic performance.

The directive obliges certain large companies (approximately about 11.700 in Europe) to disclose non-financial information to stakeholders, investors and consumers in order to assess the risks regarding sustainability issues and value creation of the company. Concretely, the information must be reported in a non-financial statement containing information relating to at least environmental matters, social and employee-related matters, respect for human rights, anti-corruption and bribery matters.

2. Belgian implementation of the NFRD 2014/95/EU

This directive has been incorporated into Belgian law in 2017, namely in art. 3:6 of the Belgian code on companies and association, imposing a compelling obligation on large companies to include a comprehensive non-financial statement within their management reports. This statement must encompass all pertinent information necessary for a thorough understanding of the company's progress, outcomes, and standing. It should shed light on the ramifications of the company's activities, specifically with regard to social aspects, human resources, environmental considerations, as well as the company's commitment to upholding human rights and combating corruption and bribery.

This requirement applies to companies that meet the following criteria: (i) being a public interest entity (e.g., a listed company or a credit institution), (ii) having 500 or more employees in the preceding financial year, and (iii) having a balance sheet total of at least EUR 17 million as of the balance sheet date of the last completed financial year or an annual turnover of at least EUR 34 million. The law provides for an exemption if the company falling within the scope is a subsidiary and has already been included in the annual report of the consolidated financial statements by the parent company.

In order to comply with these obligations, companies are expected to draw upon recognized European and International reference models to provide all the requisite information. Moreover, they are obliged to specify the reference models they have utilized

If the company does not disclose or provides incomplete non-financial information on one or more of the items for which a non-financial information statement is required, the company can opt for the "comply or explain mechanism" which allows them to draft a statement that include a clear and reasoned explanation of why it does not do so, for example, because an indicator is not relevant given the company's activities. However, all other indicators of the chosen reference model(s) shall be provided for each type of information.

Companies can also opt for the " Safe Harbor clause" by deciding to not disclose information that could cause "serious harm" to their commercial position, as long as omitting this information does not hinder the presentation of a "true and fair view and a balanced understanding of the developments".

With regard to the verification of the supplied information, it is imperative to underscore that the governing body bears exclusive responsibility for the substance of non-financial information, in the same manner as it does for all other data within the annual report. The governing body is mandated to ascertain the completeness, accuracy, and relevance of this information. The control of the company's Auditor is required, where he conducts a verification on the information that provided and if it is consistent with the annual accounts for the same financial year.

3. The Corporate Sustainable Reporting Directive

In light of recent developments with the adoption of the CSRD 2022/2464/EU in January 2023, companies will face new and more stringent obligations, all aimed at disclosing non-financial information.

The main differences between the CSRD 2022/2464/EU and the NFRD 2014/95/EU are the following:

  • First of all, the CSRD 2022/2464/EU broadens the scope under the NFRD 2014/95/EU, there will now be approximately 50,000 companies likely to be caught by the directive and strengthens the reporting requirements.

  • The CSRD 2022/2464/EU introduces a concept of double materiality, whereby the company will have to insert information on the impact of your company's activities on people and the planet in the short, medium, and long term (impact materiality) and the impact of sustainability and climate on the company's business (financial materiality).

  • The directive introduces sanctions for non-compliance, eliminating the "comply or explain" mechanism used in the NFRD 2014/95/EU.

  • Another significant change involves reporting information requirement in alignment with established standards, specifically the European Sustainability Reporting Standards (ESRS) endorsed by the European Financial Reporting Advisory Group (EFRAG), an independent body representing various stakeholders.

  • The new directive is potentially applicable to companies incorporated outside the EU, if they have significant activities in Europe, with at least 150 EUR million net turnover in Europe, through subsidiaries or branches, meeting some criteria.

  • The application of the CSRD 2022/2464/EU will be phased in from 2025 to 2029, depending on various parameters such as the number of employees and turnover, beginning in 2025 with the large public interest companies with more than 500 employees.

For more information on the scope and obligations under the CSRD 2022/2464/EU, we refer you to our article "The EU's Corporate Sustainability Reporting Directive (CSRD): What you need to know".