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Belgium’s Path to Sustainable Reporting: A Shift Towards Transparency

In recent years, Belgium has been taking significant strides towards promoting sustainable reporting practices among its listed companies. While there may be varying approaches to non-financial reporting, a common thread runs through the topics being covered, including:

  • Talent management
  • Health and safety
  • Responsible supply chain
  • Climate change
  • Human rights

This trend is set to continue with the introduction of the EU Taxonomy Regulation in June 2020, which aims to establish a classification system for environmentally sustainable economic activities. This development has significant implications for non-financial reporting, as companies will need to indicate how they align their operations with these sustainable activities.

In addition to this regulation, listed companies must also disclose:

  • Which corporate governance code they have applied
  • What measures they have taken to implement it in their annual reports

Impact Bonds: A Growing Phenomenon

While impact bonds are still a relatively rare occurrence in Belgium, they are gaining popularity. According to recent data, these social impact investments make up only a small fraction of the overall debt funding raised by companies. However, as awareness and support for sustainable investing continue to grow, it is likely that we will see more companies exploring this avenue.

Belgium has also made significant strides in promoting crowdfunding, with legislative reforms in 2018 allowing for a more streamlined process. Companies can now issue securities worth up to EUR 500,000 without the need for a prospectus. For issues between EUR 500,000 and EUR 5 million, an information note is required, while for larger issues, a full prospectus is still necessary.

The EU has also introduced a pan-European framework for crowdfunding operators, aimed at harmonizing requirements across the bloc.

Tax Exemptions: A Helping Hand

For non-profit social enterprises, there are several tax exemptions available. These organizations are normally exempt from corporate income tax and only subject to a “tax on legal entities” provided they do not engage in profit-making operations on a regular basis. This exemption is dependent on the nature of their activities, with:

  • Isolated or ancillary operations allowed
  • Certain non-profit social enterprises may be exempt from corporate income tax even if they carry out activities that could be considered profit-making

These include organizations focused on: + Education + Professional interests + Social security law implementation

As Belgium continues to push forward in its efforts to promote sustainable reporting practices, it is clear that the country is committed to creating a more transparent and accountable business environment. With the introduction of the EU Taxonomy Regulation and other initiatives, it will be exciting to see how these developments shape the future of non-financial reporting in Belgium.