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  • Brussels blog
  • 03-05-2018

It may once have been true that money is the bottom line of each business transaction, but times are changing. Investors, shareholders, employees, suppliers and customers are expressing more and more interest in the non-financial aspects of business.

While financial information about a company is essential to making sound business choices and investment decisions, the values that underpin a company's policies are no less important. The importance of providing quality information about non-financial aspects of a company and its diversity policy should not be underestimated. In response to the increasing importance attached to corporate social responsibility and transparency, the Act of 3 September 2017, which transposes into national law Directive 2014/95/EU, requires certain large Belgian companies and groups to disclose non-financial and diversity information.

Scope of application

With regard to the non-financial information disclosure obligation, the law defines "large companies" as Belgian organisations of public interest with more than 500 employees and a balance sheet total of more than EUR 17,000,000 (or turnover of more than EUR 34,000,000). In other words, the non-financial reporting obligation is directed at listed companies, credit institutions, insurance companies and settlement institutions. With regard to diversity information, the law applies to large companies whose shares (or other securities) are admitted to trading on a regulated market or a multilateral trading facility. In this case, a large company is defined as any company that meets at least two of the following criteria: (i) a balance sheet total of EUR 17,000,000, (ii) annual turnover (excluding VAT) of EUR 34,000,000, and (iii) 250 or more employees.

Non-financial information to be disclosed

The law requires that, in order to provide a comprehensive overview of the development, results and - position of the company, as well as the social, personnel and environmental consequences of its activities, respect for human rights and compliance with anti-corruption and bribery legislation, the annual report must contain a statement detailing the following information:

  • a description of the company's activities;
  • a description of the company's policy with regard to the aforementioned matters, including the due diligence mechanisms in place;
  • the results of the company's policy;
  • main risks to the company's business posed by the aforementioned matters;
  • essential performance indicators for specific activities (using European or international reference models, such as OECD guidelines, ISO 26000, etc.).

Implementation of the disclosure obligation

With respect to environmental policy, the statement can address the company's use of renewable energy, its general energy consumption  and carbon footprint, initiatives to reduce CO2 emissions, waste sorting, etc. On the social level, the statement can discuss the company's policies on gender equality, the number of occupational accidents, staff turnover, consumer relations, and the training offered to staff. With regard to human rights, relevant information includes the mechanisms in place throughout the supply chain to prevent and remedy human rights abuses and an ethics charter (setting out the company's commitment to human rights). Moreover, activities that could entail a risk of human rights abuses should be addressed. Finally, with respect to anti-corruption, companies are required to describe their risk management and prevention policy, as well as the procedures in place to remedy problematic situations (such as a whistle-blower mechanism).

Diversity policy

A statement on the company's diversity policy forms part of the corporate governance chapter in the annual report. Unlike non-financial information, it cannot be included in a separate statement. The diversity statement must contain the following information:

  • a description of the company's diversity policy with regard to members of the board of directors, the executive committee, other managers and daily managers;
  • the purposes of the diversity policy;
  • measures to implement the diversity policy;
  • the results of the policy during the year covered by the annual report.

In practice, the diversity statement must explain the measures taken by the company to ensure that the management bodies are sufficiently diverse, not only in terms of expertise and experience but also based on gender, age and educational background. Targets must be specific and measurable, and it is recommended to specify deadlines for the achievement of certain quantitative targets.

Comply or explain

If a company decides to omit certain information from its statements, the omission must be justified by a clear explanation. One possible explanation could be that certain performance indicators are not relevant to the company's activities. The comply or explain principle applies to both non-financial information and the diversity policy. It is important to bear in mind, however, that gender diversity on the board of directors is not optional. The law provides that at least one third of the directors must be of the opposite gender. In addition to the comply or explain principle, the law provides for a safe harbour clause which allows certain sensitive non-financial information to be omitted if disclosure could seriously harm the company's position (e.g. in the event of a merger or takeover). Nevertheless, application of the safe harbour clause must never result in an incomplete or unfaithful representation of the company's development, results and position or the effects of its activities.


In conclusion, the new obligation to report non-financial and diversity information can be attributed in part to a greater emphasis on corporate social responsibility by stakeholders. While the law specifically targets larger companies, any company, regardless of its size, can decide to comply with these requirements.

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