Compliance with the 2020 Code

This report presents the results of a study on the concept of “sustainable value creation” in Belgian listed companies. According to the 2020 Belgian Code on Corporate Governance, sustainable value creation involves an explicit focus on the long term, on responsible behaviour at all levels of the company, and on the permanent consideration of the legitimate interests of stakeholders.

The study has been commissioned by the Belgian Corporate Governance Committee. Its goal is to evaluate how and to which extent Belgian listed companies understand and implement sustainable value creation (or more shortly, ‘sustainability’). It is based on a mixed-methods research design combining a literature review, qualitative interviews, and a survey sent to representatives of listed companies. This report focuses on the findings of the empirical study.

Overall, we find that most Belgian listed companies have started their sustainability transition and are in the process of fully embedding sustainable value creation into their purpose, strategy, operations, reporting, and governance. However, it is described as a complex process that requires time, efforts, money, and other resources.

Every two years, GUBERNA and the FEB carry out a study of compliance with the provisions of the 2020 Belgian Code on Corporate Governance. In particular, this study enables the Corporate Governance Committee to understand how Belgian listed companies and their boards make use of the flexibility offered by the "comply or explain" principle of the 2020 Code.

The latest survey of 2022 annual reports shows that Belgian listed companies apply an average of 93.8% of the provisions of the 2020 Code. In 5.9% of cases, companies apply the "comply or explain" principle and provide an explanation to justify any deviation. Finally, only 0.3% of the Code's provisions are deviated from, without this being duly justified by an explanation in the annual report.

Regarding the "explains", the proportion of non-qualitative explanations has fallen from 12.3% in 2020 to 3.1% in 2022

For the seventh time, GUBERNA and VBO FEB have conducted a joint study on compliance with the Belgian Corporate Governance Code ('Code'). This new edition is the first to focus on the 2020 Code. The results of this study can be summarised as follows: companies simply apply 89.9% of the provisions of the Code and for 6.4% of them they explain why they deviate from them. This indicates that listed companies make little or no use of the flexibility offered by the 'comply or explain' principle, as has already been found in previous studies. A less positive finding is that 4% of the Code's provisions are not applied, without explanation.

In its study of March 2019, the FSMA took stock for the first time of non-financial reporting by large listed companies in Belgium. In that study, the FSMA drew attention to good practices and presented a number of recommendations regarding the quality of reporting non-financial information.

Since the publication of that study, sustainability reporting has undergone significant development. It is for this reason that the FSMA has, two years later, drawn up a new overview of non-financial reporting by listed companies. The present study examines what areas have seen progress. It also looks at whether companies have taken into account the recommendations of the previous study.