ESG & corporate sustainability

Absolutely. Even without reporting requirements, sustainability today has a direct impact on the operation and future of your business.

• Customers, banks, investors and larger partners are increasingly asking questions about environmental and social performance, regardless of whether your company falls under the CSRD.
• Moreover, as part of a value chain, sooner or later you will be asked to provide sustainability information, for example as part of due diligence obligations or tenders.
• Corporate sustainability also strengthens your reputation, reduces operational risks and helps you save costs in terms of energy, raw materials and waste.

In short, sustainability is not a legal checkbox, but a strategic advantage even for smaller or non-reporting companies.

ESRS (European Sustainability Reporting Standards) are the detailed, technical reporting standards that apply under the CSRD. They consist of two general standards:

• ESRS 1 for general requirements
• ESRS 2 for general information requirements

In addition, 10 thematic standards apply:

• five for environment (E1 climate change to E5 circular economy)
• four for social (S1 own employees to S4 consumers)
• one for governance (G1)

Each company must determine which standards are material to their operations and report on them. The standards include specific data points, calculation methods and disclosure requirements that ensure comparability across companies and industries.

Note: under the Omnibus proposal, these standards will be simplified and introduced in stages, with more freedom and simplicity for smaller companies.

While CSR (Corporate Social Responsibility) often involved non-committal, goodwill-based initiatives, CSRD is a mandatory framework, financially relevant and deeply integrated into business operations:

• ESG carries legal implications, including compliance with CSRD regulations.
• ESG is linked to legislation such as the CSDDD.
• It affects access to capital because investors use ESG criteria

CSR was often a separate function, while ESG aspects include risk management, strategy, financial and operational aspects and requires measurable KPIs that are comparable across companies.

Absolutely. Even without reporting requirements, sustainability today has a direct impact on the operation and future of your business.

• Customers, banks, investors and larger partners are increasingly asking questions about environmental and social performance, regardless of whether your company falls under the CSRD.
• Moreover, as part of a value chain, sooner or later you will be asked to provide sustainability information, for example as part of due diligence obligations or tenders.
• Corporate sustainability also strengthens your reputation, reduces operational risks and helps you save costs in terms of energy, raw materials and waste.

In short, sustainability is not a legal checkbox, but a strategic advantage, even for smaller or non-reporting companies.

Financial institutions and investors are placing increasing importance on ESG criteria in their decisions and capital expenditures and loans.

ESG data are used to assess risks (such as climate risks or reputational damage) and to compare sustainability risk profiles. They help determine access to credit, insurance, and favorable financing terms.

A strong ESG profile can thus lead to better financing conditions, increased investment interest and thus a higher valuation (value) of a company.

ESG aspects are the base of a broader ecosystem of European sustainability legislation that reinforce and overlap each other.

• The CSRD reporting requirements are linked to the Corporate Sustainability Due Diligence Directive (CSDDD) which requires companies to monitor and address human rights and environmental impacts in their value chains.
• The EU taxonomy determines which activities qualify as sustainable and thus influences ESG reporting.
• Sector-specific legislation such as the Deforestation Regulation, CBAM (carbon limit levy), and the Batteries Regulation create specific compliance requirements that must be reflected in ESG reporting.

This integrated approach means that companies must not only report, but also make operational changes to meet all requirements.

Companies falling under the CSRD are required to have their sustainability reporting audited by an external auditor. This independent assurance ensures that your sustainability information is accurate, complete, and aligned with ESRS standards.

Within this legislation, limited assurance is the standard today. This process includes:

• verifying internal controls and processes
• validating data systems
• testing of KPI calculations
• Assess whether the information presents a true and fair view of your ESG performance

External verification not only increases reliability for stakeholders, but also helps your organization identify and improve weaknesses in data management and processes.

To measure ESG performance, start from a systematic approach with specific KPIs for each pillar:

• For Environmental, for example, you measure CO2 emissions (Scope 1, 2 and 3), energy consumption, water use, waste production and circular material use.
• Social includes employee satisfaction, diversity and inclusion, occupational safety, training and development, and community impact.
• Governance includes diversity within the board of directors, ethical incidents, compliance violations and transparency in compensation structures.

Also, use various methods to clearly chart progress and adjust as needed: set SMART goals, implement a dashboard for periodic tracking, and regularly report on progress to management and stakeholders. Provide external verification of key metrics to increase credibility.

VSME stands for Voluntary Sustainability Reporting Standard for SMEs, a simplified framework for small businesses that wish to report voluntarily or are requested by business partners to report about their sustainability performance.

The EU Taxonomy is a classification system that defines which economic activities can be considered environmentally sustainable. It sets out six environmental objectives—ranging from climate change mitigation to biodiversity protection—and establishes technical criteria that activities must meet to qualify.

Under the CSRD, companies must disclose what share of their revenue, capital expenditure (CapEx), and operating expenditure (OpEx) is taxonomy-aligned. This creates transparency for investors on how much of a company’s activities truly contribute to sustainability goals and helps prevent greenwashing.

The upcoming Omnibus proposal, however, introduces a relaxation of certain EU Taxonomy reporting requirements.

Material ESG topics are sustainability issues that

• either have significant financial impact on your business (outside-in perspective)
• either where your business has significant impact on people and the environment (inside-out perspective)

This dual perspective is also called the dual materiality analysis mentioned where stakeholders are also consulted and risks and opportunities are assessed. Examples include climate change in agriculture or energy-intensive sectors, working conditions in the manufacturing industry, or water management on farms.

Belgium follows European legislation. The CSRD is integrated into Belgian legislation, but its application follows EU timelines and thus the Omnibus proposal.

The Omnibus proposal announced by the European Commission in February 2025 could bring sweeping simplifications, but the ultimate impact remains uncertain.

Upon approval, CSRD legislation is simplified in several areas:

• Mandatory reporting for companies with more than 1,000 employees (up from current 250).
• 2 year delay for many organizations until 2028.
• Reporting burden is reduced to enhance Europe’s competitiveness.

The proposal still has to go through the European Parliament and the Council, with amendments possible. The timeline after the Omnibus proposal remains highly uncertain and depends on the European political process. The final rules may not become clear until late 2025 or early 2026, meaning companies are in an awkward position.

Our advice is to continue your preparations according to current regulations while closely monitoring developments so that you can respond flexibly as soon as clarity emerges on the final requirements and timeline.

The CSRD (Corporate Sustainability Reporting Directive) is a European directive that requires large companies to report on sustainability – such as their impact on the environment, human rights and governance. The goal is to make sustainability as important as financial performance.

CSRD regulations apply in phases for:

• Large companies (more than 250 employees and/or €50 million turnover and/or €25 million balance sheet total)
• Listed SMEs
• Subsidiaries of these companies may also be indirectly required to submit information.

However the Omnibus proposal, proposed in February 2025, seeks to drastically simplify these obligations drastically simplify. In it, the European Commission proposes, among other things:

• Limit the scope of the CSRD (fewer companies would have to report).
• Ease reporting requirements (e.g., fewer indicators for small businesses).
• Defer the implementation deadlines for Wave 2 and Wave 3 companies (“stop-the-clock”).

In short: the CSRD is still in effect, but the rules are likely to be greatly relaxed upon official approval of the Omnibus proposal.

ESG stands for Environmental, Social and Governance. These are the three pillars by which companies measure and report their sustainability performance:

• Environmental concerns environmental impacts such as climate and biodiversity.
• Social includes workers and communities.
• Governance is about corporate leadership and ethics.

CSR (Corporate Social Responsibility) is doing business with attention not only to financial profit, but also to people, the environment, and society. In doing so, companies consciously take into account the impact of their activities on all stakeholders.