For the 5th time, FINN analysed how 50 of the largest Belgian companies reported on their CO2 emissions in their ESG reports. Ambitions for decarbonization remain high, although in some cases underlying issues are coming to the surface.
The top tier has become the peloton
Our previous ranking proved to be a pivotal year: more than half of the companies climbed to the lead group for the first time.
This year, that effect is even stronger: almost 70% of companies are among the ‘best in class’ (68% to be precise). They set quantified carbon targets for 2030or earlier, and share concrete action plans to achieve that goal. They also refer to the Science-Based Targets initiative (SBTi), the gold standard for sustainability targets.
So the former top tier has become a broad peloton. In many reports, you can read between the lines that the advent of CSRD has set a lot in motion. In others, ambitions from years ago are now taking shape. Galapagos and Econocom, for instance, are the firmest risers: they move up 3 classes in one fell swoop.
Quite a few companies integrate their annual report with their sustainability report by the way – a sign that the two are closely linked. Sustainability figures are increasingly appearing on the stub pages with ‘key performance indicators’.
Ambitions for CO2 reduction are high
Another continuing trend: more and more companies are venturing into reporting their ‘scope 3’ emissions, the indirect emissions that occur both upstream (at suppliers e.g.) and downstream (at customers e.g.) – generally considered the most difficult part of reporting. No fewer than 41 companies – a 20% increase – now include scope 3 in their reporting.
A large group of leaders also means fewer laggards: only Katoen Natie and Ravago still keep each other company in the lowest group. Furthermore, cooperatives are relatively more represented in the lower regions – perhaps because it takes a bit longer to get all noses in the same direction.
ESG reports increasingly include missed targets
In our earlier analyses, we reported that there would be possible ‘sustainability warnings’, modelled on the profit warnings of listed companies. You can now see these popping up: Argenta, for example, is very openly saying that it did not meet its interim target. It shows that progress rarely runs in straight lines, but often in peaks and troughs. Sometimes business ‘gets in the way’ of the tight targets: an acquisition, more or less business trips due to a pandemic, falling or rising activity of one department vs another,…
Belfius caused a stir when it publicly announced earlier this year via its ESG report that it was quitting SBTI, because it felt its focus on climate was getting in the way of an equitable transition (read: we can’t give some of our customers a home loan because their home is not sustainable enough).
We do not rule out other companies following suit.
Increasing technicality in ESG reports trigger a stronger focus on storytelling
Also noteworthy: KBC provides an overview of all its ESG-type reports. Among them is a ‘Report to Society’, intended for ‘customers, employees and society in general’. It shows that the increasing technicality of ESG-reporting (with double materiality analysis, etc), triggers a need for storytelling to translate these initiatives and investments to a larger audience.
Also new: reports entirely dedicated to decarbonisation. AB Inbev has a Net Zero Ambition report, Sibelco published a separate “climate” report, something which Argenta already had.
Despite sustainability reporting standards, comparing companies remains difficult
A driving force behind the push for more standardized sustainability reporting came from the investor and banking community. The goal was to set a standard that would allow stakeholders to compare “apples to apples”.
Anyone reading through the 50 sustainability reports must conclude that the dream of a uniform way of reporting is still a long way off. Some companies report on absolute CO2 emissions (how much in total) others on CO2 intensity (how much emission per product/tonne/…). Some companies compare with their emissions from the previous year, others with their starting point (the so-called ‘baseline’). For now, still a lot of apples, oranges and a whole range of other fruits.
That said, there is a growing awareness though that decoupling (i.e. decoupling emissions from production or the number of products) is the real challenge.
Related: some companies are still adjusting the scope of their measurements (e.g. UCB, Ageas, Beaulieu,…). It shows that a clear and complete analysis is still a work in progress for many.
Will SMEs be able to comply with the sustainability ambitions (and reporting standards) of their corporate clients?
Companies remain committed to big ambitions, and that includes ambitions for their scope 3 emissions, for which they need to rely on their suppliers. Increasingly, sustainability will become a procurement challenge.
A quote from Aurélie Comhaire, Group Sustainability Manager at Vandemoortele, sums it up nicely. Asked for the biggest success of the past year, she replies, ‘our great progress on sourcing’.
Greenyard, Proximus and Umicore are just a few examples of companies explicitly stating how they encourage (compell?) their suppliers to be as ambitious as themselves and, in some cases, to set science-based targets.
A recent article in De Tijd questioned – rightly in our view – what this will mean for the many SMEs in our country: will they be able to live up to the expectations of their larger clients both on the substance and on the reporting? The future will tell.
FINN: your communications agency for ESG and sustainability reports
Questions about your ESG or sustainability reporting? FINN can support with different aspects and channels, from readiness support to reports and CEO communication. Don’t hesitate to reach out to exchange ideas!
- CSRD readiness support
- GRI compliance consulting and implementation
- End-to-end partner in ESG reports: from frameworks to finished report
References include: AB Inbev, La Lorraine, Lhoist, Vandersanden, Saint-Gobain Belgium, Spadel
Methodology
We included companies with a Belgian capital base whose size is measured on the basis of their 2019 turnover. We removed financial holding companies and trading companies from the sample.
We based our analysis on the latest annual reports published before 1 June 2024 (both financial and CSR/sustainability), and on the corporate websites of these companies.
We analyzed them using 7 questions:
- Does the company express a commitment to sustainable development and/or present concrete initiatives?
- Does the company engage in specific sustainability reporting, including quantitative data?
- Has the company published its carbon footprint, with supporting figures?
- What is the scope (1, 2, 3)?
- Does the company communicate clear and quantified CO2 reduction targets (at group level)?
- Does the company communicate numbered carbon reduction action plans for 2030 or closer?
- Is there an explicit reference to SBTi?
The purpose of our research is not to judge decarbonization ambitions, their alignment with the objectives of the Paris Agreements, the choice of “metrics” or the credibility of the plans undertaken by companies, but rather the way they communicate on this subject.