What is the purpose of the new legislation? The proposal aims to add a new paragraph 5 in article 3:6 of the companies and associations Code (“CAC”) to include the carbon footprint information in the annual reports of the Belgian companies.

Who must comply with this new legislation? Companies that exceed, on the balance sheet date of the last completed financial year, the criterion of an average number of 500 employees over the financial year.

Which information must be included in the annual report? The annual report shall include a balance of greenhouse gas emissions (un bilan des émissions de gaz à effet de serre/een broeikasgasbalans), i.e. an estimate of the greenhouse gas emissions caused by the company’s activities in Belgium during the financial year covered by the annual report.

The balance of greenhouse gas emissions shall make a distinction between:

1° direct emissions caused by sources that are necessary for the company’s activities; and

2° indirect emissions related to the consumption of electricity, heat or steam that is necessary to carry out these activities.

The annual report shall also contain a summary of the measures planned to reduce greenhouse gas emissions, as well as an estimate of the expected reduction in these emissions.

The greenhouse gas balance shall be prepared in accordance with European and international benchmarks, which must also be mentioned. The King shall draw up a list of the European and international benchmarks and due diligence procedures on which companies may rely.

When will companies have to comply with this new legislation? The new legislation will come into force for the financial year beginning January 1, 2022, or during the calendar year 2022, provided that the King has established the list of European and international benchmarks and due diligence procedures at least three months before the beginning of that financial year.

What is the status of this potential new legislation? To date, the bill is still in draft form and has been adopted at first reading by the Chamber Commission (Commission Chambre/Commissie Kamer) on October 5, 2020.

Following this first approval, two amendments have already been proposed, including a change in the effective date of the law to postpone the coming into force of this new obligation to January 1, 2024 for the financial year beginning January 1, 2023.

Does my company need to take any action at this time? We recommend that companies that may fall within the scope of this potential legislation  (i) proceed with the analysis on whether your company falls within the scope of the new possible obligation of the CAC and (ii) perform an internal due diligence to determine if this information/data is readily available. If this information/data is not available, actions must be taken to prepare for compliance with this legislation.