Colofon Responsible publisher: Transparency International Belgium VZW-ASBL, Nijverheids - straat 10 rue de l‘Industrie, 1000 Brussels, Belgium. Date of publication: 10 February 2017, www.transparencybelgium.be Transparency International is the global civil society organization leading the fight against corruption. Through more than 100 chapters worldwide and an international secretariat in Berlin, Transparency International raises awareness of the damaging effects of corruption and works with partners in government, business and civil society to develop and implement effective measures to tackle it. Every effort has been made to verify the accuracy of the information contained in this report. All information was believed to be correct at the date of our review (1-20 October 2016). Nevertheless, Transparency International cannot accept any responsibility for the consequences of its use for other purposes or in other contexts. We would like to thank all individuals who contributed to the research, the review or the drafting of the report: Karel Boone, Guido De Clercq, Hanneke de Visser, Evert- Jan Lammers, Lydia Ruelens, Anja Siebel and Brendan Sinnott (for Transparency International Belgium) and Aurélia Belvaux, Alexia Borremans, Maxime Servais, Léna Vandermoere, Marie Vranckx, Lionel Willems and Corentin Hericher (for Louvain School of Management). 2
CONTENTS 1. Results at a glance ..................................................................................................................................... 4 2. Introduction ............................................................................................................................................... 5 3. Summary .................................................................................................................................................... 8 4. TRAC-methodology .................................................................................................................................. 16 5. Reporting on Anti-Corruption-Programmes ............................................................................................ 21 6. Organisational Transparency (OT) ........................................................................................................... 25 7. Country-by-country Reporting (CBC) ....................................................................................................... 28 8. Scores per company ................................................................................................................................. 29 Create change with us ................................................................................................................................. 30 Join us .......................................................................................................................................................... 31 3
1. Results at a glance Overall score and results per section: Section Acronym Average score * Results for reporting on Anti-Corruption Programmes ACP 27% Results for Organisational Transparency OT 65% Results for Country-by-country Reporting CBC 7% Overall** 33% * Unweighted average scores per Section: equal weights for the questions and for the companies ** Unweighted overall average score: equal weights for the sections. Companies included in the survey: Agfa-Gevaert Exmar Recticel ArcelorMittal Greenyard Resilux Barco IBA Sioen Biocartis Kinepolis Sipef CFE Lotus Bakeries Ter Beke Deceuninck Melexis Tessenderlo Chemie Econocom Nyrstar Van de Velde Euronav Ontex Viohalco EVS Picanol Zetes 4
2. Introduction Transparency in Corporate Reporting: Assess ssing 27 7 Listed Belgian Compani nies 2016 provides an evaluation of the transparency of reporting by 27 listed companies of the Euronext Brussels-index. The methodology used (Transparency in Reporting on Anti-Corruption - TRAC) focuses on three areas of reporting which are evolving fast in the face of rapidly changing public expectations of what constitutes good corporate practice: anti-corruption programs, their organisational transparency (where and through what subsidiaries they operate) and country-by-country reporting. The aim of this report is to encourage companies to align with developing reporting requirements rather than lag behind to await the inevitably slower developing statutory requirements. Leading from the front can be a competitive advantage, particularly in attracting investors and enhancing the public image. Being compliant with formal reporting requirements is not enough, companies increasingly need to anticipate change. This is as true of their investor relations as it is of their business strategies. The voluntary reporting that is described in this report today will be part of the formal reporting standards of tomorrow. Transparency International encourages companies to adopt these standards now because it makes sense: their statements will be more convincing; their standards will be more credible; their values can be linked to policies and procedures; their vision is translated into strategy, policies and procedures. That is at the core of the business case of transparency in reporting on anti-corruption. For many years already Transparency International encourages companies to disclose their group structure and corporate income tax structure. Organisational transparency is important for many reasons, not least because company structures can be made deliberately opaque for the purpose of hiding the proceeds of 5
corruption, as LuxLeaks, Panama Papers and Bahama leaks have shown during the past years. In 2016, Belgian multinationals have seen a true wave of new laws, regulations, standards, guidance and recommendations in all of the above areas, which confirms the relevance of our TRAC-studies. All the average scores are unweighted and must be interpreted with caution, not least because the relative importance of questions varies from company to company depending on the extent of their international business and presence outside Belgium and business sectors. We would particularly like to thank the companies which responded with useful comments on the initial evaluations giving rise to fruitful exchanges of views. The more we can dialog with companies in such a study the better and more useful the findings. Transparency: “Characteristic of governments, companies, organisations and individuals of being open in the clear disclosure of information, rules, plans, processes and actions. As a principle, public officials, civil servants, the managers and directors of companies and organisations, and board trustees have a duty to act visibly, predictably and understandably to promote participation and accountability and allow third parties to easily perceive what actions are being performed.” Bribery: ”The offering, promising, giving, accepting or soliciting of an advantage as an inducement for an action which is illegal, unethical or a breach of trust. Inducements can take the form of gifts, loans, fees, rewards or other advantages (taxes, services, donations, favours etc.).” Corruption: “Corruption is the abuse of entrusted power for private gain. It hits all the people whose live, livelihoods or happiness depend on the integrity of those holding a position of authority.” 6
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3. Summary Overall The following general trends and conclusions can be drawn from this year’s review: Euronext Brussels-companies improve their corporate reporting over time, even if this improvement is small: : from 34% (TRAC2015) to 35% (TRAC2016) for the 13 13 companies that were als lso included in last yea r’s sample. The 14 new companies have an average score of 31%, which leads to an overall average score for the 27 companies of 33%; This improvement is in line with the trend of increasing reporting on non-financial performance; Size and degree of multi-nationality matter: in general, the Euronext Brussels- multinationals (33%) are lagging the BEL20-companies (44% in TRAC2015). The distance is even bigger in the section Anti-Corruption Programmes (27% versus 50%) while the international score of large corporates is as high as 70%; Companies pay increasi sing attention to reporting on anti-corruption programmes (27%) and on organizational transparency (65%). However, country-by by-country reporting at corporate level still does not get the attention it deserves (7%). This year’s Champions are Arcelor -Mitttal (overall average score 52%), Barco (51%), Exmar (49%), Recticel (48%) and Ontex (46%). The only 100%-score for an entire section is achieved by Ontex (section Organisational Transparency). Arcelor-Mittal comes close with 96% (section Anti-Corruption Programmes). The results of this TRAC-review vary considerably from company to company, which is related to size and may also reflect the extent to which they have international operations and presences: Companies operating internationally on a large scale may be more frequently faced with issues around bribery and corruption, not least the legal risks associated with external jurisdictions such as the US Department of Justice (DoJ) with the Foreign Corrupt Practices Act (FCPA) and the UK’s Anti -Bribery 8
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