Belgium remains in the top 20 of the KBC Country Sustainability Barometer
Since 2002, KBC Economics has calculated the sustainability profile of countries on an annual basis. This calculation produces a country ranking, known as the KBC Sustainability Barometer, which serves as the basis for the investment choices in government bonds for KBC’s Responsible Investing (RI) funds. In the latest update of the ranking, made end 2024, Belgium scores 17th in the group of 165 (both developed and emerging) countries considered. Quite good in itself, but compared to peers, such as neighbouring France and, in particular, Germany and France, Belgium’s sustainability performance is somewhat less convincing. Moreover, Belgium has been losing a few places in the overall country ranking in recent years. For one of the five sustainability themes in the analysis, namely ‘Environmental performance and commitment’, Belgium scores below the median. Especially in that area, there is still some way to go.
Countries that invest in the sustainable promotion of their citizens’ general well-being thereby lay the foundations for also favourable and stable political-economic development in the future.1 The sustainability performance of countries, in combination with the traditional ratings of credit rating agencies, is thus a powerful tool to assess the risk of government bonds and make better-informed investment decisions.
In our analysis, we define a country’s sustainability as ’the set of achievements, institutions and policy efforts that promote the well-being of the current and future population in a sustainable manner, without compromising the well-being of populations in other countries and the environment’. To measure it, we use a scoring model based on five themes: (1) General economic performance and stability, (2) Socio-economic development of all citizens, (3) Equality, freedom and rights of all citizens, (4) Environmental performance and commitment, and (5) Security, peace and international relations. Each theme is in turn subdivided into three sub-indicators. A more detailed description of the screening approach, as well as the most recent country ranking (the so-called KBC Country Sustainability Barometer) can be found in a KBC Research Report published together with this opinion.
17th place out of 165 countries
In the latest update of the country screening, recently finalised, Belgium obtains 17th place out of a total of 165 (developed and emerging) countries considered. This is roughly the same position as in the previous screening (Belgium ranked 16th in the 2023 update) and in itself a good result. But when we compare Belgium with peers, such as its neighbouring countries, Belgium’s sustainability performance is somewhat less convincing. Especially Germany and the Netherlands, but also France, do better. These three countries rank 6th, 7th and 14th respectively in the latest country ranking. Within the euro area, there are countries, especially in Southern Europe, that score (much) worse than Belgium. But even compared to the (GDP weighted) average ranking of the euro area countries (15th place), Belgium’s score is rather average.
Figure 1 shows the relative performance of Belgium compared to its three neighbouring countries (the Netherlands, Germany and France) and to the euro area average since the KBC Sustainability Barometer was first calculated in 2002. Belgium consistently scored worse than the Netherlands and Germany over the entire period 2002-2024. Its position relative to France was alternately worse or better, but since 2017 Belgium’s place in the ranking has also been below that of France. Moreover, in recent years there has been a slight trend deterioration with Belgium’s place dropping also below the GDP weighted average ranking of all euro area countries.
Poor score for environmental theme
Table 1 shows the rankings in the latest update for the five sustainability themes. Belgium’s rank, within the group of 165 countries considered, is the highest for theme 5 (‘Security, peace and international relations’). With a 8th place, Belgium performs roughly equal to the Netherlands and Germany, but better than France. It owes this mainly to its strong international openness, as reflected in its high score for economic, social and political globalisation. For theme 1 (‘General economic performance and stability’), 2 (‘Socio-economic development of all citizens’) and 3 (‘Equality, freedom and rights of all citizens’), Belgium’s rank is quite decent as well. The Netherlands and Germany perform better, though, while the rank of France is (slightly) behind Belgium’s. For all four themes mentioned, Belgium’s place in the ranking is better than the (unweighted as well as GDP weighted) average rank of the euro area countries (see table 1).
Unlike the other four themes, Belgium’s performance for for theme 4 (‘Environmental performance and commitment’) is poor. It corresponds to a paltry 112th place in the country ranking. This places Belgium among the 50% worst performing countries for this theme. The poor performance is due to Belgium’s relatively high ecological footprint and its weak score on certain aspects of climate change. These include higher CO2 emissions and a high overall energy consumption per capita, as well as a relatively lower share of renewable energy in total energy consumption.
Belgium is not alone in scoring still decent in themes 1, 2, 3 and 5, but poorly in theme 4, especially among advanced economies. Among the top 20 ranked countries in the Sustainability Barometer, several other countries, including the Netherlands and Luxembourg, show a less-than-stellar performance in environmental sustainability. This relatively unfavourable situation illustrates that the challenges for the countries concerned in this area remain significant.
1 The link between sustainability issues on the one hand and economic development and political stability on the other has been amply demonstrated in the literature. See, for example, Mellios & Paget-Blanc (2006) and North et al (2008).