New digital tool helps organisations get ahead of new EU ESG reporting rules

Developed over several months, the new tool has been created to help in-house counsel map their company structure against the European Union's Corporate Sustainability Reporting Directive (CSRD), at the click of a button, through an easily accessible interface.  It accommodates iterative changes to the Directive as it has evolved since its inception at the start of 2023. Accessible on any PC or laptop, the tool helps users  pinpoint which of the organisation's corporate entities fall within the remit of the Directive, removing the need for time-intensive information reviews and analysis.

The 'CSRD Mapper,' analyses information such as annual turnover, balance sheet total, number of employees, whether the organisation is listed on a regulated market in the EU, and its country of incorporation. It uses the information to provide a comprehensive report setting out legal advice on which undertakings will have reporting obligations under the Directive, together with an outline of what activities must be reported on.

"The EU's Corporate Sustainability Reporting Directive is nothing short of a game changer for the world of business because its reach is so much wider than anything coming before. The CSRD is expected to impact tens of thousands of organisations globally, requiring them to examine their corporate structure, coupled with a need to determine what information has to be reported; its impact will be extensive," says Silke Goldberg, partner and global head of Herbert Smith Freehills ESG and Climate Change practices.

Assessing the application of the CSRD is complex, not only due to the levels at which the thresholds apply – coupled with the implications in terms of the timeframe for reporting - but also because of the exemptions available in different circumstances and for different periods of time.

Critically, the CSRD will also apply to subsidiaries of non-EU based companies, leading Jannis Bille, head of ESG (UK) at Herbert Smith Freehills, to note: "Organisations headquartered outside Europe will be mistaken to think the Directive does not apply to them because they are not headquartered in the EU. Thousands of non-EU entities are expected to fall within scope. The CSRD will impact ESG reporting on a global scale and its requirements focus on a broad range of environmental, social and governance issues arising as part of direct operations and value chains."

Created to sit behind a secure server to protect client data, the new tool is part of a suite of services designed to help clients navigate the CSRD and related requirements and ensure they are fully informed about their obligations.