Dealmakers are actively integrating ESG considerations

The megatrend of sustainability has reached the M&A world. Across sectors and around the world, more and more deals are starting to be influenced by sustainability criteria. Targets with strong sustainability stories (and the data to back it up) are enjoying price premiums. And M&A teams are increasingly conducting Environmental, Social and Governance (ESG) due diligence (DD) on targets at an early stage.

To find out what this means for dealmakers across Europe, the Middle East and Africa, KPMG surveyed more than 150 active dealmakers across the region. They have been asked what works, what doesn’t work and what challenges they face going forward. Further, they have shared their advice and insights based on previous experience.

What we found was little consensus around what ESG DD actually means. Dealmakers are divided about how best to incorporate ESG DD into their existing due diligence frameworks. ESG DD work is often underfunded. And ESG DD is not always aligned to the organisation’s overall ESG strategy.

Yet the data also suggests that dealmakers have made this area a key priority. And they are determined to see how ESG DD can not only help identify and manage potential risks, but also identify significant financial upside driven by ESG transformation. The importance of getting ESG DD right has never been clearer.

In this report, you can get insight into the findings of the survey and the one-on-one interviews with dealmakers. Leveraging insights gained from the KPMG firms’ deep experience in ESG and due diligence, the report also offers tips and advice of KPMG firm professionals to help dealmakers evolve and mature their ESG DD capabilities. And we share some practical examples from our work in the area.

We hope this report provides EMA dealmakers and strategy leaders with new ideas and motivation to drive forward their ESG DD capabilities.