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, we surveyed more than 150 active dealmakers across the region. We asked them what works, what doesn’t work and what challenges they face going forward. We discussed various models for embedding ESG into DD. And we asked them to share their advice and insights based on their 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 organization’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.
Deal makers in Finland are at different stages of maturity regarding ESG DD. In addition to delivering high-quality ESG DD analysis, we support clients in defining a sensible approach for each deal. Contact me to get your ESG DD right.
Riikka Weber
Manager
Corporate Sustainability & Sustainable Finance
KPMG Finland
View the report here
In this report, we explore the findings of our survey and our one-on-one interviews with dealmakers. Leveraging insights gained from the KPMG firms’ deep experience in ESG and due diligence, we offer some tips and advice of KPMG firm professionals to help dealmakers evolve and mature their ESG DD capabilities. And we share some practical examples from KPMG firms’ work in the area.
