ESG Due Diligence in the M&A process and in financing
Whether as part of an M&A process or financing, buyers and investors nowadays are not just analysing the normal financial risks and returns, but also increasingly scrutinising the possible negative consequences that can result from corporate activities in the areas of environment, social, and governance (ESG). It is therefore prudent for companies to identify hidden opportunities and risks early on and to include them in their sustainability strategy which, in turn, should have a positive effect on the company's development and value.
Here you will find an overview of our services and solutions related to ESG due diligence and valuation.
At the national and international level, lawmakers have recently introduced various regulations in the field of ESG, for example, CSRD, Taxonomy, TCFD, and the German Supply Chain Act. Much is changing, and more changes are expected. Management needs to keep a closer eye on environmental, social, and governance issues, and make these a priority. Performing a complete assessment of the company’s stance and exposure on these issues, including periodic audits, has now become routine for corporate management. After all, companies must be aware of the potential future reputational and liability risks and their associated costs and must consciously take steps to counteract them.
In the event of a company sale or purchase, ESG due diligence ranks firmly alongside financial due diligence, tax due diligence, and legal due diligence in importance.
Making "soft" issues tangible
Although the environment, social, and governance issues at first glance appear to be "soft" issues, appearances can be deceptive. It is precisely their intangibility that makes it all the more important to examine the future impact of ESG issues on the company's business model and future performance. These aspects should be more strongly considered in business decisions because they are becoming increasingly important in transaction and financing decisions. However, as existing ESG standards are often formulated in general terms and are rarely sufficient for an assessment, expertise and market experience are required.
ESG due diligence, the associated effort, and the use of external consultants are worth the investment. The tools used to assess sustainability are varied. Their use differs according to analysis method, analysis depth, available data, and objective. Corporate data can thus be examined very specifically on all aspects of ESG to shed light on their influence on business development, corporate value, and the material design of a possible business transaction.
How Forvis Mazars can assist you:
Our experts will be happy to help you to determine how the various regulations will affect the particular business model. The respective strengths and weaknesses, as well as all the opportunities and risks, are identified and analysed.
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Our solutions for ESG due diligence
Are you planning a corporate transaction or are you already involved in an M&A? Then you should also have an eye on ESG's environmental, social, and governance aspects for your financial due diligence. The current or foreseeable regulatory requirements in these areas have a direct impact on the development and value of your company or planned acquisition. The aim is to identify and assess potential...
ESG strategy: integrating sustainability goals
Sustainability aspects affect all business functions such as product development, production, financing, purchasing, and the company’s reputation as an employer. And it is not just about the implementation of regulatory requirements. Moreover, there are numerous ESG-related opportunities to strengthen a company’s future viability through strategic objectives and specific initiatives, and anticipate...
ESG: Having the right data is essential
Companies continuously produce data: from purchasing to production to sales, accounting, risk analyses, and customer care, companies collect and store information, thereby producing data on internal and external processes. However, for sustainability reporting and with regard to ESG evaluation criteria and classification aspects, consolidating different kinds of data of varying quality from diverse...