Beyond a mounting execution and DD risk for deals, ESG factors
are now driving some transactions outright
WHY IS ESG IMPORTANT?
Environmental, social and governance (ESG) issues have risen up
the agenda of investors, governments and the public at large all
over the globe. This has seen ESG become a driver for transactions
– in the form of both disposals of risky assets (eg, fossil
fuels) and acquisitions of sustainable assets or assets that will
help a company achieve its ESG goals (eg, renewables, recycling,
waste management, tech and aquaculture). At the same time, ESG
factors are receiving more attention in due diligence and deal
terms as their materiality increases.
There is also greater regulatory focus on ESG – reflected
in the introduction of reporting requirements across the globe
(including in the UK, Japan, Hong Kong and China) and moves in
Europe to impose new corporate governance and risk management
obligations on companies relating to ESG.
