Climate Disclosure Readiness In Transactions: Using Due Diligence To Prevent Post-Closing Reporting Surprises

Following the well-publicized rollback and simplification of sustainability rules in the United States and Europe, companies might assume that this is no longer an area that needs attention in transactions. However, this is certainly not the case: the impact of both mandatory sustainability regulations and voluntary commitments needs to be carefully considered on both sides of the Atlantic. Acquirers who skip sustainability diligence risk expensive post-close surprises: inherited emissions data gaps, weak controls over sustainability metrics, missing contractual rights to collect supplier data, and unexpected reporting obligations.

Application of Sustainability Regulations

Many sustainability reporting regimes apply only above certain thresholds, and application analysis is often more complex than anticipated. For example, the European Corporate Sustainability Due Diligence Directive applies to global groups that generate more than €450 million of turnover "in the EU." This metric