ESG & Climate Due Diligence

The regulatory framework for climate change is simultaneously shifting and expanding. Newly imposed regulations affect the expectations and demands of all company stakeholders.

However, it is not just new regulations that create new demands and high expectations. Stakeholders, including shareholders and other investors and the company itself, are switching their focus from mainly financial targets to business models and other targets that include and focus on elements related to climate change and environmental, social and governance (ESG) factors. These developments require many companies and investors, to constantly re-evaluate their approach to a range of sustainability issues, including ESG and climate policies.

Strategy, however, should not be driven by this regulation and shifting expectations from outside your organisation. Sustainability should be built into the strategic planning and decision-making processes of companies, shareholders, and other investors.

ESG legal due diligence

ESG and climate legal due diligence are increasingly common practice within the corporate environment, including M&A transactions.

Houthoff's Corporate/M&A Team is focusing on this area. It has obtained valuable experiences in assisting and advising clients in this changing (regulatory) environment before, during and after transactions (e.g. during the legal due diligence phase).

Value creation opportunities

The main objectives of an ESG or a climate legal due diligence are to identify and evaluate the ESG management and climate risks of the companies involved in a transaction. The process can also be used to identify value creation opportunities in that respect, which can be implemented before the transaction (in the case of a vendor due diligence) or afterwards. ESG or climate legal due diligence investigations may cover, amongst other topics, the legal aspects of the target company's:

• climate risk management and climate opportunities;
• environmental management and compliance;
• supply chain management (including the environmental aspects) and product safety;
• HR management and health & safety management; and
• governance organisation.

Houthoff's Corporate/M&A Team can conduct and manage these due diligence investigations and implement any potential issues or opportunities into the relevant transaction documentation. It can ensure that your organisation will stay ahead of all new regulations as well as of the demands and expectations of your stakeholders.