ESG & M&A: why ESG issues deserve ongoing attention
21 February 2023
ESG is currently on the rise in the M&A world. ESG stands for Environmental, Social & Governance. Within M&A, this term implies that factors such as energy consumption, the availability of raw materials, the environmental impact of the operations, diversity within the company, compliance with human rights, safe working conditions and good corporate governance are all to be considered in the selection and management of participations.
ESG investments cautiously came on the scene in the 1960s under the heading of Socially Responsible Investing (SRI), but today it is apparent that investors and businesses can no longer allow themselves to ignore the subject of ESG. What’s more, there is consensus in the literature and in practice that ESG investments and ESG targets bring added value. Added value that is endorsed and driven by regulatory developments that force businesses to report on ESG and compliance with it (CSRD, CSDDD).
In short, against this background ESG no longer seems to be merely on the rise within M&A but is here to stay and will play a more prominent role in M&A strategy and M&A processes. Reason why Erik believes that ESG issues deserve ongoing attention.
In this contribution (English translation), Erik aims to clarify the role of ESG issues within M&A processes in two ways. First, by briefly explaining what as a rule is understood by ESG, and second, what role ESG issues play.