PROFIT ESG IN M & A should A strategy
Consultants from Deloitte , KPMG and Roland Berger provide insights on how to handle environmental , social and governance ( ESG ) issues during M & A activity
WRITTEN BY : KATE BIRCH
In good times and in bad , mergers and acquisitions ( M & A ) play a vitally important role in the health of your business . M & A can make your organisation more resilient , accelerate transformation , and drive growth . However , there is a new factor in play in these deals that is proving make or break for all stakeholders – environmental , social and governance ( ESG ).
It ’ s becoming abundantly clear that climate change will be a defining issue for both governments and businesses for the foreseeable future . The global transition to a low carbon economy is already well underway . Governments are mandating compliance with emissionsreduction targets , and investors are holding organisations accountable for their performance on ESG .
Add to that changing consumer demands ( with 90 % of Millennials and Gen Zs looking to reduce their impact ), not to mention B2B pressures across the value chain , and it ’ s clear to see that the time to act on ESG is now .
Tackling climate change and making your business not only compliant but also competitive and attractive to both customers and investors is crucial . So how to go about it ?
When it comes to M & A strategies where ESG is the central driver , there are three main plays , according to Rochel Hoffman , M & A Partner , Deloitte Australia :
Product plays – investing in businesses whose core product and services drive ESG improvement , such as waste management
Infrastructure plays – investing in companies that provide the underlying infrastructure for sustainable solutions , such as those in vertical farming
Technology plays – investing in businesses that are using disruptive technologies to displace the market by creating new product categories , such as those cultivating meat in laboratories
“ Following the uncertainty of the last two years , where markets and the world were heavily impacted by COVID-19 , we ' ve seen just how important M & A can be in the good times and the bad ,” Hoffman tells Business Chief .
“ Today , market conditions are fluctuating once again , with economic headwinds and geopolitical tensions . During times of uncertainty or ' crisis ', M & A is an effective tool for safeguarding for the future . The right deals can help to defend against threats
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