PROFIT ESG IN M & A
“ APAC differs from the EU and US in that ESG has not been driven by extensive country regulation . Instead , there is a growing appreciation across APAC that ESG risk can materially impact business value , serve as a source of value creation , and provide access to international markets and competitive green capital within and outside APAC ”
WILL SYMONS CLIMATE & SUSTAINABILITY LEADER APAC , DELOITTE
the sector they operate in ,” adds Lalli . “ For example , energy and resource efficiency are likely to be high priorities for manufacturers , but for knowledge-based employers , skills development , diversity and shared prosperity are likely to deliver sustainable benefits .
“ Once the ESG priorities are understood , the next stage is to start measuring current performance and identify gaps where M & A can accelerate change . We ’ re starting to see listed companies lead in this area , and ESG due-diligence is now becoming a routine part of assessing potential acquisition targets .”
Regional variation in ESG expectations and strategies Geography also plays a hand , with regional variation in ESG expectations and strategies . Europe , for example , had barely begun to recover from the pandemic before the war in Ukraine added extra levels of shock and risk to navigate . From severe disruptions to food supply chains to economic sanctions impacting soaring energy prices , businesses are facing unexpected shocks and see M & A as a potential safety net .
Christof Huth , partner at global consultants Roland Berger , says companies in Europe are looking to strengthen their core business to become less susceptible to these kinds of shocks . “ Times like these show how resilient the business model really is and companies may need to reshape themselves – one important tool to become more resilient to crisis is M & A activity .”
Fellow partner at Roland Berger , Sven Kleindienst , says ESG will be just as important as traditional motives , such as geographical or product expansion , digitalisation and cycle resilience , in the next five years . He says the European market is a clear frontrunner in this drive towards ESG . “ ESG is already playing a large role in companies ' target selection processes and due diligence and it is expected to further increase ,” says Kleindienst . “ Transforming your own company towards being more sustainable is not easily done . Acquiring the knowledge and processes from a company with an advanced ESG and managing system or a more sustainable product service offering can strongly accelerate the transformation compared to developing everything in-house .
32 November 2022