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Infographic of the month

ESG climbs the M&A due diligence hit list

Author: ICAEW

Published: 27 Nov 2020

This month’s infographic looks at the growing importance of ESG as a consideration in M&A due diligence for investors.

Over the last few years, the rise of environmental, social and corporate governance (ESG) issues as a focus of corporate and investor interest has been on a steady upward trajectory. Then the COVID pandemic threw the proverbial curveball and temporarily stopped this trend in its tracks.

The uncertainty and turmoil caused by the pandemic has, commentators have noted, shifted the emphasis away from ESG issues as businesses battle to stay afloat during the pandemic and grapple with its economic repercussions.

However, research suggests this is more than likely a temporary blip rather than a long-term trend. A recent study by online data room specialist Datasite indicates that the desire for investors to turbocharge their use of alternative data on which to base M&A decisions remains alive and well.

Its survey of 860 EMEA-based M&A practitioners from corporates, private equity firms, investment banks, law and professional services firms suggests that the collective appetite for ESG is strong.

Respondents were asked to rate the importance of ESG as a consideration in M&A due diligence. Most practitioners in all three regions say ESG is an important and very important consideration. It is interesting to note, however, that notably fewer EMEA practitioners currently say this compared to their peers in the Americas and APAC.

People and Planets in the Accounts

Convergence of non-financial frameworks and standards is gaining momentum and we are beginning to see how nature and society might be included in the financial statements. But can these frameworks tolerate such change? In these articles we explore this from the perspectives of different actors in the debate.