Environmental, Social, and Governance (ESG) factors are becoming more important in investment and acquisition decisions. Should ESG performance be a major criterion when evaluating potential acquisition targets?
I think it would depend on the industry. I work in the renewable energy sector, and sustainability is a standalone part of the technical DD. However, I found it’s actually rare that ESG redline becomes a deal breaker or a reason for valuation reduction unless it’s really material. I think part of the reason is that in newable energy sector, most of the players already pay sufficient attention to ESG management.