Does anyone talk about environmental due diligence when it comes to M&A?

This topic contains 4 replies, has 5 voices, and was last updated by  Kai Jie 10 months, 3 weeks ago.

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  • #112668

    Tim Allen
    Participant

    I’m with an environmental due diligence company and we work with M&A all the time. Wondering if that’s relevant in this forum?

    #112927

    Matthew Chatelain
    Participant

    Yes, we constantly focus on environmental due diligence as, not only are environmental matters part of our core values, but they are of significant importance to investors. It is critical for us to understand practices and policies with regards to environmental matters, such as agriculture, water, and packaging.

    Typical questions we ask are whether raw materials are sustainably-sourced, whether targets are looking into innovative ways to package products without the use of plastics, whether water supply management is effective, etc…

    #114508

    Karl Heinz Foertsch
    Participant

    Guess it depends on the industry you are in. In some industries like power generation, chemical, pharmaceuticals etc. environmental due diligence is crucial. They might have significant hidden environmental liabilities, which need to be discovered.

    #114570

    Clark Murphy
    Participant

    I absolutely agree with Karl and Mathew. I think for starters, it does depend on the industry. If its an acquisition of a social media company. I don’t think an environmental report really is going to hold much value. That being said, perhaps the investor/company behind the acquisitions cares about green Initiatives and carbon footprints, then perhaps an environmental report or audit might be necessity for the acquisition of the social media company. But typically industries that do produce some pollutants, like gas, oil, power, automotive, real estate, its going to be involved heavily with an environmental report.

    #115448

    Kai Jie
    Participant

    I agree with the above responses as well. Environmental due diligence is dependent on the target’s industry and supply chain network. For instance, it would be less relevant for software and internet companies, but more relevant for those in the manufacturing and oil sectors. However, environmental due diligence is getting more spotlight in recent times, and many companies are vesting resources to ensure that they contribute sustainably to the environment, regardless of the nature of their products or services.

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