Environmental Due Diligence is a process which is not regarded as a key DD process. For what type of industries would such a process be prerequisite for an M&A transaction?
The palm oil industry and possibly other agriculture industries. Due to environmental problems such as deforestation, illegal land conversion, land-grabbing, loss of biodiversity, etc., governments in countries where palm oil production is high (like malaysia and indonesia) have in place certification requirements to regulate the palm oil industry and ensure sustainability. Due diligence will be required on companies bound by these regulations to ensure that the company has complied with the certification requirements.
Environmental DD must be a pre-requisite for petroleum and petrochemical industries because it could threaten the life of people.
It is key in the oil and gas production industry where risks include: oil and gas leaks, oil and produced water spills, pipeline/transportation ruptures, unauthorized discharge of toxic chemicals, gases, or other pollutants. Environmental DD includes procedures such as visits to well sites and taking soil and air samples to be analyzed for level of hazardous content.
In manufacturing industries, environmental DD is often crucial, especially when it comes to emissions and discharge material and the fulfillment of all related rules and regulations
If the target company is a supplier of German automotive industry, it is necessary to make an environmental DD. Many barriers are in place, but also many opportunities to obtain subsidies.
Pharma and research too
Pharma and oil & gas come to mind immediately in terms of environmental due diligence. There are a lot of legal, policy, and compliance requirements surrounding both industries, therefore environmental due diligence is key.
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