Whether you’re a law firm advising on an IPO, or a private equity house considering an investment, or you’re providing corporate finance to fund M&A activity, environmental due diligence is crucial.
Beyond the traditional Phase 1 and 2 studies that are often relied upon, it is increasingly important to consider broader environmental, social and governance (ESG) factors as part of the due diligence process or risk a reputational crisis that slashes future returns.
But as the recent Volkswagen emissions scandal demonstrates, there’s more to it than simply looking for evidence of accolades and awards – you need to look beyond these obvious markers and, instead, delve deeper into company culture.
A model for risk reduction
Our unique maturity model does just that. It can be used alongside traditional environmental due diligence activities in order to help better understand the prevailing culture of an organisation and therefore a glimpse of the risks it might one day present.
The assessment considers 30 separate sustainability and resilience measures, and grades performance as either Beginning, Improving, Succeeding or Leading in each one. It also produces an index score to make it easier to judge overall performance at a glance.
Consisting of a detailed online questionnaire, backed up by telephone interviews and a site visit that enables us to validate the information we’ve been given, it provides actionable insights and intelligence on how well embedded ESG practices are.
As well as helping to minimise risk, our assessment process also identifies opportunities for improvements that can yield additional value as part of the transaction.
For instance, improving practices that help to cut waste, recycle more and save money can help to boost profitability and therefore earnings. Sustainable waste management is just one of the measures we consider in our maturity model evaluation.
Clients in the investment community use our services to:
- better understand the financial implications of ESG factors in the investment process
- reduce transactional risks
- identify opportunities to boost investment returns through reduced costs and enhanced profitability