The importance of ESG criteria in corporate acquisitions has changed significantly since 2020. Today, it is no longer just financial indicators that determine the success of a deal, but also environmental and social factors. This article shows what companies should pay attention to.
ESG is more than just a trend. In the context of M&A, it has become a key valuation factor. Investors, banks and institutional buyers are paying increasing attention to whether companies operate sustainably, comply with human rights due diligence requirements and act in a corruption-free manner.
What does this mean in practice?
- ESG due diligence is becoming an integral part of the audit process
- Supply chain and sustainability risks influence the purchase price
- Contract clauses increasingly contain ESG guarantees and withdrawal rights
- Companies with weak ESG performance are considered ‘risk targets’
The planned EU Corporate Sustainability Due Diligence Directive (CSDDD) will further tighten requirements. Companies that fail to take precautions today may no longer be able to conduct transactions tomorrow.
Internal preparation is crucial:
- Identify and document ESG risks
- Check supplier responsibility
- Implement a credible sustainability strategy
Those who ignore ESG risk purchase price discounts, reputational damage and failed transactions. Companies should view ESG not just as an obligation, but as a strategic competitive advantage.
The most important points in brief:
- ESG has become an integral part of due diligence
- Sustainability deficits lead to legal and financial risks
- Proactive ESG strategies strengthen market position and transaction security
