ESG due diligence
Environmental, social and governance (ESG) factors are poised to shape the financial investor industry for years to come. There is growing evidence that when investors embed ESG considerations into their strategies, they achieve superior valuations and a host of positive outcomes.
The increasing pressure from Limited Partners to align investment practices with ESG policies and outcomes has led to a sharp increase in the number of private equity firms committing to the integration of ESG values and frameworks. As a result, ESG strategy integration has become an issue of value protection, creation, and alignment and ESG risks and opportunities are increasingly considered during the due diligence reviews of potential investments.
As social impact and sustainability experts, we bring expertise across the full spectrum of ESG considerations, regulations and innovation, including decarbonisation, waste reduction, sustainable sourcing and diversity and inclusion. Our suite of proprietary diagnostic tools, benchmarks and methodologies, enables us to rapidly analyse a target’s ESG maturity, to reveal both upside potential and areas of risk.
Our approach to ESG due diligence
We provide comprehensive customised ESG due diligence reviews across supply chains, product stewardship, human capital, diversity and inclusion, climate change, carbon emissions, waste minimisation, biodiversity impacts, water quality, fuel, and energy efficiency,.
We follow the following steps:
Define the scope of the ESG due diligence (boundaries of due diligence)
Collect and review ESG documentation, including publicly available information and documents requested from the company
Assess the company’s commitment, capacity and track record (CCTR) to establish its ability to achieve and maintain expected ESG performance. This may include a site visit or a technical deep dive in specific areas.
Develop and agree ESG action plans to address any gaps/improvement areas.
Recommend how to ensure sufficient influence and oversight post-investment.
Finalise the due diligence report, including key findings, ESG risks and opportunities, a view of the company’s CCTR and corrective actions.