The Changing Landscape of Transaction and Corporate Services

In the first of our Transaction and Corporate Services blog series, we hear from Satu Juntunen on the changing landscape of Merger and Acquisition (M&A) Environmental Due Diligence.

I joined the Anthesis Group in January of this year as I believe the business has a unique perspective on Environmental Due Diligence (EDD) beyond the minimum requirements of traditional EDD services in the M&A space, giving me the opportunity to leverage my experience from more than 800 M&A EDD projects worldwide.

M&A EDD is a specialist business that requires the individual to have detailed knowledge of Environmental and Health and Safety Legislation, enforcement’s and best practices across a range of sectors and both at a local and global level. The role of EDD within the M&A process is to identify liabilities, such as soil, groundwater or sediment contamination and/or landfill closure issues and non-compliances (i.e. CAPEX issues related to emissions minimization and/or materials storage upgrades) and to estimate costs associated with the findings. Traditionally it has not been standard practice to systematically screen ESG risks and opportunities prior to or during an M&A DD process so issues such as climate adaption, resource scarcity and energy security have previously been overlooked

However over recent years there has been growing pressure for investors to include the evaluation of non-financial risk when assessing the value of a potential acquisition. With many high-profile announcements, including that made by Blackrock in 2016, that “Investors can no longer ignore climate change. Climate factors have been under-priced because they have been perceived to be distant (problems)” Financial Times, September 6, 2016.

It is now acknowledged that ESG factors can and do have an important impact on the performance of an investment across its lifecycle, identifying both opportunities to reduce exposure to risk but also unlimited potential for value creation through securing the long-term operations and financial performance of an asset.  At Anthesis we believe that there is need and benefit to evolve the traditional EDD processes to ensure that assets are future ready by considering both traditional EHS and non-traditional ESG risks. Sustainability and shareholder value have a strong correlation. Therefore, going beyond the minimum by screening the ESG risks and opportunities prior to or during the initial stage of the M&A DD process is a win-win situation to both parties of the process.  At Anthesis we complement traditional EDD assessments with tailored ESG reviews. We provide sellers and buyers with both a view on traditional risk and liabilities as well as looking at value creation opportunities through the application of an ESG lens, associated with improved sustainability performance.

For more information about how Anthesis can support your business through the M&A process or to find out more about our services in this area please contact Satu Juntunen, or alternatively, use the form below.