Newsletter

In conversations with corporate clients we often point out three important factors driving their sustainability journey: (1) the steady increase in investor interest in corporate ESG performance; (2) internal stakeholders pressuring their employer to start or enhance the journey, and (3) competitive forces as peer companies in their respective industries or sectors enhance their ESG efforts. 

Here’s another force for corporate boards and C-suites to now consider: in this year’s Deloitte survey of corporate leaders and M&A leaders examining key trends in M&A and private equity (PE), ESG is in sharper focus. In the introduction, Deloitte states:

“Across the deal life cycle, better data, improved measurement, and deeper understanding of ESG are key factors shaping dealmaking for M&A leaders. The results of our 2024 ESG in M&A trends survey show a bold embrace of the role of ESG in M&A strategies that seize opportunity and create additional value.” 

According to the findings of Deloitte’s survey, which is our Top Story below, corporate and private equity (PE) leaders have a growing appreciation for the ways that ESG factors can drive value.

The annual survey that began in 2022 is supervised by Sarah Corrigan, Managing Director of MYA and Restructuring Services, and Brian Lightle, Deloitte Partner overseeing M&A Transaction Services. Highlights of the 2024 survey include:

• The growing proliferation of accurate, reliable, comparable ESG data, and more comprehensive ways of parsing the data, is helping in assessing valuations, portfolio management, and strategic targeting in M&A practices.

• Being able to have more confidence in ESG profiles and better understanding of the acquirer’s own ESG profile can provide more confidence in the transaction being considered. (From the first survey conducted in 2022 to the 2024 results, survey respondents reported now have a “very high” or “high” confidence, moving to a 91 percent level in 2024.)

• While the consideration of ESG factors in transactions is low (the percentage of M&A leaders having a dedicated approach for management of ESG factors is only 12%), 19% see ESG as now important in the regulatory context. Financial services organizations lead in adopting ESG approaches and PE respondents are working to address ESG factors. 

Respondents told Deloitte that while consideration of ESG factors in M&A activities can drive the process, the approach can also help acquirers build and enhance their own ESG strategies and goals. What ESG data should an acquirer look at in their analysis of the target? Start with a better understanding of the organization’s own ESG data.

According to Deloitte: ESG in M&A strategy is becoming a rationale to influence which deals to seek; 74% of companies say they have looked at possible targets while considering their own portfolios or their own investments from the ESG perspective; 67% says the same about their divestiture strategies.

At G&A Institute our team isr assisting our corporate clients enhance their ESG profiles as they set their respective acquisition, divestiture, or exit strategies. This is now another key driver for addressing risk and opportunities through increasing focus on a firm’s sustainability journey. 

Top Story

• The increasingly vital role of ESG in M&A: Insights from our 2024 ESG in M&A trends survey (Deloitte)

Sustainability Standard Setters & Policy Makers

SEC, SASB, GRI, IIRC, FSB-TCFD

• Finalization of Three EFRAG ESRS IG Documents (EFRAG)

• IFRS, GRI Collaborate on Interoperability for Sustainability Disclosure Standards (ESG Today)

• Concrete and significant step': European Council formally adopts sweeping corporate due diligence rules (Business Green – subscription required)

• California proposes $22 million for climate disclosure law (GreenBiz)

ESG / Sustainable & Responsible Investment

Asset Owners & Managers, Ratings Agencies

• Nearly Half of Sustainability-Labelled Funds May Have to Change Names to Meet New EU Anti-Greenwashing Rules: Clarity AI (ESG Today)

• Investors Increasing Focus on Climate Solutions and Transition Strategies: Robeco Survey (ESG Today)

• Shell investors back oil major’s move to weaken climate targets (Financial Times – subscription required)

Corporate Sustainability / ESG

Disclosure, Reporting, Corporate Initiatives

• Google Announces First Renewable Energy Deals in Japan (ESG News)

• How getting ahead of ESG regulations can be a major competitive advantage (Fast Company)

• 80% of Companies See Sustainability as a Potential Revenue, Profitability Driver: Morgan Stanley Survey (ESG Today)

Stakeholders That Matter

Developments, Trends, Corporate Actions Affecting Stakeholders

• Simple food swaps could cut greenhouse gas emissions from household groceries by a quarter (Science Daily)

• Investors push for more disclosure on corporate lobbying (GreenBiz)

• Vermont becomes first state to require oil companies to pay for climate change damage (The Hill)

Global Sustainability News: Forward Momentum!

News & Developments of Note

• Half of world's mangroves under threat, says conservation group (Reuters)

• Qatar Sells First Eurobond in Four Years, Debut Green Deal (Bloomberg – subscription required)

• Coffee traders speed up shipments before EU deforestation law, says ICO (Reuters)

Sustainability Data in Focus

Developments in Data, Research, Trends

• FRS Says Over Half of Global Economy Moving Towards Coverage by ISSB Sustainability Reporting Standards (ESG Today)

• Solar hits above its weight in powering US energy transition (Reuters)

• Majority of Lawyers Expect SEC’s Climate Disclosure Rule Will Not Survive Intact: Bloomberg Survey (ESG Today)

U.S. Climate Actions

Updates from and about Washington D.C.

• US unveils policy to boost carbon offset market integrity (Reuters)

• White House and 21 states to announce grid modernization program (The Hill)

• Biden administration ends solar tariff exemption (The Hill)

Eyes on Europe

ESG Regulations

• Biosolutions: Strengthening Europe’s sustainability, resilience, and competitiveness (Euractiv)

• Europe unprepared for climate disaster, warns World Bank (Euractiv)

• Build climate resilience in cities using nature-based solutions, say conservation experts (Euractiv)

These feeds are provided for G&A Institute in partnership with 3BL. 3BL distributes press releases, blogs, videos, podcasts, reports, newsletters and more to the growing audience of stakeholders interested in Corporate Social Responsibility (CSR) and Sustainability. Visit 3BL.com for more.

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