According to KPMG’s study, more and more company acquisitions are preceded by ESG due diligence

By: Trademagazin Date: 2024. 09. 06. 08:50

According to the latest research by KPMG International, despite economic and geopolitical challenges, ESG (environmental, social and governance) aspects are playing an increasingly important role in corporate due diligence prior to acquisitions and mergers (M&A) worldwide. The global body’s annual ESG Due Diligence study, now in its third year, shows that ESG priority has increased over the past year and a half, despite a slowdown in the takeover market in many countries due to higher interest rates.

More than 600 active business decision-makers shared their views in KPMG’s research, providing valuable insight into how leading investors and advisors are tackling the practical challenges of ESG due diligence. In the first study of 2022, it became clear that business professionals have practical difficulties in managing ESG aspects, despite the increasing importance they attach to them in due diligence. According to this year’s global report, 70% of business decision-makers have already reported an increase in the importance of ESG due diligence in the last 12-18 months. Five out of four respondents said that ESG aspects in a broader sense are already specifically included in their list of tasks compiled in connection with company acquisitions – this proportion was only 74% in 2023. This increase occurred despite the fact that acquisition activity has decreased, and in some countries there are political discussions about the assessment of ESG.

Looking ahead, more than half of business decision-makers (57%) said that they expect to carry out ESG due diligence in the course of most of their transactions in the next two years. Only 6% clearly stated that they do not plan this type of vetting in the future.

“In the case of domestic sales transactions, ESG due diligence is still relatively rare on a dedicated basis, but there have been more and more examples of it in the recent past”

– said Ágnes Rakó, KPMG’s partner responsible for ESG services.