Environmental, Social and Governance (ESG) due diligence is an integral part of due diligence investigations for long-term profitable transactions. Successful transactions are based on more than just the analysis of financial figures, tax issues, or legal contracts. To gain a 360° view of a company, successful deal teams also leverage the benefits of analysing sustainability information. This enables them to better identify and manage risks, as well as identify value creation potential – both of which ensure long-term investment success. At the same time, careful ESG due diligence can also influence deal financing, deal pricing, deal contracts, and exit and post-merger integration strategies.

Why is ESG due diligence essential for deal teams?

Risk identification

Risks that could have financial or legal consequences and are not directly covered by other due diligence

Value creation opportunities

Identification of strategies to drive operational efficiency, competitive advantage, and long-term profitability

Post-merger integration costs

Anticipating sustainability-related expenses for a smoother post-acquisition transition

Negotiation leverage

Data-driven arguments for price and contract negotiations

Reputation and stakeholder trust

Helps strengthen relationships with stakeholders

Expanding access to financing/funding

Increasing information needs of banks and institutional investors to meet their own sustainability goals and regulatory requirements

Alternative financing options

Lower cost of capital through use of sustainability-linked debt

What does the ESG due diligence cover?

The sustainability issues we address in our ESG due diligence are tailored to the deal-specific circumstances and the needs of our clients. As a minimum, we cover sustainability issues that are increasingly requested as information by banks and insurance companies. Typical areas of focus include:

Environmental: climate change, energy and greenhouse gas emissions, physical climate risk, pollution, water withdrawal and consumption, biodiversity and ecosystems, circular economy

Social: Employee profile, health and safety, human rights

Governance: Board profile, corporate culture, sustainability governance, stakeholder engagement

What is our typical ESG due diligence process?

A typical ESG due diligence process is similar to a traditional financial due diligence process. We start with an initial data analysis of the documents provided, followed by further AI-assisted background checks and media analysis. This is followed by interviews with key personnel and optional site visits to verify sustainability standards. Finally, a comprehensive assessment is provided, along with the final report.

BDO is your partner for ESG due diligence

We are one of the world’s leading transaction advisors: Thanks to our in-depth expertise and global presence, we consistently rank among the top transaction advisors in leading rankings

We act in a risk- and opportunity-oriented manner: ESG risks are identified and value creation potential is highlighted at the same time

We are pragmatic and transaction-oriented: Our ESG due diligence is tailored to the specific situation of the company and the needs of the deal team

We have a proven track record: Strategic investors, private equity firms, and financial institutions trust us - in Germany alone, we are involved in around 100 transactions per year

We are one of the leading one-stop shops on the market, offering all the necessary due diligence services

ESG Due Diligence

Why is ESG due diligence essential for deal teams?

What does the ESG due diligence cover?

What is our typical ESG due diligence process?

BDO is your partner for ESG due diligence

Further due diligence topics:

Due Diligence

Vendor Due Diligence

Compliance Audit

Financial Due Diligence

Commercial Due Diligence

Real Estate Due Diligence

Environmental Due Diligence

Our team of IT due diligence experts