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2024 ESG in M&A Trends Survey

Rising influence of ESG

Deloitte’s latest global survey explores the role of environmental, social, and governance (ESG) factors in merger and acquisition (M&A) activity. Across the marketplace and the deal life cycle, better data, better measurement, and a deeper understanding of ESG are shaping dealmaking agendas for M&A leaders.

ESG across the M&A marketplace

With growing awareness of the impact of environmental, social, and governance (ESG) factors on mergers and acquisitions (M&A) activity, leaders are better positioned than ever to realize its potential on deal-making, or deal-breaking. Organizations are increasingly considering ESG and finding new ways to incorporate relevant factors into their M&A strategies, as they are supported by the rise of available data and advancements in more precise, consistent measurement tools. In just two to three years, ESG has gone from a niche concern to a major player in the M&A game. 

In 2024, Deloitte conducted a survey of leaders at corporations with revenues of at least $500 million or PE funds of at least $1 billion in assets under management. The survey identifies an increase in confidence to evaluate a target company’s ESG profile, while also being prepared to discuss the organization’s own ESG profile, as 91% of respondents expressed a very high or high level of confidence, a notable 17% increase from 2022. Concerns about a target company’s ESG performance, also known as ESG red flags, are notably being considered to pause or end deal activity, with 72% of organizations saying they have decided not to proceed with an acquisition because of this, up from 49% in 2022. 

Despite ESG becoming a significant factor in M&A decisions in recent years, its influence varies by region and industry. The latest data found that companies in Europe and the Middle East experienced the highest operational impact from climate change, resulting in ESG playing a more significant role in M&A strategy in these regions, 64%, compared to 50% in APAC and 46% in North America. Financial services and life sciences and healthcare industries have been more focused on ESG in M&A pursuits, with 69% and 60% of survey respondents respectively, placing high importance on it.

Our 2024 report offers valuable insights on the significance of ESG in M&A transactions, emphasizing its growing importance in decision-making processes, and underlines the need for organizations to prioritize their own ESG profiles and those of their targets to ensure successful M&A transactions. 

Read the full report and find out how your business can understand the impact of ESG on M&A activity.

About the survey

Deloitte surveyed 500 leaders in January 2024 at corporations with revenue of at least $500 million or PE funds of at least $1 billion in assets under management. Not-for-profit and public-sector organizations were excluded, and our respondents were balanced between C-suite executives and senior- and mid-level managers. Ninety percent of respondents came from a corporate background, whereas PE leaders constituted 10%. Company size (in terms of annual revenue) was balanced while geographical representation centered on North America (34%), Europe and the Middle East (33%), and APAC (33%).

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