There is growing evidence that environmental, social, and governance (ESG) factors have a significant impact on business performance, and the speed at which these factors are becoming material is rapidly accelerating.

This is driven by enhanced ESG data, society's evolving expectations (due to increased awareness), and the growing influence of investors who are incorporating ESG into their core due diligence processes.

As a result, ESG has become a critical factor in the Mergers & Acquisitions (M&A) landscape.

Shareholders and stakeholders now more than ever expect companies to prioritise sustainability, act responsibly, with inclusiveness and diversity, while contributing to global environmental goals. Negative incidents such as human rights violations, environmental damage, and other ethical breaches can have a significant impact on a business's reputation and financial performance.

As ESG considerations become increasingly important to stakeholders and shareholders, they present both financial and reputational risks in the context of M&A transactions. Investors are thus paying more attention to tracking and improving ESG metrics to recognise the value it brings.

This article explores the impact of ESG on the M&A process and its growing influence on valuation and investor considerations. Download the full article here.