ESG considerations are being given increased importance in deals, as a survey found that over half of Mergers and Acquisitions Specialists (M&A) cancelled deals due to findings from ESG reports.
Nearly two-thirds of investors also said they would “pay a premium” for companies aligned with their ESG priorities, according to the KPMG study.
For the study, KPMG surveyed 200 U.S. ESG practitioners including corporate investors, financial investors, and M&A debt providers.
M&A specialists are already integrating ESG into their considerations, with the identification of ESG risks and opportunities given as the top reason for conducting ESG due diligence. Almost 20 percent of respondents said ESG was a requirement by investors.
“The data speaks loud and clear: Companies and investors are increasingly integrating ESG considerations into their M&A strategies, not only because it’s the right and responsible thing to do but also because of the value implications of ESG,” KPMG U.S. ESG and Climate Services Leader Mark Golovcsenko, said.
The survey examined the potential impacts of findings in the ESG due diligence process, with more than half of respondents indicating that red flags on ESG could be a deal stopper (51%).
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