Let's Go Beyond Business As Usual4 Jun, 2014 By: Sand Sinclair, Editor
A lot has been said about the trend to create a corporate culture policy that will affect, besides sales/profit/growth, some sustainability measures - for that company's corporate responsiblility for a more resilient organization as one that "cares" about the environment. Customers expect it, on some level. Today’s generation of forward-thinking leaders, focus on the environmental, social, and governance (ESG) aspects of their strategy more than ever before. Some believe that to build the “total” organization to present to clients and employees alike, it means having some interest in eco-presence or responsibility (cartridge returns/land fill/water/disposing of devices), besides “business as usual.”
While due diligence is often a fast-paced whirl, the stakes are such that ESG assessments can and should be built into diligence processes. At a minimum, buyers should look to unearth hidden ESG risks and liabilities buyers look to ESG strategies as a path toward value enhancement in a deal.
The deal market brings sustainability into sharp focus. It can present them in the form of a target that has built an ESG competitive edge that can be exploited or, conversely, one that lags its peers in ESG focus and so poses a risk to potential deal makers. And these factors can be difficult to measure. Indirect benefits and risks that derive from customer and employee relations, brand value and reputational standing must be evaluated along with the pure financial data. Deal professionals are taking note and are modifying their IPO, M&A and divestiture processes accordingly.
They lead their peers in eco-efficiencies that convert into cost synergies at the target and drop directly to the bottom line. Still others look for new, sustainable products and strategies that could lead to top-line value enhancement as well as improved standing with a variety of stakeholders. Consider an exploration and production company that invests in a renewable energy target. As a result of the deal, the company may gain indirect benefits, such as enhanced relationships with institutional investors, regulators, non-governmental organizations (NGOs), customers and local communities where they do business – in addition to direct cash benefits such as tax incentives and reduced operational costs. As a result of the deal, the company may gain indirect benefits, such as enhanced relationships with institutional investors, regulators, non-governmental organizations (NGOs), customers and local communities where they do business – in addition to direct cash benefits such as tax incentives and reduced operational costs.