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1、2022 EMA ESG Due Diligence StudyHow leading M&A teams are managing ESG DDhome.kpmg/esg-dd November 2022 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.ForewordDear readers,Sustainability has become

2、 one of the defining megatrends affecting businesses worldwide.And the M&A world is no exception to the rule.Across sectors and around the world,more and more deals are starting to be influenced by sustainability criteria.Targets with strong sustainability stories(and the data to back it up)are enjo

3、ying price premiums.And M&A teams are increasingly conducting Environmental,Social and Governance(ESG)due diligence(DD)on targets at an early stage.To find out what this means for dealmakers across Europe,the Middle East and Africa,we surveyed more than 150 active dealmakers across the region.We ask

4、ed them what works,what doesnt work and what challenges they face going forward.We discussed various models for embedding ESG into DD.And we asked them to share their advice and insights based on their experience.What we found was little consensus around what ESG DD actually means.Dealmakers are div

5、ided about how best to incorporate ESG DD into their existing due diligence frameworks.ESG DD work is often underfunded.And ESG DD is not always aligned to the organizations overall ESG strategy.Yet the data also suggests that dealmakers have made this area a key priority.And they are determined to

6、see how ESG DD can not only help identify and manage potential risks,but also identify significant financial upside driven by ESG transformation.The importance of getting ESG DD right has never been clearer.In this report,we explore the findings of our survey and one-on-one interviews with dealmaker

7、s.Leveraging insights gained from KPMG firms experience in ESG and due diligence,the authors offer some tips and advice to help dealmakers evolve and mature their ESG DD capabilities.And we share some practical examples from KPMG firms work in the area.We hope this report provides EMA dealmakers and

8、 strategy leaders with new ideas and motivation to drive forward their ESG DD capabilities.To learn more about the topics raised in this report or to discuss your organizations unique ESG DD situation we encourage you to contact any of the KPMG professionals listed at the back of this report.To find

9、 out what ESG DD means for dealmakers across Europe,the Middle East and Africa,we surveyed more than 150 active dealmakers across the region.022022 EMA ESG Due Diligence StudyHow leading M&A teams are managing ESG DD 2022 Copyright owned by one or more of the KPMG International entities.KPMG Interna

10、tional entities provide no services to clients.All rights reserved.Summary of key findingsSomething exciting is happening at the nexus of M&A and ESG.Dealmakers are actively integrating ESG considerations into their deal activities.Investors across the board are ramping up their ESG due diligence ef

11、forts.And premiums are being paid for targets that meet ESG priorities.Dealmakers see the financial value and potential uplift opportunities that can be achieved by understanding a targets ESG-related performance at an early stage of the transaction process.Read Chapter 1 to learn more.However,there

12、 are still major challenges faced by ESG DD practitioners.Specifically,there appears to be no market consensus around what a standard ESG DD scope would include,as practitioners struggle with the breadth of the term“ESG”.And targets arent always able to provide quality data or documentation.As such,

13、practitioners can often struggle to quantify their findings and related financial impacts or value creation opportunities.Read Chapter 2 to learn more.Nonetheless,there are clear indications of“what good looks like”.Mature ESG DD practitioners are making a strong link between their overarching corpo

14、rate sustainability strategy and their ESG DD procedures.They are connecting their ESG DD findings to post-closing actions.And they are focused on value creation opportunities(i.e.“upsides”)rather than just mitigation of risks.They are also more likely to mandate a dedicated ESG DD workstream,as opp

15、osed to a“fragmented”model where“E”,“S”,and“G”topics are handled by separate workstreams.Financial investors appear to be somewhat ahead of the curve in terms of ESG DD maturity.Read Chapter 3 to learn more.The immediate priorities for dealmakers are becoming clear.First,dealmakers need to understan

16、d their companys ESG strategy and identify the areas that are truly material.This can help them break through the complexity caused by the breadth of the term ESG.Second,they need to develop a“blueprint”for their ESG DD approach,both in terms of intellectual framework as well as in terms of organiza

17、tion(dedicated workstream vs.fragmented workstream model).This will require ensuring proper budgets and resources are in place to deliver on these objectives.Read Chapter 4 to learn more.Help is at hand.While the field of ESG DD continues to evolve,practitioners should look to leaders and other rela

18、tively more mature sectors to uncover new ideas and approaches to ESG DD.Dealmakers may also want to consider leveraging the experience of outside advisors and practitioners to not only ensure a robust DD process,but also to help share insights and knowledge as the ESG DD framework evolves.Read Chap

19、ter 5 to discover how KPMG firms can help.032022 EMA ESG Due Diligence StudyHow leading M&A teams are managing ESG DD 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.ContentForeword 02Summary of key

20、 findings 0301.Something exciting is happening 05Sustainability is changing the strategic environment 05ESG is on the agenda of most dealmakers 05Investors are willing to pay more for a sustainable target 06ESG DD is on the rise 07Investors believe in the value of ESG DD 0802.There are still major c

21、hallenges to be solved,however 09Challenge#1:Agreeing on terminology and scope 09Challenge#2:Securing the right data from the target 12Challenge#3:Quantification of findings 1203.What does best practice look like?13Action#1:The leaders conduct ESG DD on every transaction 13Action#2:The leaders link

22、their ESG DD approach to the overall corporate ESG strategy 14Action#3:The leaders link their ESG DD to clear post-closing actions 15Action#4:The leaders look beyond risks to find value 16Action#5:The leaders are clearly defining their DD workstreams 17Action#6:The leaders are securing appropriate r

23、esources to be effective 18Action#7:The leaders are continuously improving their approach 1904.What should dealmakers do?22Step#1:Establish link to corporate sustainability strategy 22Step#2:Develop your framework 22Step#3:Secure appropriate resources 22Step#4:Implement&improve 2305.How KPMG can hel

24、p 24About the study 25Authors&Contacts 26042022 EMA ESG Due Diligence StudyHow leading M&A teams are managing ESG DD 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.01Something exciting is happening

25、Sustainability is changing the strategic environment Sustainability has become a defining megatrend affecting businesses worldwide.This is particularly true of the EMA region,where the EUs Green Deal and other regulatory initiatives are pushing ESG to the top of the corporate strategy agenda.At the

26、same time,companies face pressure from their employees and customers who want to work for,and purchase from,organizations that reflect their expectations around sustainability.And they are hearing from their investors who are starting to ask increasingly tough questions as they seek to understand an

27、d quantify Figure 1:Are ESG considerations currently on your M&A agenda?82%14%4%YesNoI dont know/prefer notto answer052022 EMA ESG Due Diligence StudySomething exciting is happeningSource:KPMG EMA ESG Due Diligence Study(2022)risks and opportunities of their portfolios in a fast-changing business en

28、vironment.In sum,these developments amount to a significant change in the strategic environment companies in the EMA region operate in,driving corporate leaders to recalibrate their strategy.The M&A world is clearly not immune from these pressures.M&A has long been a vital strategic tool in the corp

29、orate strategists toolbox,used in times of disruptive change be it to accelerate entry into emerging markets,to diversify away from markets with diminishing attractiveness or to close key capability gaps.Historically,M&A waves often occurred during times of fundamental regulatory or technological ch

30、anges,as companies scrambled to capitalize on new market opportunities or to mitigate emerging risks.Our view suggests that the rise of sustainability as a disruptive factor in a companys strategic environment could have a similar catalytic impact on M&A activity going forward.In this context,KPMG p

31、rofessionals surveyed over 150 active dealmakers across Europe,the Middle East and Africa(“EMA”)to understand how environmental,social and governance(ESG)factors affect their deal-making activities.In addition,they held in-depth conversations with senior dealmakers in eight countries in the region.T

32、he results of these interactions clearly show that,indeed,something exciting is happening at the nexus of M&A and ESG.ESG is on the agenda of most dealmakersDealmakers recognize the importance of ESG.In fact,four out of five dealmakers in our survey say that ESG considerations are now on their M&A a

33、genda(see Figure 1).Yet what this means in practice differs from investor to investor.Each company will look at ESG from a different context and at a different stage of maturity.Some are at an early stage of assessing the issue.“Im quite sure that the current ESG trends will impact our deal processe

34、s.But Im not quite sure how yet,”admitted one business development manager at a life sciences organization.Others have started to seek alignment between their companys overarching ESG strategy and its DD procedures.“One of my tasks right now is to link our corporate ESG strategy to the M&A strategy

35、and processes,”said an industrial manufacturing M&A manager.“We are identifying the main pillars of our ESG strategy and determining what they mean for our deal process.”Many of those that are further ahead say they are focused on operationalizing this alignment.“Were developing a standard ESG due d

36、iligence questionnaire,”noted an investment director at a European chemicals company.“Going forward,we want to enter into an annual dialogue with management about our targets,post-closing goals and milestones.”As the data suggests,dealmakers are highly focused on integrating ESG factors into dealmak

37、ing activities.And many are now working along a journey to achieve that.Investors are willing to pay more for a sustainable targetAnd whats more:Dealmakers arent just talking about wanting sustainable investments.They are ready to put extra money on the table to secure those investments.More than tw

38、o thirds of respondents said that they would be willing to pay a premium for a target that demonstrates a high level of ESG maturity in areas that align to their ESG priorities.Half of all respondents said that premium would be between 1%and 5%(see Figure 2).Almost one-in-five said they would pay a

39、premium of 5 percent or more.Figure 2:As a buyer,how much would you be willing to pay more for a target that demonstrates a high level of ESG maturity in line with your ESG priorities?32%50%15%3%0%no premium1-5%premium5-10%premium10%premium062022 EMA ESG Due Diligence StudySomething exciting is happ

40、ening 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Source:KPMG EMA ESG Due Diligence Study(2022)2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities

41、provide no services to clients.All rights reserved.Rarely(0-20%)Figure 3:How frequently did you/do you expect to involve an ESG DD on your deals?Very frequently(80%)Occasionally(20-50%)Frequently(50-80%)Never(0%)Historically(past 2 years)16%16%15%28%25%Going forward24%11%12%5%48%Source:KPMG EMA ESG

42、Due Diligence Study(2022)Why are investors willing to pay more for a sustainable target?Most believe that there is a positive long-term correlation between sustainable business practices and financial returns.“We believe sustainability is good for business,”noted the head of M&A at an industrial man

43、ufacturing company and added:“We see good performance on ESG as a proxy for good management.And we know that good management drives the financial value of a company.”Or,in the words of a partner at a PE fund:“ESG helps us reduce the beta risk the systemic risks of our investments”.ESG DD is on the r

44、iseExpect ESG due diligence to become much more commonplace in dealmaking.The survey results indicate that investors are looking to significantly increase their use of ESG DD.The number who expect to conduct ESG DD very frequently is set to nearly double.The share of dealmakers who dont plan to cond

45、uct any ESG DD will fall from 28 percent to 5 percent going forward(see Figure 3).This means that the pool of ESG DD practitioners will grow,which in turn will drive market maturity.For buyers,this is good news,as ESG DD procedures are likely to mature quickly over the coming months and years.For se

46、llers,it means that increasing levels of scrutiny from buyers must be expected even for assets and dealmakers that may historically not have been subject to stringent ESG DD enquiries.072022 EMA ESG Due Diligence StudySomething exciting is happening 2022 Copyright owned by one or more of the KPMG In

47、ternational entities.KPMG International entities provide no services to clients.All rights reserved.Investors believe in the value of ESG DDAnd finally,ESG DD isnt just performed because dealmakers have to(e.g.due to regulation or stakeholder pressure).The top reason mentioned by the survey responde

48、nts was that they believe in the monetary value of identifying risks and upsides related to sustainability at the pre-signing stage(see Figure 4).“I have not seen one single company that is poor on ESG matters and has been sustainable over time,”argued one PE fund partner.“We are convinced that ESG

49、is a key operational performance indicator,”he added.A head of M&A of an industrial manufacturing company explained that they had“learned in practice that ESG-related problems will come around to impose a cost on the business at a later stage.”A range of other motivations also play a role in driving

50、 demand for ESG DD.Many suggest it can help them better respond to regulatory requirements in areas such as reporting(e.g.SFDR1).Others suggest it is a requirement of their internal corporate policies or from investors or debt providers.Many fund managers also see ESG as a key differentiator with cl

51、ients.“We see ESG as being of primary importance in fund raising.It helps us distinguish us from other organizations,”explained an ESG leader at an infrastructure fund.Such ESG-funds then naturally need to ensure that its investments fall in line with the funds ESG-related priorities and ESG DD is a

52、 key tool to achieve that outcome.082022 EMA ESG Due Diligence StudySomething exciting is happening1 SFDR refers to the EUs“Sustainable Financial Disclosure Regulation”,a landmark legislation related to ESG disclosures of asset managers and other financial market participants,effective since 10 Marc

53、h 2021.For more information,see:What is the SFDR?Sustainable Finance Disclosures-KPMG Ireland(home.kpmg)Figure 4:Why have you conducted/are you going to conduct ESG DD on your deals(multiple choice)?0(0%)5(6%)We believe in the monetary value of identifying risks and upsides related to sustainbiltiy

54、pre-signing54(65%)33(75%)1(13%)88(65%)We believe that by conducting ESG DD,we are better able to respond to regulatory requirements in areas such as reporting(e.g.SFRD)35(42%)28(64%)1(13%)64(47%)Our corporate policy requires it as a matter of standard27(61%)2(25%)56(41%)Our investors are requiring u

55、s to conduct ESG DD on deals19(23%)30(68%)53(39%)Our debt-providers are requiring us to conduct ESG DD on our deals14(17%)10(23%)27(20%)Our financing products are designed for ESG as dedicated ESG funds7(16%)5(6%)0(0%)12(9%)Other1(2%)6(4%)Our deal insurance provider is requiring it2(2%)1(2%)0(0%)3(2

56、%)27(33%)4(50%)3(38%)TotalCorporate investorsFinancial investorsIndependent board members&advisorsSource:KPMG EMA ESG Due Diligence Study(2022)2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.02There

57、 are still major challenges to be solved,howeverAs ESG DD is becoming more common and as dealmakers enhance their maturity around ESG-related issues,several challenges and complexities remain to be solved.Challenge#1:Agreeing on terminology and scopeFirst and foremost,the term“ESG Due Diligence”suff

58、ers from a similar degree of confusion as the term“ESG”often does on a broader scale beyond just deals.“The term ESG is vast,complicated to define and to fulfill,”noted one PE fund sustainability director.Or,as a chief sustainability officer of another PE fund noted:“I do not like the term ESG.I do

59、not discuss ESG matters.I try to find key areas that will have an impact on the company,which naturally cover the E,the S and the G but these are not necessarily labeled as ESG.”In our view,the reason for this confusion lies in the inherent broadness of the term“ESG”.The term co-mingles a multitude

60、of distinct topics under each of the respective letters that are quite different in their nature.For example:“E”could include topics like greenhouse gas emissions,climate change,biodiversity,soil contamination,water contamination,air pollution,the protection of marine resources,etc.“S”brings togethe

61、r topics like living wages,child labor and human rights in the supply chain,diversity and inclusion,data security and privacy,social practices,product labelling,etc.“G”relates to topics like anticorruption,business ethics,anticompetitive behavior,responsible tax records,whistleblower mechanisms,etc.

62、Clearly,not all these topics are equally applicable to all targets and transactions.092022 EMA ESG Due Diligence StudyThere are still major challenges to be solved,however 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to client

63、s.All rights reserved.To cut through this complexity,mindful upfront scoping is paramount.Yet,this is a step that many investors are struggling with.The survey results indicate that selecting a meaningful,yet manageable scope is the number one challenge faced by ESG DD practitioners(see Figure 5).“T

64、he basic problem with ESG DD is understanding what to look at in the first place,”admitted one industrial manufacturing M&A leader.To better understand the depth of this challenge,survey participants were asked to rate a set of twenty potential ESG DD scope items according to:(a)Whether they are imp

65、ortant at all and(b)if so,whether they should be included in an ESG DD workstream or in another workstream such as environmental DD,HR DD,tax DD,legal DD,etc.The results(shown in Figure 6)show that:While the respondents agreed that all 20 items are important to some degree,there is no clear market c

66、onsensus on whether they should be part of an ESG DD or not.Specifically,for 16 of the 20 items,only 40-60%or respondents agreed that they should be part of an ESG DD product.Some degree of consensus(70%)can be seen only on three topics:-Climate-related matters generally appear to be viewed as belon

67、ging in a ESG DD product(e.g.a targets understanding of its climate related-risks,as well as its own carbon footprint and the presence of a credible decarbonization plan)-There was similar consensus that issues such as tax transparency and cybersecurity may belong in other workstreams(presumably tax

68、 and IT,respectively).102022 EMA ESG Due Diligence StudyThere are still major challenges to be solved,howeverFigure 5:What are the key challenges you have encountered,or you expect to encounter in conducting ESG DD (multiple choice)?Selecting a meaningful,yet manageable scope,considering the breadth

69、 of ESG5(63%)48(57%)25(48%)78 (54%)4(8%)Difficult to quantifying potential findings4(50%)37(44%)30(58%)71 (49%)Lack of robust data or written policies of allegedly followed practices at the target4(50%)38(45%)29(56%)71 (49%)Lack of common understanding of what“ESG DD means”between us,the target,and/

70、or other parties in the process(e.g.,advisers,banks,lawyers)22(26%)11(21%)35 (24%)Dont know how to approach ESG DD(no framework,limited experience available in-house)2(25%)11(13%)18 (13%)Low level of knowledge/training/common terminology in our own organizationDifficult to find a knowledgeable advis

71、er0(0%)9(11%)5(10%)14 (10%)Encountered no serious challenges2(2%)6 (4%)Difficult to find relevant benchmarks1(1%)1(2%)2 (1%)2(25%)5(10%)2(25%)12(14%)18 (13%)4(8%)0(0%)0(0%)TotalCorporate investorsFinancial investorsIndependent board members&advisorsSource:KPMG EMA ESG Due Diligence Study(2022)2022 C

72、opyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Important and should be part of ESG DDImportant,but should be part of another DD work streamUnimportant in the context of my dealsDont knowClimate a targets

73、 understanding of its carbon footprint,science-based decarbonization targets and a credible decarbonization plan69%15%12%4%Climate a targets understanding of its exposure to climate change related risks68%14%14%5%Contamination risks from soil or groundwater contamination59%27%13%1%Waste&resource eff

74、iciency maturity of a targets waste&resource management practices58%21%18%3%ESG controversy screening whether the target has had any controversy that may impact their ESG performance and wider reputation58%23%10%9%Link to business strategy degree to which ESG considerations are embedded in a targets

75、 strategy and business model(e.g.,whether to play in a certain product category,geography,etc.)54%30%11%5%Regulation-a targets understanding of existing or emerging sustainability-related regulation relevant to its business53%34%11%2%Certifications&ratings degree to which the target has obtained wel

76、l-recognized sustainability certifications&ratings52%27%18%3%Governance a targets sustainability-related governance structures(e.g.,management roles&responsibilities,link to executive pay,etc.)51%33%12%4%EHS strength of a targets employee health&safety records and policies50%39%8%3%Labor practices s

77、trength of a targets labor policies and practices(e.g.,human rights,living wages,modern slavery,child labor)47%41%11%1%Diversity&inclusion strength of a targets Diversity&Inclusion policies and performance44%30%23%3%Product safety strength of a targets product safety records and policies44%47%7%3%Bi

78、odiversity a targets understanding of its impact and dependency on biodiversity,related targets and action plans43%17%30%10%Corruption strength of a targets anti-corruption policies and processes42%49%7%2%Materiality whether a target has a robust understanding of its material areas41%39%11%9%Data&sy

79、stems maturity of a targets ESG data,systems,and processes41%34%21%4%Compliance degree to which a target has mature compliance processes and a strong compliance record40%55%3%2%Tax transparency degree to which company makes use of aggressive tax planning;risks of tax avoidance/evasion;non-regulatory

80、 disclosure of tax-related information24%71%3%2%Cybersecurity strength of a targets cybersecurity policies and track record23%70%3%4%Figure 6:In your view,which are the key sub-areas of sustainability that an ESG DD work stream should make enquiries about?Source:KPMG EMA ESG Due Diligence Study(2022

81、)112022 EMA ESG Due Diligence StudyThere are still major challenges to be solved,however 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.In KPMG firms experience a meaningful scope of an ESG DD need

82、s to be defined on a case-by-case basis,considering the sector,size and maturity of the target,as well as the investors sustainable investment strategy.We will elaborate on this in Chapter 3.Challenge#2:Securing the right data from the targetDealmakers say they are struggling to gather the relevant

83、data and documentation of allegedly followed ESG practices at a target,making it difficult to assess the relevant areas in a fact-oriented manner(see Figure 5 above).On a positive note,this situation should be expected to gradually improve in the near future,as many companies are required by regulat

84、ion to measure and report on many aspects of sustainability in a more standardized and transparent manner2.Indeed,as the recent KPMG global Survey of Sustainability Reporting 2022 has shown,sustainability reporting is adopted at fast rates across the globe3.However,in the meantime,dealmakers need to

85、 find solutions to this challenge.For many,the absence of sufficient data or documentation is a relevant finding in itself,suggesting the existence of potentially undiscoverable risks or an overall lack of ESG maturity of a target.Additionally,KPMG firms are seeing buy-side practitioners start to be

86、come more creative in the way they find and assess target data.For example by:Making use of innovative data and analytics tools,such as internet scrapers,which can be used to screen large amounts of external data for ESG-related controversies in connection with a target Making use of some of the met

87、hods typically applied in other DD workstreams where reliable documentation is rare for example,Commercial Due Diligence workstreams regularly speak to large numbers of customers,suppliers,or competitors to fact-check alleged characteristics of the targets product or service.The same could be done t

88、o sanity-check certain claims of management with regard to ESG;e.g.launching a survey or interview program with(ex-)employees,suppliers,or customers to fact-check whether indeed the target is perceived as having acted as described orally by management Where there are gaps in documentation,discuss wi

89、th management about why these exist and what it would take to close them in many cases,they exist because a target is still developing on a particular matter,and in certain cases such a gap can turn out to be a potential source of value creation post-closingAt the same time,sell-side advisors should

90、 take note.If buyers struggle with proper target documentation,this is an opportunity for sell-side advisors to create additional value by properly documenting(and ideally improving)a targets ESG-related performance in advance of a sales process an activity that KPMG firms still do not see embedded

91、into standard sell-side vendor assistance services frequently enough.Challenge#3:Quantification of findingsEven in situations where the scope of the ESG DD is clear and reliable target data is available,dealmakers often struggle to quantify their findings and assess the financial impact on the deal(

92、see Figure 5 above).In large part,this reflects challenges in obtaining readily available,fit-for-purpose benchmarking data.Once again,such data should be expected to become more readily available in the near future due to the increase in public reporting described above.In fact,there is already a d

93、ynamic landscape of start-ups focused on addressing this need in the market.However,in some instances,even if a relevant benchmark can be found and if a target turns out to be“below par”or“above par”,it can still be difficult to quantify the potential financial deal impact of such performance on a s

94、pecific ESG-related factor.As one senior ESG industry practitioner noted:“Lets say I find out that a target company has not been paying up for all its carbon certificates.I can probably quantify the financial risk this may cause.But if I find that the targets management team is somewhat lagging in i

95、ts diversity and inclusion whats the financial impact of that on a deal?How much less should you pay for a few percentage points of lower D&I?”One workaround KPMG firms see applied in practice is to quantify such gaps by estimating the expected costs to bring a target up to the level expected by the

96、 investor.Taking the D&I example from above,the investor could consider which particular skills and profiles are missing in the targets management team and how much it would cost to re-shuffle the team accordingly in the post-closing phase.2 For example,EU legislation such as the Corporate Social Re

97、sponsibility Directive(CSRD)or the EU Taxonomy.For further information on these acts,see Corporate Sustainability Reporting Directive The CSRD KPMG Ireland(home.kpmg)and EU Taxonomy disclosures setting a baseline-KPMG Ireland(home.kpmg)3 According to the KPMG Survey of Sustainability Reporting 2022,

98、sustainability reporting rates among the Top 100 companies in terms of revenues across the 58 geographies worldwide have climbed from 64%to 79%in the past decade.For further information see:Big shifts,small steps KPMG Global(home.kpmg)122022 EMA ESG Due Diligence StudyThere are still major challenge

99、s to be solved,however 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.03What does best practice look like?This survey and KPMG firms experience highlight seven key actions that the more mature deal

100、making teams are taking with the aim of achieving real value from their ESG DD processes.Action#1:The leaders conduct ESG DD on every transaction The first recommendation is as basic as it is important:If an investor indeed believes ESG-related factors are a source of either risk or value,then ESG D

101、D should be performed on transactions as a matter of standard.The survey shows that ESG DD is impactful.For example,consider the responses shown in Figure 7.It shows that those investors who performed ESG DD more frequently were more likely to say they had unearthed material findings.Conversely,inve

102、stors who performed ESG DD less frequently were more likely to say that they hadnt uncovered any material findings or,perhaps more worryingly that they didnt know whether they had identified any material findings in the past.The consequences of these material findings can be significant(see Figure 8

103、).More than half of the respondents suggested some material findings could be a deal stopper.A similarly high share of respondents said that ESG DD findings can result in a need to request an additional representation,warranty or indemnity from the seller,a need to reduce the value of their bid,or a

104、 need to change the deal structure,timeline or closing conditions.In other words:ESG-related findings have the potential to derail a deal.Consider the sidebar for a real-life example of a deal derailed by an ESG-related issue.A case in point Consider the example of an industrial manufacturing compan

105、y in the Nordics where an ESG-related finding resulted in a deal stopper.This company had identified a target in the same industry for a bolt-on acquisition.Since the industry involves significant indirect sales,the investor wanted to put particular focus on the targets business ethics and bribery-r

106、elated processes and practices as part of their ESG DD.During the DD phase,indications of kickback payments were discovered.Upon making this finding,the investor gave the target an opportunity to improve performance but when meaningful changes were not effectively made over the next year,the investo

107、r walked away from the deal.132022 EMA ESG Due Diligence StudyWhat does best practice look like?YesI dont knowNoRespondents who do ESG DD rarely(0-20%)0408020601009%9%23%60%25%17%29%29%30%30%30%10%Respondents who do ESG DD occasionally(20-50%)Respondents who do do ESG DD frequently(50-80%)Respondent

108、s who do ESG DD very frequently(80%)Figure 7:Have you ever had a material finding in an ESG DD that has had a significant deal implication(by frequency of conducting ESG DD)?Source:KPMG EMA ESG Due Diligence Study(2022)2022 Copyright owned by one or more of the KPMG International entities.KPMG Inter

109、national entities provide no services to clients.All rights reserved.Figure 8:What consequences did those material findings have/could such material findings have for you(multiple choice)?Financial investorsIndependent board members&advisors69%68%Deal stopper69%64%Request for an additional represent

110、ation,warranty,or indemnity from the seller58%66%Reduction of valuation73%58%Change of deal structure/timeline/closing conditions35%11%Impact on post-signing integration prioritiesNo significant impact,neither on pre-signing negotiations nor on post-signing prioritiesChange of deal scope100(66%)97(6

111、4%)93(62%)92(61%)29(19%)4(3%)1(1%)Corporate investorsSource:KPMG EMA ESG Due Diligence Study(2022)Clearly,the only way to make these consequences actionable is by uncovering ESG-related issues during the pre-signing phase.And this can only happen if systematic ESG DD is performed.Those investors who

112、 forego ESG DD processes do so at their own peril.Action#2:The leaders link their ESG DD approach to the overall corporate ESG strategyAs part of the survey,dealmakers were asked how mature their ESG DD approach is overall.Additionally,they were asked to comment on the strength of the link between t

113、heir companys overall ESG strategy and their ESG DD approach in deals.The combination of these questions revealed an interesting pattern shown in Figure 9:There is a clear link between the maturity of an organizations ESG DD approach and its alignment to the corporate ESG strategy.The most mature un

114、animously say they have strong and direct alignment with the corporate ESG strategy.Many of the least mature suggest that there is only a weak link or that their organizations dont even have a formal ESG strategy(see Figure 9).Figure 9:In your view,how well connected is your pre-signing ESG DD appro

115、ach to your ESG strategy?Strong,direct link100%Somewhat linkedWeak linkNot relevant we dont have an agreed ESG strategy0%60%10%35%45%0%3%20%2%25%0%Share of respondents who believe their approach is“early days,quite immature”Share of respondents who believe their approach is“reasonably mature and eff

116、ective,but still in the learning phase”Share of respondents who believe their approach is“top notch/market leading”Source:KPMG EMA ESG Due Diligence Study(2022)142022 EMA ESG Due Diligence StudyWhat does best practice look like?2022 Copyright owned by one or more of the KPMG International entities.K

117、PMG International entities provide no services to clients.All rights reserved.This finding is strongly supported by the work of KPMG firms deal practitioners across the EMA region.If there is no agreed ESG strategy at the corporate level,or if the corporate ESG strategy is not sharp enough for examp

118、le,by not clearly differentiating the material sustainability areas,or by not setting a clear ambition then scoping a meaningful ESG DD is difficult for the responsible M&A departments.The more mature organizations financial investors in particular tend to have a clear view of how their ESG DD align

119、s to their overall ESG strategy.They assess sectors and subsectors for unique risks and opportunities.“We systematically look at ESG topics based on a checklist.Before the non-binding offer,we cover around 10 different topics that help us scope what needs to be addressed in terms of ESG issues durin

120、g due diligence”,one ESG leader at an infrastructure fund explained.Corporate investors tend to face a less complex process,as most of them are only active in a small number of adjacent sectors.Nonetheless,going“back to basics”and understanding their overarching ESG strategy and ambition first is eq

121、ually applicable to corporate investors,as the example in the adjacent sidebar illustrates.Action#3:The leaders link their ESG DD to clear post-closing actionsUncovering ESG risks and opportunities during the due diligence process is not the same as managing those risks and opportunities.The more ma

122、ture ESG DD teams put significant effort into making sure the findings of their ESG DD reports are used to drive a clear post-closing action plan(see Figure 10).As one PE fund Sustainability Director noted,“There is a direct link between our findings and the action plan that is put in place right af

123、ter the closing.We use our findings to drive an 18-month post-closing program in which we assess ESG issues together with the management and create a roadmap around the ESG priorities.”A case in point Consider the example of a food&beverage company,whose M&A department was tasked with incorporating

124、ESG considerations into their due diligence procedures.Initially,the team struggled.The topic seemed broad.The number of potential KPIs to be requested from targets was overwhelming.The inability of targets to provide the relevant information was frustrating.So,the M&A team took a step back,sat down

125、 with senior leadership and worked with them to identify which areas of sustainability were material to their company overall,and to set their ambition.Today,the team has an agreed,short list of non-negotiable topics that are successfully incorporated into every deal process.Figure 10:How well do yo

126、u make use of the findings of your ESG DD reports to establish a post-closing action plan?Strong,direct link82%Somewhat linkedWeak linkNot relevant we dont take any ESG-related post-closing63%26%29%50%5%11%3%13%9%0%9%Share of respondents who believe their approach is“early days,quite immature”Share

127、of respondents who believe their approach is“reasonably mature and effective,but still in the learning phase”Share of respondents who believe their approach is“top notch/market leading”Source:KPMG EMA ESG Due Diligence Study(2022)152022 EMA ESG Due Diligence StudyWhat does best practice look like?20

128、22 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Others indicate that their strong link between their ESG DD and their post-closing action plan often allows the team to move forward on deals that might

129、 otherwise be seen as too risky.“We recognize that our targets wont be as mature as us on the ESG agenda,”said the head of M&A at an industrial manufacturing company.“But we then focus on bringing them up to that level post-closing.”Action#4:The leaders look beyond risks to find valueAvoiding risks

130、is important but in addition to avoiding risks,the most mature ESG DD practitioners put significant focus into helping investees tap into ESG-related value creation opportunities during the post-closing stage(see Figure 11).More than nine-in-ten of the most mature say they focus on the opportunities

131、 they uncover during their ESG DD process.Perhaps not surprisingly,more than a quarter of the least mature see no link between their ESG DD and their plans to enhance the value of their investments.Among some of the more mature investors,ESG-related transformation is a core investment theme,as one P

132、rivate Equity practitioner explained:“Our main objective is to transform our portfolio companies.Thus,sustainability is approached from a strategic point of view and not from a“tick-the-box”compliance point of view.We work hand-in-hand with the CEOs of our portfolio companies to integrate sustainabi

133、lity in their vision,mission,purpose,DNA and strategy.”Interestingly,the approach taken by the target also says a lot to some investors about the quality of the targets management.As one Private Equity fund leader noted,“If the president or CEO of a company responds to ESG questions from a pure comp

134、liance point of view and with conformism,this is a clear red flag for us as investors.”KPMG firms experience suggests that risk mitigation is clearly important.However,risk mitigation alone tends to be viewed as an immediate cost item.To achieve more financial value from sustainability-related inter

135、ventions,dealmakers need to follow the lead of the most mature practitioners and embrace the focus on commercial and operational improvement levers related to sustainability.A case in point Consider the example of a Private Equity fund that conducted an ESG DD on a company in the oil and gas sector.

136、As part of the process,they talked with the owner about what it means to be present in the oil and gas sector today,and how the target could potentially reduce their carbon footprint.A few months later,the owner of the company called the fund manager to say that he had signed a partnership with a we

137、ll-established company to develop their decarbonization plan a direct result of the ESG DD that the PE fund conducted.Figure 11:To what extent are the findings of ESG DD relevant in the value creation plans of your investments?Share of respondents who believe their approach is“early days,quite immat

138、ure”Share of respondents who believe their approach is“reasonably mature and effective,but still in the learning phase”Share of respondents who believe their approach is“top notch/market leading”We focus on the opportunities identified in ESG DD to help our investees take advantage of them91%We focu

139、s on the risks identified in ESG DD to help our investees mitigate themESG DD findings are irrelevant in our plans on enhancing the value of our investments55%34%85%61%2%28%82%0%Source:KPMG EMA ESG Due Diligence Study(2022)162022 EMA ESG Due Diligence StudyWhat does best practice look like?2022 Copy

140、right owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Action#5:The leaders are clearly defining their DD workstreamsBased on the survey data,there appear to be two distinct operational models of running ESG DD in

141、the market the“fragmented”model and the“dedicated workstream”model(see sidebar for a deeper look at both models).The dedicated workstream model was most popular among respondents(see Figure 12).However,there was also a significant minority of proponents of the“fragmented model”.Interestingly,the dif

142、ference between these responses is almost entirely driven by the difference between financial and corporate investors.Among financial investor respondents,the dedicated workstream model was hugely popular,with 85 percent saying they maintain a separate workstream for ESG DD,while amongst corporate i

143、nvestors both models are prevalent.And dealmakers have good arguments for both of these approaches.Some proponents of the“fragmented”model argue that it is difficult to put all“E”,“S”and“G”topics under one roof.“To us,having a dedicated ESG ad-hoc workstream does not make sense.The topics are just t

144、oo broad to be covered by one workstream”,said one sustainability director of a Private Equity fund.Others argue that for historical reasons,the relevant ESG topics are already well addressed through existing workstreams,as this A closer look at ESG DD operational modelsFragmented model:In this mode

145、l,practitioners define the individual“E”,“S”and“G”topics relevant to their transaction and embed these into existing workstreams(such as environmental,legal,HR,etc.),without an overarching ESG DD workstream.Findings flow together at the level of the M&A deal leader but are not necessarily grouped or

146、 labelled as ESG DD findings.Dedicated workstream model:In this model a dedicated workstream is appointed,which defines the relevant“E”,“S”and“G”topics and owns them.ESG DD is therefore treated at the same level as other,pre-existing workstreams streams.In some instances,expert inquiries into select

147、ed“E”,“S”,and“G”topics are left with previously existing workstreams if they already were a functioning part of the investors historical M&A playbook(e.g.soil pollution risks may stay with environmental DD,bribery may stay with legal DD,labor practices may stay with HR DD,etc.),but all ESG-related f

148、indings on pre-defined material topics are at least pulled together centrally by the ESG DD workstream in order to create a particular focus on them.49(54%)44(85%)5(63%)34(37%)5(10%)A separate DD product that analyses the material risks and opportunities across a wide spectrum of sustainability-rela

149、ted sub-topics,from a business perspective,connecting the dots between the various technical work streams(e.g.,environmental,HR/social,etc.)A catch-all term for technical DD products that have existed for a long time across other DD work streams(e.g.,environmental DD,HR/social DD,etc.)Other8(9%)3(6%

150、)1(13%)2(25%)98(65%)40(26%)13(9%)Figure 12:Which of the following descriptions best fits your understanding of“ESG Due Diligence”in deals?Corporate investorsFinancial investorsAdvisory firm or indep.board memberSource:KPMG EMA ESG Due Diligence Study(2022)172022 EMA ESG Due Diligence StudyWhat does

151、best practice look like?2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.business development professional at a chemicals company explained:“Our material areas mostly relate to environmental and heal

152、th&safety topics.They have always been important to us and they have always been covered by an EHS workstream.”While this may be true in many cases,those who follow the fragmented model will need to ensure they arent missing out on the strategic layer of sustainability.An EHS workstream may,for exam

153、ple,be well versed in assessing a targets compliance with,say,carbon trading schemes.But it may not have the capabilities to assess the viability of and the value creation opportunities in a targets decarbonization plan.A fragmented model also runs the risk of allowing some material ESG issues to fa

154、ll into obscurity.Not surprisingly then,proponents of the dedicated workstream model,tend to argue that their approach enhances the focus on the material ESG-related topics.As one deal practitioner at an industrial manufacturer said in our interviews,“In my view,the ESG DD team should be a separate

155、one because otherwise the relevant information would be too scattered.A separate stream allows the relevant dimensions to be investigated with the required focus.”There are also some more nuanced views that suggest a dedicated ESG DD workstream can be complimentary to existing DD workstreams:“We run

156、 a separate ESG DD workstream.But there is typically some overlap,particularly between the legal DD and ESG DD workstreams.The legal team is usually focused on gathering documentation to compile a checklist of policies and documentation.They do a“tick-the-box”type of exercise but they dont really in

157、vestigate whether such policies are actually implemented,”noted a healthcare sector investor.“This is where the ESG DD workstream adds value for us in combination with the existing legal workstream.”In KPMGs view,neither of these approaches is necessarily right or wrong.Ultimately,the right operatio

158、nal set-up will likely depend on multiple factors,including a dealmakers historically established processes,potential resource constraints and the importance of ESG-related factors in the context of its wider business strategy.The key lesson for investors is to think explicitly about which of these

159、models suit them best and to manage the potential downsides of either approach accordingly.Action#6:The leaders are securing appropriate resources to be effectiveThe survey suggests the majority of dealmakers are underinvesting in ESG DD relative to other DD workstreams.Indeed,when respondents were

160、asked what they considered an appropriate external advisor budget for ESG DD,the majority returned a figure below EUR50,000 even on large transactions worth more than EUR1 billion in value.Given that ESG DD is central to assessing a companys actual value and the broad variety of topics covered under

161、 the workstream,it seems that ESG DD budgets are lagging behind those of other workstreams such as commercial,financial or legal.One area where many dealmaking teams often hope to cut costs is in site visits.Site visits tend to require significant time investments from senior experts,as well as trav

162、el costs and other costs.However,KPMG firms experience suggests that site visits can be crucial in the context of ESG DD and are often the only tool available to help dealmakers ensure what they are seeing in the data is borne out in the reality on the ground(see sidebar for an illustrative example)

163、.182022 EMA ESG Due Diligence StudyWhat does best practice look like?A case in point Consider the example of a member firm client who was looking to acquire a datacenter operator in the US.For this investor,the targets greenhouse gas footprint was a material area they wanted to understand better dur

164、ing ESG DD.Desktop analysis revealed no critical findings the target seemed to understand its as-is carbon footprint and appeared to be in compliance with the local“cap&trade”carbon credit trading system,which requires companies to own certificates for their carbon emissions.However,upon visiting it

165、s site,the investors ESG DD team did a walkaround of the exterior of the building and noted the presence of diesel generators placed behind the facility,used by the target to bridge the occasional local power outages.These generators had not been mentioned in the documents provided by the target thr

166、ough the virtual data room.Upon enquiry,the ESG DD team noted that the emissions for the generators were not reported,which were significant given their size and that the company had failed to secure the required air permits for the generators,essentially rendering the target non-compliant with loca

167、l carbon trading regulations and thereby creating a financial risk to the deal.This issue would not have been uncovered without a site visit.2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Earlier s

168、ections described that ESG DD is a potentially very broad workstream.In addition,its findings can be as significant as de-railing a deal or supporting an investors ability to pay a significant price premium for a compliant target.In this context,it appears to the authors that ESG DD budgets have not

169、 yet caught up with the emerging importance of the topic.To put it in the words of one Private Equity partner:“ESG is an investment.An investment may or may not have a return.Thus,as any investment,ESG must be managed as such.You have to put in energy,be engaged,allocate experts on the subject(for E

170、SG DD for example)and budget.I am convinced that ESG increases the value of a company.”Action#7:The leaders are continuously improving their approachKPMG firms experience shows that the more mature dealmaking teams are constantly seeking to improve their approach to ESG DD.They recognize that the ES

171、G agenda continues to shift and that approaches continue to improve.And they are looking to other leaders and outside advisors to help them identify and capture best practices.Interestingly,the data indicates that financial investors tend to be somewhat ahead on the ESG DD maturity curve.For example

172、,financial investors were more likely to say ESG considerations are on their agenda(see 192022 EMA ESG Due Diligence StudyWhat does best practice look like?2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights res

173、erved.Figure 13),more likely to rate themselves as top notch/market leading in their approach(see Figure 14),and they reported having performed more ESG DD in the past than corporate investors(see Figure 15).KPMG professionals asked a number of senior dealmakers both corporate and financial why fina

174、ncial investors might be ahead.Many suggest that the EUs Sustainable Finance Disclosure Regulation(SFDR)may Figure 13:Are ESG considerations currently on your M&A agenda?94%Financialinvestors4%2%77%Corporateinvestors19%4%NoYesI dont know/prefer not to answerResonably mature,but still learningTop not

175、ch/market leadingEarly days,quite immature38%Financialinvestors21%60%Corporateinvestors40%40%Figure 14Overall,as how mature would you describe your ESG DD approach?Source:KPMG EMA ESG Due Diligence Study(2022)202022 EMA ESG Due Diligence StudyWhat does best practice look like?2022 Copyright owned by

176、 one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Figure 15:Historically,for what share of deals did you involve ESG DD?32%19%20%19%11%15%12%12%8%54%Corporate investorsFinancial investorsVery frequently(80%)Frequently(50-80

177、%)Occasionally(20-50%)Rarely(0-20%)Never(0%)100%100%Source:KPMG EMA ESG Due Diligence Study(2022)have catalyzed financial investors to start thinking early about how they might position themselves in a world where sustainability is becoming increasingly important.“We really formalized our ESG best p

178、ractices after 2018 when we saw how ESG was rising up the agenda for German,Nordic and European funds at the time,”noted an infrastructure fund leader.“Today,we have gone even further,offering specific SFDR Article 9-branded funds.”Privately,some corporate M&A practitioners acknowledge that their fi

179、nancial peers may currently be more mature in terms of ESG DD.“Although in-house corporate M&A teams dont like to hear it,financial investors are probably ahead of the curve on this,”admitted one.“They are professional dealmakers,after all”.212022 EMA ESG Due Diligence StudyWhat does best practice l

180、ook like?2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.04What should dealmakers do?Based on the findings described in the preceding sections and KPMG firms experience in working with leading inves

181、tors in the market,here are four recommended steps for dealmakers who wish to embed ESG into their due diligence procedures more thoroughly.Step#1:Establish link to corporate sustainability strategyAs discussed in the preceding chapters,establishing a direct link between your ESG DD approach and you

182、r companys overall sustainability strategy is a key step to cut through the complexity of the broad term of“ESG”.If you have not already done so,ask yourself.222022 EMA ESG Due Diligence StudyWhat should dealmakers do?Do we have clarity on our overall corporate sustainability strategy?Does it articu

183、late which“E”,“S”and“G”areas we consider material?Does it say anything about our companys overall sustainability ambition?For example,is our objective simply to be“compliant with regulation”?Or are we seeking to use sustainability as a competitive advantage,perhaps even looking to become an industry

184、 benchmark?Does our corporate strategy aim to capture the commercial upside potential unlocked by the sustainability revolution?For example,by mandating the creation of new products or services for consumer segments that particularly value sustainability?If so,what does this mean for your M&A approa

185、ch(e.g.target search,due diligence,integration)?If your existing corporate sustainability strategy does not answer these questions,insist on that conversation being initiated with your companys leadership.Once you have answered fundamental questions such as the above together with your leadership te

186、am,articulating the most relevant areas for ESG DD will become easier.Step#2:Develop your frameworkHaving created alignment with your corporate sustainability strategy,the next step is to develop your blueprint for ESG DD,both in terms of its intellectual framework,as well as from an organizational

187、perspective.If you have not already done so,ask yourself.Have we explicitly defined which sub-areas of ESG we will consider material in the context of transactions?Which ones will we need to monitor in every transaction versus on a case-by-case basis?Do we know what we will measure our targets again

188、st(e.g.industry peers?Relative level of performance compared to us?).Are there any levels of performance we would consider red lines?Should our ESG DD approach focus on risks only?Or do we have an appetite to explore potential sources of financial value creation connected to ESG?Would a fragmented o

189、r a dedicated workstream model be most appropriate?In this context,have we properly demarcated the scope of ESG DD and where it interfaces with other existing workstreams?Step#3:Secure appropriate resourcesMake sure you have the appropriate resources,budget and capabilities to ensure your ESG DD del

190、ivers on your corporate ESG strategy.Where needed,look for additional support that can also help enhance your own in-house capabilities.If you have not already done so,ask yourself:Who should run an ESG DD workstream?Do we have sufficient budget for the additional workstreams and expertise required

191、for ESG DD?What capability gaps might we experience as we evolve our ESG DD approach and how can we fill them?2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.232022 EMA ESG Due Diligence StudyWhat s

192、hould dealmakers do?Are we securing the right level of budget for deals and are we using the budget efficiently?What resources are our competitors putting towards their ESG DD approach and are we lagging?Step#4:Implement&improveWith a basic framework in place and resources earmarked,the best advice

193、is to just get started.Rather than waiting until you achieve a high level of ESG DD maturity,work with what you have and focus on improving as you learn even if you still feel the pain of the challenges described in Chapter 2.Many of the most mature dealmakers in the market have reached their level

194、of maturity through trial and error,by refining and adopting their approach as they went along.Many of them continue to develop their approach further.If you have not already done so,ask yourself:How can we capture best practices,lessons and material findings to ensure we continuously improve?What o

195、rganizations and peers should we be watching as industry benchmarks?Are there external advisors that can help bring best practices to the table?How might those topics we deem material evolve over the medium-term and how are we monitoring those shifts?2022 Copyright owned by one or more of the KPMG I

196、nternational entities.KPMG International entities provide no services to clients.All rights reserved.123405How KPMG can helpAs some of the worlds leading deal advisory and sustainability service providers,KPMG member firms are at the nexus of the intersection between M&A and ESG.Through their daily

197、work,KPMG professionals are at the forefront of the developments taking place in this rapidly evolving field.They are working with many of the leading corporate and financial investors to identify and develop ESG-related deal strategies and processes that meet their unique needs and objectives.Leadi

198、ng investors and dealmakers around the world look to KPMG firms to help them:Develop the corporate sustainability strategy:For investors who do not have a sufficiently sharp corporate sustainability strategy in place,KPMG professionals can help review,develop and sharpen your corporate sustainabilit

199、y strategy.They can help identify which areas should be considered material.They can help align ambition with the strategic context of your sector and overall business strategy.And they can help articulate pathways towards achieving your ambition.Link the M&A strategy to corporate strategy:For inves

200、tors who have a sharp corporate sustainability strategy in place but who have not yet explicitly linked it to their M&A strategy,KPMG professionals can help ensure your M&A strategy reflects and aligns to your corporate sustainability strategy.They can help make the linkage stronger.They can help as

201、sess acquisitions or divestitures based on sustainability-related criteria.And they can assist investors to articulate the material areas that should be reflected in the deal process.Develop an ESG DD framework:KPMG professionals can help investors develop their ESG DD framework.For those seeking to

202、 include standard ESG DD approaches going forward,KPMG professionals can help identify areas that should be considered material in all transactions and those that will be material on a case-by-case basis.And they can help you consider what operational approach would be most effective for your organi

203、zation.Perform ESG DD procedures:KPMG professionals can help investors execute against their framework on live transactions.They can help perform not only ESG DD procedures,but a wide range of different DD workstreams.And they can help enable a seamless integration across the DD environment to maxim

204、ize value.How can KPMG help your organization?To find out,please contact your local member firm or any of the authors listed at the back of this publication.242022 EMA ESG Due Diligence StudyHow KPMG can help 2022 Copyright owned by one or more of the KPMG International entities.KPMG International e

205、ntities provide no services to clients.All rights reserved.2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.About the studyThis report is based on a survey conducted across the EMA region using a two

206、-step process.In the first step,dealmakers completed a standardized online survey.The second step involved additional interviews with selected respondents to dig deeper into the survey results.A total of 151 valid and complete responses were received in the first step.Ninety-three percent of respond

207、ents reported conducting at least one transaction per year ranging from less than EUR10 million to more than EUR1 billion in size.Respondents were split across sub-regions,ownership status and investor type as follows:By sub-regionNo.of responsesDACH71(47%)Benelux25(17%)Southern and Western Europe(I

208、taly,France,Spain)24(16%)U.K.&Ireland18(12%)Middle East,Africa&India4 8(5%)Nordics5(3%)Total151(100%)By ownership statusNo.(and share)of responsesPrivately held98(65%of respondents)Publicly traded45(30%of respondents)Government owned8(5%of respondents)Total151 By investor typeNo.(and share)of respon

209、sesCorporate investor91(60%of respondents)Financial investor52(34%of respondents)Independent board members and advisors8(5%of respondents)Total151 To find out more about the survey sample or to view further breakdowns of the results please view the interactive dashboard online.4 For the purpose of t

210、his study,India was a part of the EMA perimeter252022 EMA ESG Due Diligence StudyAbout the studyContactsLead authorKPMG SwitzerlandFlorian BornhauserSenior Manager,Global Strategy Group,Deal AYour local ESG Due Diligence solution leadersKPMG AustriaKatharina SchnauerSenior Manager,Head of ESG Team A

211、dvisorykschoenauerkpmg.atKPMG BelgiumStijn PotargentPartner,Deal AKPMG DenmarkNiclas Buch MahlerAssociate Director,Deal AKPMG FinlandTomas OtterstrmHead of Sustainable Finance and Corporate Sustainabilitytomas.otterstromkpmg.fiKPMG FranceNicolas CottisAssociate Partner,Head of ESG Transaction Servic

212、esncottiskpmg.frKPMG GermanyFrank HengelbrockPartner,Advisory,Head of ESG Due Diligence in DKPMG Hungarykos PjerDirector,Deal AdvisoryAkos.Pajerkpmg.huKPMG IndiaShivananda ShettyPartner and Practice Lead,ESGKPMG IrelandShane OReillyDirector,KPMG Sustainable Futuresshane.oreillykpmg.ieKPMG ItalyStefa

213、no GiacomelliAssociate Partner,Sustainability&Climate Changes ServicesSGiacomelliKPMG.itKPMG NetherlandsJeiran EbrahimiDirector,Deal Advisory,Transaction ServicesEbrahimi.Jeirankpmg.nlKPMG NorwayAnne-Julie JssangSenior Manager,Head of ESG Reporting and Performance ManagementAnne-Julie.Jossangkpmg.no

214、KPMG SpainRamn Pueyo ViualesPartner,Head of Sustainability and Corporate Governancerpueyokpmg.esKPMG SwedenTomas GrendalDirector,Head of Deal Strategytomas.grendalkpmg.seKPMG SwitzerlandFlorian BornhauserSenior Manager,Global Strategy Group,Deal AKPMG U.K.James HolleyPartner,ESG Transaction Services

215、James.Holleykpmg.co.ukAdditional key contributorsAdditionally,we would like to thank the following people for their support and contributions to this study:Clive Adendorff(COO,KPMG EMA ESG Hub),Verena Thiriet(Assistant Manager at KPMG in Switzerland),Martin Lenke(Senior Manager at KPMG in Switzerlan

216、d),Aniko Kraft(Manager at KPMG in Ireland),Carlos Jimenez Lazaro(Senior Manager at KPMG in Spain),Johanna Hashagen(Senior Associate at KPMG in Austria),Gabriel Gage(Senior Manager at KPMG in the Netherlands),Riikka Weber(Manager at KPMG in Finland),Elsa Stetinger(Manager at KPMG in Germany),Anand Ku

217、lkarni(Director at KPMG in India),Jonathan Szke(Associate Director at KPMG in U.K.),Kirk Caron(Director at KPMG in the U.S.)home.kpmg/esg-dd Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.The information contained h

218、erein is of a general nature and is not intended to address the circumstances of any particular individual or entity.Although we endeavor to provide accurate and timely information,there can be no guarantee that such information is accurate as of the date it is received or that it will continue to b

219、e accurate in the future.No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights

220、 reserved.KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited(“KPMG International”),each of which is a separate legal entity.KPMG International Limited is a private English company limited by guarantee and does not provide services to clients.For more detail about our structure please visit home.kpmg/governance.The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization.