Exploring the Impact of ESG on Deal and Valuation

Why leaders and shareholders must view sustainability as a value driver and a critical success factor in transactions.

Despite recent pushback to ESG initiatives, sustainability should remain a top priority for all firms due to:  

  • Tangible impacts of the climate crisis and tightened access to critical resources;  
  • Growing stakeholder expectations around social responsibility, particularly from customers and employees;  
  • Implementation of sustainability laws that have concrete consequences for all firms.

With respect to valuation, 75%¹ business leaders see ESG as a powerful lever for value creation, not just a compliance exercise. Our analysis shows that companies which proactively integrate ESG can:

 ✔ Unlock new revenue opportunities; 
 ✔ Improve operational efficiency; 
 ✔ Reduce financing costs and improve access to capital. 

In contrast, ignoring ESG factors leads to value erosion and missed opportunities.  

In the realm of transactions, 60%² of investors have either walked away from deals or would consider doing so due to ESG concerns, and over 80%³ of financial buyers now include ESG in their investment policies. This underscores that ESG is no longer optional in dealmaking - it’s essential. Both buyers and sellers must now evaluate ESG risks and opportunities at every stage of the transaction lifecycle.

ESG

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Archambeau

Etienne Archambeau

Senior Manager
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Sources: 

1. 75% from BDO / Mercuriy Uival. The ESG imperative: Business trends among European companies.

2. 60% from  Private Equity International. (2023). Private fund leaders survey.

3. 80% from Vlerick Centre for Mergers, Acquisitions, and Buyouts. (2024). 2024 M&A monitor.