Four out of five (82%) dealmakers globally indicate that ESG considerations are on their merger and acquisition (M&A) agenda while 71% report an increase in the importance of ESG in transactions in the last 12 to 18 months. This has been revealed in the Global ESG due diligence+ study 2024 published by KPMG International.
This is the first global KPMG study on ESG due diligence in M&A transactions that builds on their 2022 industry-leading international study on ESG due diligence in the Europe, Middle East and Africa (EMA) region that showed evidence of the rising importance of ESG due diligence in transactions. In 2023, the follow-up study in the US found similar developments.
The new international survey, covering 600 respondents from 35 geographies aims to establish a global baseline and create comparability between the different regions of the world and set out to re-examine the relevance of ESG due diligence in transactions.
Globally, 57% of respondents say they expect to perform ESG due diligence on most of their transactions over the next two years. Almost 58% of investors are motivated by the belief that ESG due diligence increases monetary value.
The study shows that 45 % of surveyed investors have encountered a significant deal implication as a result of a material ESG due diligence finding. Also, 55 % of survey respondents are willing to pay a premium of between 1-10% for assets with high ESG maturity.
“ESG in deal is rapidly maturing. The ESG lens is becoming increasingly important to investors and customers. The difficulty lies in the breadth of the topic, making it critical to know how to look at it in a focused manner. That’s why we focus on value not values,” said Craig Mennie, Global Head of Transaction Services at KPMG Australia.