Sustainability Factors into Deal Making, PwC Says
More than two-thirds of executives say they plan to evaluate environmental, social and governance (ESG) factors in future deals, according to a poll of more than 300 professionals conducted by PricewaterhouseCoopers (PwC) US.
The poll, conducted during PwC’s webcast, Integrating environmental, social and governance (ESG) issues in deals and valuing their impact, found that 68 percent of participants who are planning a divestiture, acquisition, merger or IPO in the next 12 months plan to evaluate ESG considerations when planning their transactions.
Investors are increasingly taking environmental, social and governance factors into consideration when assessing the value of a company, according to the survey. Of executives polled, 38 percent say that investors are the stakeholder group most focused on ESG issues, closely followed by senior management at 36 percent. Other stakeholders focused on ESG issues include boards (19 percent) and bankers (7 percent).
The goals behind an ESG program vary according to an organization’s priorities and desired outcomes. When asked to identify the leading areas of ESG focus in their own organizations, poll participants cited several factors.
Twenty-seven percent said that regulatory compliance and risk management is their primary focus. Fifty percent said they are focused on three areas: regulatory compliance and risk management; operational efficiency and effectiveness; and revenue enhancement and other market-facing initiatives.
PwC’s poll also asked executives to identify barriers to placing a dollar value on their ESG initiatives. Nearly half (46 percent) responded that they are facing three barriers: a lack of in-house expertise, lack of methodology, and lack of senior-level support.
Private equity firms still mainly gear their ESG management towards risk, rather than opportunity with less than 15 percent calculating the value they create through ESG activity, according to a report last month by PwC.
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