Mergers and acquisitions and divestitures have mostly been unaffected by the green trend. But according to Deloitte, recent deals have demonstrated that sustainability can affect both the viability and the ultimate value of deals.
Companies are facing increasing demand for information about their environmental liabilities. In addition, investors are also calling on publicly traded companies to assess and fully disclose their financial risks from environmental issues. Dynegy and Xcel Energy Inc. were both recently ordered to disclose their financial risks associated with climate change to the S.E.C.
Here are tips from Deloitte on how to tackle sustainability issues during a deal (PDF):
1. Understand how well the organization is addressing sustainability issues.
2. Incorporate corporate responsibility and sustainability metrics, goals, and targets into the deal valuation process.
3. Consider the potential economic impact of changes on consumer preferences, legislative changes, significant variations in energy prices, and other supplier prices.
4. Plan for evolving regulatory conditions.
5. Engage in a formal alternative future/risk assessment scenario planning exercise.
6. Determine whether target-company management can effectively address sustainability requirements and whether the people responsible for sustainability initiatives are capable and receiving necessary organizational support.
Larry Quinlan, CIO at Deloitte LLP, recently discussed the company’s green IT initiatives.