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The pre-investment phase

Pre-acquisition due diligence can help investors to understand the ESG performance of a target and identify potential material ESG risks and opportunities, which could impact the business case or business value. ESG matters should be considered at key stages throughout the pre-investment processes.

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ESG evaluation process


Top tips
  • Consider ESG risks and opportunities across value chain.

  • Allow sufficient time and access for due diligence. Unless preferable to start earlier, ESG consultants are typically commissioned at “exclusivity” stage when expenditure can be justified to complete the transaction.

  • Allocate a team member with responsibility for ESG due diligence.

  • Share lessons learnt (e.g. material issues) across investment teams and apply to sector guidance notes.

Case study: 3i

3i

A case study on pre-acquisition due diligence.

VIEW CASE STUDY

 

Taking ESG into account has helped

85%

of GPs to identify risks and opportunities for value creation.

Source: UNPRI Report on Progree: PE, 2015

Screen for ESG risk and opportunities

Always screen target companies for ESG risks and opportunities pre-acquisition.

Source: PwC Global PE Responsible Investment Survey 2016

Mandatory to include ESG issues

It's mandatory to include ESG issues in final investment committee papers.

Source: PwC Global PE Responsible Investment Survey 2016