Integrating an acquisition into your ESG programme.
Knowing the target's ESG risks and gaps is the first step in starting to fix them as an integrated company
Due Diligence is the normal business practice when looking to invest or acquire a company. While due diligence might have been limited in the past to financial matters (and more recently anti-corruption/FCPA issues) the need for a broader and more holistic review of ESG risks and opportunities is now very real.
You have decided to acquire one of your contract manufactuers to simplify and secure your supply chain.
Your supplier manufacturing agent has been a partner for many years in Asia, Europe and Brazil. They have been manufacturing your products for a long time and now, you have decided to make an investment in them to secure your supply chain. As part of the due diligence, you have engaged Speeki to conduct an ETHIC Intelligence® ESG Due Diligence to give you some surety on their ESG. Speeki will be working alongside other parties conducting due diligence including a Big 4 for the financial and tax review, a law firm for contracts and liability and a supply chain engineer for their manufacturing capability.
A state of play analysis using the Speeki Engage™ framework that gives great insight into the state of their ESG risks.
Clear directions from ESG experts on areas of significant concern pre-close and guidance on bridging the gap in their ESG practices post close.
Significant guidance on ESG risks that may give support to price negotiations or projections around warranties and insured liabilities.
Situation or challenge
Our client operates a strong ESG and compliance programme covering all major risk areas. However, as a predominantly domestic organisation, buying a company with significant operations offshore creates certain risks, particularly in the area of ESG.
The Speeki Solution
Our solution is to conduct an ETHIC Intelligence® ESG Due Diligence on the target company. The engagement would take approximately 3-4 weeks an involve interviews, reviews, assessments, site visits and mini audits of some of their operations in China, Brazil and South Africa. These reviews would be mostly done onsite alongside other due diligence teams from other providers (on other topics) and would involve substantial analysis of the data room. The onsite analysis would depend on whether the project was time sensitive and also confidentiality restrictions and market sensitivity.
The resulting report will give the client significant knowledge on ESG risks and potential areas in the target company that lead to exposure either immediately or in the short-medium and long term. It will also provide a step-by-step way to bridge the gap between their existing stance on ESG and where they will need to be to fit into your own ESG position should the acquisition move forward.