ECONOMY AND MARKETS

ESG Still Matters in Corporate Dealmaking

By: Anneken Tappe · July 18, 2024 · Reading Time: < 1 minute

Environmental, social, and governance (ESG) practices have been under attack. But when it comes to business decisions, it still counts. A lot.

Some politicians and investors have argued against ESG, pointing at investment performance or “wrong” priorities. But when it comes to corporate dealmaking, ESG evaluation remains standard practice, according to a survey from Deloitte.

ESG Evaluations

The 500 business leaders surveyed unanimously said they considered ESG in acquisitions and divestitures, while more than half (57%) used specific ESG metrics in their evaluations of potential mergers and acquisitions (M&A) for their companies. The majority of respondents also reported abandoning deals due to a target’s poor ESG profile.

Companies still assign weight to their own ESG practices as well. Nearly three-quarters of respondents (74%) evaluated their portfolios from an ESG perspective.

Perhaps more notable than the absolute figures is their relative increase from Deloitte’s last survey in 2022, which showed 64% conducting ESG evaluations when weighing new acquisitions, and just 50% for divestitures. This suggests that, despite significant pushback, the role of ESG behind the scenes is only continuing to grow.

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