Green Gold
Description
An up-to-date and complete approach to incorporating ESG considerations in real-world M&A transactions
In Green Gold, a team of seasoned strategists and analysts delivers a comprehensive discussion of how value is created and destroyed by ESG considerations in mergers and acquisitions transactions. The authors explain how environmental, social, and governance considerations impact financial value in M&A, providing extensive examples and case studies.
The book explores successful and unsuccessful attempts to incorporate and account for ESG. It offers a practical methodology and structured approach that you can use in real-world transactions when dealing with ESG value.
Inside the book:
- Explorations of the investment lifecycle predominantly focused on ESG due diligence
- Discussions of materiality and maturity assessments and a comprehensive examination of the ESG investment thesis
- Introductions to an ESG adjusted earnings and cash-flow forecast
Perfect for students of finance with a focus on ESG and sustainability, as well as students in MBA programs and M&A professionals working at accounting and law firms, investment banks, private equity firms, and hedge funds. Green Gold is also an invaluable guide for board members and senior executives.
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Persons
MICHEL DRIESSEN is a Professor in the Practice of Finance and the Director of the M&A Research Centre at Bayes Business School. In addition, he is a Chairman, Business Advisor and Board Member. He was previously a Senior Partner in the Strategy and Transactions Group at EY UKI.
SEBASTIAN SCHMIDT is a partner at EY Parthenon who leads an expert group for Decision Support and Business Modelling within Strategy & Transactions for the Europe West region.
Content
Acknowledgements xiii
Introduction xv
Why We Wrote This Book and Why You Should Read It xv
About the Authors xix
Chapter 1 Defining Terms and Exploring the Sustainability/ Financial Value Link 1
A Brief History of Sustainability 2
The Link with Financial Value 19
Does the ESG Pushback Impact Financial Value? 35
References 39
Chapter 2 ESG and Regulation - The Hidden Value of Rules 43
The History of Sustainability Regulation 43
The International Sustainability Standards Board (ISSB) 49
ESG Ratings and Their Relationship to Regulation 56
Regulatory Rollback, the Real Impact 61
Unintended Consequences 64
References 66
Chapter 3 Capital Flows - How ESG Drives Deals That Create Value 67
What Do Deals Tell Us About the Financial Value of ESG? 67
How Deals Address the Plastics Problem and Create Value 81
Customer Sentiment and the Key to Sustainable Success 94
References 104
Chapter 4 Establishing the Link Between ESG Performance and Financial Value 107
The Cost of Capital - What's ESG Got to Do with It? 107
Establishing the Link Between ESG Ratings and Price Multiples 117
The ESG 'Value Bridge' - Taking a More Granular Approach 131
References 141
Chapter 5 ESG Due Diligence and the Private Equity Playbook 143
What is ESG Due Diligence? An Overview 143
Three Approaches Towards ESG Due Diligence in Transactions 148
The Private Equity Approach to ESG Due Diligence 148
A Bias Towards Compliance 166
Applying the Private Equity Playbook 171
References 177
Chapter 6 When ESG Goes Wrong (And How to Put It Right) 179
The Rise and Fall of Boohoo 179
The Palm Oil Story 187
Key Deal Rationales 194
References 196
Chapter 7 Financial Value of ESG in Transactions: Lessons Learned and How to Apply Them 199
Key Takeaways for Investors 202
Key Points for the ESG Universe 205
Appendix 1 Materiality, Maturity and Sample Private Equity ESG Due Diligence 207
Appendix 2 Comparison of Three Global Private Equity Firms on How They Approach ESG in Their Own Firms 215
Index 221
