Aligning portfolios with commitments to environmental, social and governance goals is increasingly a question of both which assets to divest and acquire. “ESG is top of mind on many agendas, as it should be,” says EY global buy and integrate leader Brian Salsberg. “M&A is viewed as a tool to change the ESG footprint on the buy and sell side.”
Companies as anodyne wineries are feeling the impact of the shift in investor expectations, PwC private equity lead Manoj Mahenthiran tells us. Firms looking to divest assets to improve their social profiles are seeking to part ways with a variety of assets with an antisocial or less environmentally friendly taint.
“Everyone would have different views of what could be ‘good’ aspects or not,” EY’s Salsberg explains. “Companies are looking more closely at the ESG profile of all of their businesses not even today but in the future.”
That means dealmakers, both corporates and private equity are “a lot more willing to make portfolio changes, meaning there are fewer sacred cows,” says Salsberg. “It’s becoming easier to sell divisions and parts of businesses I think in part because technology and use of cloud tech, etc. have made it quicker to give up part of your business without the same level of complexity there once was.”
Mergers & Acquisitions takes a closer look at trailblazers in the field in our November/December issue of the magazine, where we will recognize the 2021 PE Innovators in ESG. This inaugural list will honor the PE firms that are pioneers in integrating ESG considerations into their investment strategies. We will soon be announcing a Call for Nominations.