ESG Due Diligence Services | Environmental, Social and Governance (ESG) Due Diligence

The term ‘ESG’ is frequently used to refer to environmental, social, and governance (ESG) issues that are critical to a business’s strategy and operations.  There is a growing awareness among the financial community that an effective analysis of environmental, social, and governance (ESG) risks and opportunities a critical component of evaluating a business’s value. Managing ESG risks and capitalizing on opportunities for ESG improvements made during the investment period of a fund are critical levers for fund managers to leverage in order to add value to their portfolio firms.

Integrated environmental, social, and governance due diligence means taking ESG factors into account alongside more conventional financial and business considerations of performance in the assessment and management of a business.

The business case for ESG Due Diligence in investments and corporate strategy is becoming stronger for many reasons, as described below:

Governments in developed and many developing countries are strengthening environmental, social, anti-corruption and corporate governance regulations. Companies need to be able to respond. In many developed countries, governments are increasingly applying their substantial purchasing power to the procurement of sustainable goods and services, with impacts on supply chains also in developing countries.

Consumers know and care more and more about what they buy, how it is made, what it is made from, how far it has travelled and how it is packaged. As demonstrated by numerous surveys and studies, there is an increasing demand for products that are produced sustainably, for the benefit of people and without causing harm to the environment.

Mainstream investors were historically not drivers towards more long-term or integrated ESG management, partly because there was a perception that consideration of ESG issues was not compatible with fiduciary duties and profit maximization. However, this has changed.

ISOmantra collaborates with clients to customize the scope of our ESG due diligence projects based on the investment’s sector, geography, and business model. ISOmantra provides the following ESG services:

• Identification of environmental, social, and governance factors that pose risks or opportunities to a business’s valuation and/or reputation;
• A company’s reputation in comparison to its competitors;
• Profiles of litigation and environmental risk;
• Engagement of third-party stakeholders (consumer advocates, environmental advocates, landowner advocates, industry advocates);
• Identifying best practices for mitigating future risk;
• Capacity, Commitment, and Track Record (CCTR) assessment of a company in relation to its capacity for ESG management;
• Infrastructure development: evaluation of adherence to industry standard;
• Identification of sustainable development best practices and risk mitigation;
• Elaboration of ESG action plans to ensure ongoing risk management throughout the investment’s life.

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