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Leading investors and finance executives know; addressing environmental, social, and governance (ESG) factors leads to business resilience and positive impact. It’s not just a matter of protecting against risk or meeting regulatory requirements. Embedding sustainability topics into the investment process is also a way to unlock value, attract clients, retain employees, strengthen reputation, and stand out from competitors.
PwC possesses the experience and the breadth of capabilities to support your sustainability efforts whether you’re setting an investment/financing strategy, exploring deals, conducting due diligence, managing a portfolio of assets to enhance value or preparing for an exit. We can help you transact to transform to achieve your sustainable growth ambitions.
ESG's impact on value - What value levers can you pull on?
Transforming the way deals are done and valued
As global leaders in mergers and acquisitions (M&A), we help clients integrate ESG into all aspects of their investment decisions, from setting growth strategy and defining a deal thesis, to making capital allocation decisions and planning exits. Our thorough approach enables clients to assess the impact of ESG on cash flow, terminal value and cost of capital, across multiple asset classes, deal types and capital raising.
Responsible investing and financing strategy
When it comes to sustainability, is your organisation aiming to fulfil ESG commitments made to stakeholders? Comply with regulations? Enhance your risk-adjusted returns? Uncover opportunities in your target sectors? Whatever your objectives, we help investment firms and corporations to define and update their sustainable and responsible investing/financing strategies to match their goals and those of their clients. And when the strategy is set, we help clients develop effective procedures and governance, upskill your investment teams, and put tools and technology in place to execute that strategy effectively.
In particular, we will help you develop a bespoke ESG strategy to drive growth, enhance reputation, ease access to capital and create lasting change.
We will embed climate, net-zero, diversity and other ambitions into your investing strategy with a focus on creating value.
Integrated ESG due diligence and quantification
It’s no longer enough for investors to screen an opportunity against a preset list of ESG-related risks. In today’s markets, a more sophisticated approach to due diligence can provide an advantage. Leading dealmakers look carefully at the potential for ESG factors that either create or destroy value.
We tailor our flexible due diligence framework to fit investors’ strategy, policy and objectives for a particular fund or investment. We help identify ESG topics that have material financial impact on a target, assessing the target’s ESG performance and management approach, benchmarking against competitors and leading practices, and highlighting post-deal opportunities to create value by improving a target’s ESG profile.
These value levers are maturing into a set of ESG due diligence criteria with important implications across the M&A landscape, from raising financing and capital allocation, to carrying out acquisitions and divestitures. This ongoing transition will require evolving capital allocation to take fuller account of intangible attributes that matter. For example, what is the value of high employee morale, or diversity of thinking, or an enhanced reputation as a greener company? These types of attributes can be quantified and linked directly to cash flow forecasts that drive enterprise value.
Value enhancement and post-deal transition
Business leaders recognise that positioning their companies to succeed in the transition to a sustainable economy can require bold, transformative moves. Decarbonising an existing business might involve significant capital outlays. Redesigning a business to tap into growing demand for low-carbon goods and services might call for acquiring new lines of business, restructuring existing ones and divesting others.
Leading investors recognise that deals with strong ESG credentials can yield a premium, and so they factor sustainability objectives and cash flow impact into their deal thesis and their value-creation plans. We help investors and corporations to understand, in quantitative terms, how a given asset’s value might change because of sustainability-related market shifts, regulatory and policy developments, or concerns related to environmental and societal impact.
Based on that understanding, we help investors and corporations develop a roadmap to bridge the gap between pre-investment due diligence findings and value creation by helping companies to seamlessly embed ESG throughout their operations, while ensuring alignment with the acquiring company’s values and strategic direction.
We can also work with investors throughout the holding period, and just prior to exit, to realise material improvements of an asset’s sustainability profile.
Sustainable infrastructure and capital projects
Decarbonising existing infrastructure—and building new low-carbon infrastructure, from power plants and grid networks to ports and shipping terminals—will be essential to achieving net zero targets and sustainable development goals. The world also faces a growing need for sustainable infrastructure projects that can help withstand extreme weather and other physical risks resulting from climate change. These infrastructure and capital projects will require substantial capital to deliver.
We assist infrastructure investors and owners in finding effective ways to raise and deploy capital, whether equity or debt, public or private, or blended. Our experience structuring transactions among investors, communities, indigenous communities, governments, banks and companies can assist these stakeholders in accessing sustainable capital and delivering the returns and sustainability outcomes they are seeking.
Sustainable capital raise and debt advisory
With the expanding range of green and sustainable finance products available, the options can feel overwhelming. That’s why we bring together our community of solvers—global sustainability and sector specialists, empowered by the right tech and data insights—to help you pinpoint the most effective sustainable finance products or structures to create the most value.
Investees:
We support corporate borrowers looking to effectively align their ESG strategy and commitments to financing goals. For instance, we can assess your 'readiness' for sustainable finance, help you plan your green or sustainable capital and operational expenditure, and communicate your ESG initiatives as part of your investable proposition. We can also structure and implement green and sustainable financing products, such as sustainability-linked loans or bonds, including key performance indicator (KPI) determination, target-setting, sustainable finance framework development, principles of taxonomy-aligned use of proceeds, and reporting. Ultimately, we can introduce you to the right pockets of capital, enabling you to raise the most competitive finance to meet your goals.
Investors:
We support financiers seeking to understand how best to strategically align their financing activity with green or sustainable commitments to minimise value erosion and maximise value creation impacts. We also advise on effective implementation or operationalisation of strategic initiatives, e.g., when planning to launch an impact fund, divest hard-to-abate assets or deploy green or sustainability-linked loans.
In focus: ESG due diligence
For many investors, due diligence is the focal point to integrate ESG factors with investment decisions.
But a broad range of non-financial priorities need to be considered.
Our thorough approach helps investors:
understand—and maximise—all value levers associated with ESG
assess materiality of external and internal ESG issues and the maturity of a target company’s ESG approach
compare the target’s performance and approach with peers and leading practices
develop a high-level roadmap for value creation
Our ESG diligence framework is modular
Contact us
Global and Canada Sustainable Capital Leader, Partner, PwC Canada
Tel: +1 514 205 5000
Contact us
Partner, Corporate Finance, ESG Leader for Deals, PwC United Kingdom
Tel: +44 (0)20 7583 5000
Kushal Chadha
Asia Pacific Sustainability, Deals, Private Equity and Sustainability Finance, Partner, PwC Australia
Tel: +61 (0)3 8603 1000
