KPMG reveals how ESG priorities impact M&A deals and influence premiums


A recent survey by KPMG has found 74% of professionals are integrating ESG considerations into their M&A plans.

The top reason for conducting ESG due diligence is identifying ESG risks and opportunities (46%), followed by investor requirements (19%) and regulatory preparation (14%).

Findings in the ESG due diligence process have substantial impacts. 51% of respondents indicate that ESG red flags could halt a deal, while 52% would necessitate additional closing conditions. 44% believe it could result in valuation reductions, and 53% reported that ESG due diligence findings had led to deal cancellations.

Furthermore, 60% of investors would pay a premium for targets that align with ESG maturity, and 72% expect to conduct more ESG due diligence in the future.

The challenges reported by professionals include a lack of robust data (59%), difficulty in selecting a meaningful scope for ESG due diligence (56%), inadequate understanding of ESG due diligence across stakeholders (56%), and difficulties in quantifying findings (45%).

KPMG U.S. ESG and Climate Services Leader Mark Golovcsenk said, “The data speaks loud and clear: Companies and investors are increasingly integrating ESG considerations into their M&A strategies, not only because it’s the right and responsible thing to do but also because of the value implications of ESG.”

KPMG U.S. Partner, ESG Clare Lunn said, “As the world continues to evolve, so do the expectations of businesses. Our latest ESG Due Diligence Survey reveals an undeniable truth: Sustainable practices are no longer just a choice but a prerequisite for resilience and growth.”

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