Key topics discussed at AVCJ Singapore on ESG in M&A:
How to use ESG to avoid investing in potentially stranded assets
The transitional risk in climate change and the need to shift from high-carbon to low-carbon emitting assets / carbon tax, changes in subsidies
Exit high carbon exposure businesses, change of scope of businesses or global footprint
Improve the current carbon profile (reduce carbon emitting activities, direct emissions, and supply chain)
Use carbon markets to buy and sell carbon credits to offset emissions
Incur fines and higher taxes for emitting carbon at unsatisfactory levels/lose employees and customers
The policy transitional risks to consider including understanding a global theoretical price of carbon due to carbon taxes and changes in subsidies
Why every company needs a plan to get to Net Zero
What is your carbon neutrality pathway and the need to report on it—you will be expected to articulate the rational and the process—and report on your efforts
In determining material ESG factors, you need to know what your employees think (“I have one life; Why should I be working with you?”)
What your customers care about, what are your peers doing, and what your potential exit cares about
Anecdote: Rebranding a meter reading company into an energy efficiency company results in more job applications
ESG must be internalized—it is not just for one person. Everyone will be asked in DD: Are you really doing the things you say you are doing? Bidders looking for hidden ESG risks
Steven Okun, Moderator