How Green is the Deal? The Growing Role of Sustainability in M&A

Mergers and acquisitions and divestitures have been — for the most part — unaffected by the green trend. However, recent deals in industries as disparate as energy and retailing have demonstrated that sustainability can affect both the viability and the ultimate value of deals. Companies are seeking to gain support for acquisitions by committing to actions that will help address issues which affect the environment. Others are willing to pay a premium earnings multiple for companies because of their sustainability leadership.

In today’s environment, companies that have strong corporate responsibility and sustainability (CR&S) programs in place are likely to be rewarded for their efforts. Those that don’t have such programs can expect to face increasing regulatory and marketplace demands for change. It is clear that greater consideration of sustainability related issues when evaluating potential M&A transactions will help improve the likelihood of the success of the deal.