ESG due diligence

Subscribe to ESG due diligence via RSS
Green Leaf - defocused background

The Private Members Bill, if passed, would establish the UK’s first law mandating business due diligence on human rights and the environment.

By Paul A. Davies, Michael D. Green, and James Bee

On 28 November 2023, Baroness Young of Hornsey (Baroness Young) introduced the Commercial Organisations and Public Authorities Duty (Human Rights and Environment) Bill (the Bill) to the UK House of Lords. The Bill seeks to establish the UK’s first law mandating certain companies to conduct human rights and environmental due diligence, and would also introduce an overarching duty for companies to prevent environmental and human rights abuses within their operations and value chains.

The Bill aims to level the playing field among businesses, provide clarity on legal obligations, and enable a greater level of access to justice. It also aims to align UK law with voluntary international standards, such as the United Nations (UN) Guiding Principles on Business and Human Rights, the Organisation for Economic Co-operation and Development (OECD) Guidelines, and the International Labour Organization (ILO) Multinational Enterprises Guidelines.

Dealmakers should continue to weigh the impact of ESG issues on M&A deals as ESG standards evolve.

By Richard Butterwick, Pierre-Louis Cléro, Paul A. Davies, Tobias Larisch, Michael D. Green, James Bee, and Catherine Campbell

Environmental, social, and governance (ESG) issues have become increasingly important for corporates in recent years, driven initially by investor and consumer demand, and now by legislative developments across multiple jurisdictions.

As ESG becomes a growing part of the dealmaking conversation and acquirers seek to improve ESG credentials through individual acquisitions, the M&A market is showing a greater demand for enhanced ESG due diligence, particularly in relation to value chains. A wider range of deal provisions are being considered in light of their potential to enhance the ESG outlook of acquisitions. Further, regulatory developments and forthcoming changes mean that reporting obligations, both voluntary and mandatory, should remain front of mind. In this M&A Views article, we consider how corporates and M&A dealmakers are responding to the growing importance of ESG.