Strategic Focus: ESG And Sustainability Due Diligence For Investors

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Executive Summary

Investors faced substantial challenges in 2023 – notably, global inflation, political instability and increased regulatory scrutiny – causing investments in many sectors to slow significantly, especially those in privately held entities. However, despite a more sluggish start than anticipated in the mergers and acquisitions (M&A) space in 2024, there is anticipation that the pace of deals will accelerate throughout the year – especially in the healthcare, manufacturing and technology sectors – thanks to declining interest rates, less rapid inflation, and growing corporate confidence in the market. At the same time, investors are placing an increasing emphasis on ESG and sustainability criteria during the investment process, including at the due diligence phase. This report provides investors with information about services and software that can help them incorporate ESG and sustainability due diligence into their existing due diligence processes and workstreams.

ESG and sustainability considerations are becoming more important in due diligence
Multiple factors drive investors to conduct ESG and sustainability due diligence
ESG and sustainability due diligence is a core component of the investment life cycle
Investors face challenges when conducting ESG and sustainability due diligence
Investors need external guidance on ESG and sustainability due diligence
Services firms are essential throughout the due diligence process
Software can supplement ESG and sustainability due diligence offerings
Figure 1. Incorporating ESG and sustainability due diligence into the investment life cycle
Figure 2. Overlap between ESG and sustainability due diligence and other diligence streams

About the Authors

Jessica Pransky

Jessica Pransky

Principal Analyst

Jessica is a Principal Analyst at Verdantix, specializing in providing insights to sustainability leaders and analysing ESG and sustainability reporting software. She advises …

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Kim Knickle

Kim Knickle

Research Director

Kim Knickle is a Research Director at Verdantix, bringing more than two decades of analyst experience to the evolving world of sustainability. Her current research spans ESG a…

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