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Rödl & Partner Italy advises LCF Alliance on 95 million financing with Societe Generale and BayernLB |

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ESG Due Diligence

The acronym ESG stands for Environmental, Social, and Governance, which are the three pillars of sustainability. Together, they shape and define an organization's concrete approach to sustainability.

Through ESG analysis, organisations (i.e. entities, companies and other legal persons) are assessed through the lens of their ESG performance, based on objective and measurable data. An organization’s long-term performance and valuation can be influenced by how it addresses ESG issues.

This analysis becomes relevant in the investment and capital allocation decisions of an organisation's stakeholders, facilitating the prediction of the company's future financial performance.

ESG issues must therefore be incorporated into investment analysis, decision-making processes and contractual relationships with partners, suppliers and third parties.

In this scenario, conducting ESG Due Diligence becomes essential both in the context of M&A transactions, where a comprehensive view of all relevant risks and opportunities is necessary to negotiate the right price and terms for a deal, and in the context of a self-assessment by the organisation itself of its status in relation to ESG issues.

Our ESG Due Diligence service is therefore based on an analysis carried out by a network of sustainability experts specialised in identifying ESG risks and opportunities, focusing on the organisational and documentary aspects specifically for each organisation (such as the existence of policies and procedures, internal control and reporting systems, and the allocation of responsibilities).

There are many reasons for carrying out ESG Due Diligence:

Legal compliance implications related to ESG issues (disclosure and reporting of non-financial information, anti-corruption, anti-money laundering, data protection and confidentiality, 231 liability, etc.);
Verification of organisations' exposure to ESG risks and related opportunities, with improved financial analysis that can lead to greater transparency and long-term vision;
Investor focus on the inclusion of non-financial risk assessment when evaluating a potential acquisition and the subsequent development of an integrated approach to deal and investment evaluation through the joint analysis of legal, tax, commercial and ESG risks;
Need to monitor the supply chain and formalise ESG considerations within contractual relationships and with other counterparties.

Rödl & Partner Italy's ESG Due Diligence professionals support companies by offering the following services:

Analysis of how new environmental, social and governance sustainability issues may affect the target organisation and the market in which it operates;
Integrated assessment of material risks related to ESG issues for the organisation, together with any liabilities arising from them;
Integrated assessment of material opportunities related to ESG issues for the organisation;
Analysis of the organisation's policies and performance on ESG issues compared to its main market competitors and best practices in the relevant sector;
Support in formalising ESG considerations within commercial relationships and assistance in drafting contractual texts designed to monitor, promote and enforce compliance with ESG topics by counterparties;
Assessment of the Organisation's compliance with national and international regulations relating to ESG issues;
Assessment of how all these factors related to ESG issues influence the overall valuation of the target organization.

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Rita Santaniello

Attorney at law (Italy)

Partner

+39 02 6328 841

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