(ESG) Due diligence: insight into risks, opportunities, and compliance
Due diligence has been a cornerstone of the private equity investment process for many years. However, whereas legal, tax, and financial analyses used to be the main focus, there has been a clear shift: ESG factors (Environmental, Social & Governance) have become essential in assessing risks and opportunities.
HVK Stevens guides investors in an integrated approach to due diligence, with explicit attention to ESG aspects.
From compliance to value creation through due diligence
ESG is often still seen as a compliance issue, but in practice we see that thorough ESG due diligence can actually add strategic value. Think of preventing reputational risks, improving operational efficiency, or becoming more attractive to capital providers and exit parties.
Our ESG due diligence focuses on, among other things:
- Identifying material ESG risks
- Assessment of sustainability policy and governance
- Analysis of chain responsibility and regulatory compliance (such as CSRD, SFDR)
- Embedding ESG agreements in transaction documentation
Legal and tax integration
ESG due diligence does not stop with a thematic report. The findings must be translated into concrete agreements and structures. Which obligations must be laid down in a contract? How is ESG integrated into the governance of the target? Are there tax implications when structuring sustainable investments?
HVK Stevens combines legal, tax, and ESG expertise to provide a 360° analysis, one that takes into account both today's risks and tomorrow's legislation.
ESG due diligence: knowledge of regulations and practice
ESG regulations are evolving rapidly; European directives such as the CSRD and the EU Taxonomy, which have a direct impact on reporting obligations and transparency requirements. But just as important is the practical applicability of these rules within the private equity domain.
Our experts translate complex frameworks into workable structures. In doing so, we always take into account the investment horizon, the investor's profile, and the sector in which the investment is made.
Looking ahead, not ticking boxes
HVK Stevens does not view ESG due diligence as a checklist, but as a lens through which you can gain a better understanding of a company's long-term potential. Especially in private equity, where value creation often takes place through transformation, ESG offers a strategic perspective.
Want to know more?
Would you like to use ESG due diligence strategically in your investment process? Our multidisciplinary teams would be happy to work with you on integrating sustainability, the legal framework, and returns.
