Green Gold

MICHEL DRIESSEN is a Professor in the Practice of Finance and the Director of the M&A Research Centre at Bayes Business School. In addition, he is a Chairman, Business Advisor and Board Member. He was previously a Senior Partner in the Strategy and Transactions Group at EY UKI. SEBASTIAN SCHMIDT is a partner at EY Parthenon who leads an expert group for Decision Support and Business Modelling within Strategy & Transactions for the Europe West region.

• Acknowledgements xiiiIntroduction xvWhy We Wrote This Book and Why You Should Read It xvAbout the Authors xixChapter 1 Defining Terms and Exploring the Sustainability/ Financial Value Link 1A Brief History of Sustainability 2The Link with Financial Value 19Does the ESG Pushback Impact Financial Value? 35References 39Chapter 2 ESG and Regulation – The Hidden Value of Rules 43The History of Sustainability Regulation 43The International Sustainability Standards Board (ISSB) 49ESG Ratings and Their Relationship to Regulation 56Regulatory Rollback, the Real Impact 61Unintended Consequences 64References 66Chapter 3 Capital Flows – How ESG Drives Deals That Create Value 67What Do Deals Tell Us About the Financial Value of ESG? 67How Deals Address the Plastics Problem and Create Value 81Customer Sentiment and the Key to Sustainable Success 94References 104Chapter 4 Establishing the Link Between ESG Performance and Financial Value 107The Cost of Capital – What’s ESG Got to Do with It? 107Establishing the Link Between ESG Ratings and Price Multiples 117The ESG ‘Value Bridge’ – Taking a More Granular Approach 131References 141Chapter 5 ESG Due Diligence and the Private Equity Playbook 143What is ESG Due Diligence? An Overview 143Three Approaches Towards ESG Due Diligence in Transactions 148The Private Equity Approach to ESG Due Diligence 148A Bias Towards Compliance 166Applying the Private Equity Playbook 171References 177Chapter 6 When ESG Goes Wrong (And How to Put It Right) 179The Rise and Fall of Boohoo 179The Palm Oil Story 187Key Deal Rationales 194References 196Chapter 7 Financial Value of ESG in Transactions: Lessons Learned and How to Apply Them 199Key Takeaways for Investors 202Key Points for the ESG Universe 205Appendix 1 Materiality, Maturity and Sample Private Equity ESG Due Diligence 207Appendix 2 Comparison of Three Global Private Equity Firms on How They Approach ESG in Their Own Firms 215Index 221