Sustainable M&A Through Double Materiality

IN THE HIGH-STAKES WORLD of mergers and acquisitions (M&A), the focus has long been on traditional synergy metrics.

- Akshat Pratap Singh

Reducing costs through operational efficiencies, increasing revenue by capturing new markets, and optimising financial structures for tax benefits have long been the cornerstones of successful M&A strategies. However, as the world sets down the path of achieving the ambitious targets of having net zero emissions by 2050 and limiting temperature rise to 1.5 degrees above pre-industrial levels (both already considered unrealistic by some), it becomes imperative for the private sector to update its legacy practices and catch up as well.

Over the last decade, environmental and social factors have significantly influenced regulatory landscapes, consumer behaviour, and investor decisions. A 2023 EY study states that 90 per cent of international investors look for a company's sustainability performance as a key metric for long-term business resilience, while a study by Capgemini found that 79 per cent of consumers are changing their preferences based on ecological and community impact. This has led to another type of synergy gaining prominence in M&A: sustainability synergy.

With climate change being a looming existential threat for many businesses and their supply chains, the sustainability perspective must not be ignored.