ESG due diligence is buyer-side review of the target’s environmental, social, and governance performance and risk exposure, including emissions and energy use, modern slavery compliance under the Modern Slavery Act 2018 (Cth) where the threshold is met, workplace health and safety, diversity practices, and governance frameworks. ESG due diligence is most prominent where the buyer is a fund with limited partner reporting obligations, an offshore acquirer with mandatory ESG disclosure requirements, or a strategic buyer integrating ESG into post-acquisition planning.
In Australian sub-$20M deals, ESG due diligence is increasing in frequency but is not yet universal.