Anshuman Singh & Farshaz Mirza, Government Law College, Mumbai
ABSTRACT
In the contemporary landscape of corporate governance and investment strategy, Environmental, Social, and Governance (ESG) criteria have emerged as pivotal factors influencing decision-making processes. This article explores the profound impact of ESG considerations on mergers and acquisitions (M&A) deals in the 21st century. ESG was first mentioned by a report of UN titled, “Who Cares Win: Connecting Financial Markets to a Changing World”1. The report advised board of directors and management of financial institutions to incorporate a strong ESG policy, ESG metrics have evolved from niche concerns to mainstream indicators of corporate health and resilience. The three core components of ESG—Environmental, Social, and Governance—each play a crucial role in assessing a company’s operational efficiency, risk management practices, and long-term viability. The impact of ESG considerations on M&A transactions is multifaceted. Companies with strong ESG profiles are viewed favourably by acquirers seeking to enhance their own sustainability credentials, mitigate risks, and align with evolving regulatory expectations. Conversely, companies with poor ESG performance may face higher scrutiny, valuation discounts, or integration challenges post-acquisition.
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