2022 EMA ESG Due 
Diligence Study
How leading M&A teams are managing ESG DD
home.kpmg/esg-dd 
November 2022

© 2022 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 
Foreword
Dear readers, 
Sustainability has become one of the defining 
megatrends affecting businesses worldwide. And the 
M&A world is no exception to the rule.
Across sectors and around the world, more and more 
deals are starting to be influenced by sustainability 
criteria. Targets with strong sustainability stories (and 
the data to back it up) are enjoying price premiums. 
And M&A teams are increasingly conducting 
Environmental, Social and Governance (ESG) due 
diligence (DD) on targets at an early stage. 
To find out what this means for dealmakers across 
Europe, the Middle East and Africa, we surveyed more 
than 150 active dealmakers across the region. We 
asked them what works, what doesn’t work and what 
challenges they face going forward. We discussed 
various models for embedding ESG into DD. And we 
asked them to share their advice and insights based on 
their experience. 
What we found was little consensus around what ESG 
DD actually means. Dealmakers are divided about how 
best to incorporate ESG DD into their existing due 
diligence frameworks. ESG DD work is often 
underfunded. And ESG DD is not always aligned to the 
organization’s overall ESG strategy. 
Yet the data also suggests that dealmakers have made 
this area a key priority. And they are determined to see 
how ESG DD can not only help identify and manage 
potential risks, but also identify significant financial 
upside driven by ESG transformation. The importance 
of getting ESG DD right has never been clearer. 
In this report, we explore the findings of our survey 
and one-on-one interviews with dealmakers. 
Leveraging insights gained from KPMG firms’ 
experience in ESG and due diligence, the authors offer 
some tips and advice to help dealmakers evolve and 
mature their ESG DD capabilities. And we share some 
practical examples from KPMG firms’ work in the area. 
We hope this report provides EMA dealmakers and 
strategy leaders with new ideas and motivation to 
drive forward their ESG DD capabilities. To learn more 
about the topics raised in this report – or to discuss 
your organization’s unique ESG DD situation – we 
encourage you to contact any of the KPMG 
professionals listed at the back of this report. 
To find out what ESG DD 
means for dealmakers across 
Europe, the Middle East and 
Africa, we surveyed more than 
150 active dealmakers across 
the region.
02
2022 EMA ESG Due Diligence Study
How leading M&A teams are managing ESG DD

© 2022 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 
Summary of key findings
Something exciting is happening at the nexus of M&A and ESG. Dealmakers are actively 
integrating ESG considerations into their deal activities. Investors across the board are ramping 
up their ESG due diligence efforts. And premiums are being paid for targets that meet ESG 
priorities. Dealmakers see the financial value and potential uplift opportunities that can be 
achieved by understanding a target’s ESG-related performance at an early stage of the 
transaction process. Read Chapter 1 to learn more.
However, there are still major challenges faced by ESG DD practitioners. Specifically, 
there appears to be no market consensus around what a standard ESG DD scope would 
include, as practitioners struggle with the breadth of the term “ESG”. And targets aren’t 
always able to provide quality data or documentation. As such, practitioners can often struggle 
to quantify their findings and related financial impacts or value creation opportunities. Read 
Chapter 2 to learn more.
Nonetheless, there are clear indications of “what good looks like”. Mature ESG DD 
practitioners are making a strong link between their overarching corporate sustainability 
strategy and their ESG DD procedures. They are connecting their ESG DD findings to post-
closing actions. And they are focused on value creation opportunities (i.e. “upsides”) rather 
than just mitigation of risks. They are also more likely to mandate a dedicated ESG DD 
workstream, as opposed to a “fragmented” model where “E”, “S”, and “G” topics are 
handled by separate workstreams. Financial investors appear to be somewhat ahead of the 
curve in terms of ESG DD maturity. Read Chapter 3 to learn more.
The immediate priorities for dealmakers are becoming clear. First, dealmakers need to 
understand their company’s ESG strategy and identify the areas that are truly material. This 
can help them break through the complexity caused by the breadth of the term ‘ESG’. Second, 
they need to develop a “blueprint” for their ESG DD approach, both in terms of intellectual 
framework as well as in terms of organization (dedicated workstream vs. fragmented 
workstream model). This will require ensuring proper budgets and resources are in place to 
deliver on these objectives. Read Chapter 4 to learn more. 
Help is at hand. While the field of ESG DD continues to evolve, practitioners should look to 
leaders and other relatively more mature sectors to uncover new ideas and approaches to  
ESG DD. Dealmakers may also want to consider leveraging the experience of outside  
advisors and practitioners to not only ensure a robust DD process, but also to help share 
insights and knowledge as the ESG DD framework evolves. Read Chapter 5 to discover how 
KPMG firms can help.
03
2022 EMA ESG Due Diligence Study
How leading M&A teams are managing ESG DD

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Content
Foreword 
02
Summary of key findings 
03
01.
Something exciting is happening 
05
Sustainability is changing the strategic environment 
05
ESG is on the agenda of most dealmakers 
 
05
Investors are willing to pay more for a sustainable target 
06
ESG DD is on the rise 
07
Investors believe in the value of ESG DD 
08
02.
There are still major challenges to be solved, however 
09
Challenge #1: Agreeing on terminology and scope 
09
Challenge #2: Securing the right data from the target 
12
Challenge #3: Quantification of findings 
12
03.
What does best practice look like? 
13
Action #1: The leaders conduct ESG DD on every transaction  
13
Action #2: The leaders link their ESG DD approach to the overall corporate ESG strategy 
14
Action #3: The leaders link their ESG DD to clear post-closing actions 
15
Action #4: The leaders look beyond risks to find value 
16
Action #5: The leaders are clearly defining their DD workstreams 
17
Action #6: The leaders are securing appropriate resources to be effective 
18
Action #7: The leaders are continuously improving their approach 
19
04.
What should dealmakers do? 
22
Step #1: Establish link to corporate sustainability strategy 
22
Step #2: Develop your framework 
22
Step #3: Secure appropriate resources 
22
Step #4: Implement & improve 
23
05.
How KPMG can help 
24
About the study 
25
Authors & Contacts 
26
04
2022 EMA ESG Due Diligence Study
How leading M&A teams are managing ESG DD

© 2022 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 
01
Something exciting is happening
Sustainability is changing the strategic environment 
Sustainability has become a defining megatrend affecting 
businesses worldwide. This is particularly true of the EMA 
region, where the EU’s Green Deal and other regulatory 
initiatives are pushing ESG to the top of the corporate 
strategy agenda.
At the same time, companies face pressure from their 
employees and customers who want to work for, and 
purchase from, organizations that reflect their 
expectations around sustainability. And they are hearing 
from their investors who are starting to ask increasingly 
tough questions as they seek to understand and quantify 
Figure 1:
Are ESG considerations currently on your  
M&A agenda?
82%
14%
4%
Yes
No
I don’t know /
prefer not
to answer
05
2022 EMA ESG Due Diligence Study
Something exciting is happening
Source: KPMG EMA ESG Due Diligence Study (2022)
risks and opportunities of their portfolios in a fast-
changing business environment. 
In sum, these developments amount to a significant 
change in the strategic environment companies in the 
EMA region operate in, driving corporate leaders to 
recalibrate their strategy.
The M&A world is clearly not immune from these 
pressures. M&A has long been a vital strategic tool in the 
corporate strategist’s toolbox, used in times of disruptive 
change – be it to accelerate entry into emerging markets, 
to diversify away from markets with diminishing 
attractiveness or to close key capability gaps. Historically, 
M&A waves often occurred during times of fundamental 
regulatory or technological changes, as companies 
scrambled to capitalize on new market opportunities or to 
mitigate emerging risks. Our view suggests that the rise 
of sustainability as a disruptive factor in a company’s 
strategic environment could have a similar catalytic impact 
on M&A activity going forward.
In this context, KPMG professionals surveyed over 150 
active dealmakers across Europe, the Middle East and 
Africa (“EMA”) to understand how environmental, social 
and governance (ESG) factors affect their deal-making 
activities. In addition, they held in-depth conversations 
with senior dealmakers in eight countries in the region. 
The results of these interactions clearly show that, 
indeed, something exciting is happening at the nexus of 
M&A and ESG.
ESG is on the agenda of most dealmakers
Dealmakers recognize the importance of ESG. In fact,  
four out of five dealmakers in our survey say that ESG 
considerations are now on their M&A agenda (see  
Figure 1).
Yet what this means in practice differs from investor to 
investor. Each company will look at ESG from a different 
context and at a different stage of maturity. 
Some are at an early stage of assessing the issue. “I’m 
quite sure that the current ESG trends will impact our deal 
processes. But I’m not quite sure how yet,” admitted one 
business development manager at a life sciences 
organization.

Others have started to seek alignment between their 
company’s overarching ESG strategy and its DD 
procedures. “One of my tasks right now is to link our 
corporate ESG strategy to the M&A strategy and 
processes,” said an industrial manufacturing M&A manager. 
“We are identifying the main pillars of our ESG strategy 
and determining what they mean for our deal process.”
Many of those that are further ahead say they are focused 
on operationalizing this alignment. “We’re developing a 
standard ESG due diligence questionnaire,” noted an 
investment director at a European chemicals company. 
“Going forward, we want to enter into an annual dialogue 
with management about our targets, post-closing goals 
and milestones.”
As the data suggests, dealmakers are highly focused on 
integrating ESG factors into dealmaking activities. And 
many are now working along a journey to achieve that. 
Investors are willing to pay more for a sustainable target
And what’s more: Dealmakers aren’t just talking about 
wanting sustainable investments. They are ready to put 
extra money on the table to secure those investments.
More than two thirds of respondents said that they 
would be willing to pay a premium for a target that 
demonstrates a high level of ESG maturity in areas that 
align to their ESG priorities. Half of all respondents said 
that premium would be between 1% and 5% (see Figure 
2). Almost one-in-five said they would pay a premium of  
5 percent or more.
Figure 2:
As a buyer, how much would you be willing to pay 
more for a target that demonstrates a high level of 
ESG maturity in line with your ESG priorities?
32%
50%
15%
3%
0%
no premium
1-5%
premium
5-10%
premium
>10%
premium
06
2022 EMA ESG Due Diligence Study
Something exciting is happening
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provide no services to clients. All rights reserved. 
Source: KPMG EMA ESG Due Diligence Study (2022)

© 2022 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 
Rarely (0-20%)
Figure 3:
How frequently did you / do you expect to involve an ESG DD on your deals?
Very frequently (>80%)
Occasionally (20-50%)
Frequently (50-80%)
Never (0%)
Historically
(past 2 years)
16%
16%
15%
28%
25%
Going 
forward
24%
11%
12%
5%
48%
Source: KPMG EMA ESG Due Diligence Study (2022)
Why are investors willing to pay more for a sustainable 
target? Most believe that there is a positive long-term 
correlation between sustainable business practices and 
financial returns. “We believe sustainability is good for 
business,” noted the head of M&A at an industrial 
manufacturing company and added: “We see good 
performance on ESG as a proxy for good management. 
And we know that good management drives the financial 
value of a company.” Or, in the words of a partner at a PE 
fund: “ESG helps us reduce the beta risk – the systemic 
risks – of our investments”.
ESG DD is on the rise
Expect ESG due diligence to become much more 
commonplace in dealmaking. The survey results indicate 
that investors are looking to significantly increase 
their use of ESG DD. The number who expect to conduct 
ESG DD ‘very frequently’ is set to nearly double. The 
share of dealmakers who don’t plan to conduct any ESG 
DD will fall from 28 percent to 5 percent going forward 
(see Figure 3). 
This means that the pool of ESG DD practitioners will 
grow, which in turn will drive market maturity.
For buyers, this is good news, as ESG DD procedures are 
likely to mature quickly over the coming months and 
years.
For sellers, it means that increasing levels of scrutiny from 
buyers must be expected – even for assets and 
dealmakers that may historically not have been subject to 
stringent ESG DD enquiries.
07
2022 EMA ESG Due Diligence Study
Something exciting is happening

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Investors believe in the value of ESG DD
And finally, ESG DD isn’t just performed because 
dealmakers have to (e.g. due to regulation or stakeholder 
pressure). The top reason mentioned by the survey 
respondents was that they believe in the monetary 
value of identifying risks and upsides related to 
sustainability at the pre-signing stage (see Figure 4).
“I have not seen one single company that is poor on ESG 
matters and has been sustainable over time,” argued one 
PE fund partner. “We are convinced that ESG is a key 
operational performance indicator,” he added. A head of 
M&A of an industrial manufacturing company explained 
that they had “learned in practice that ESG-related 
problems will come around to impose a cost on the 
business at a later stage.”
A range of other motivations also play a role in driving 
demand for ESG DD. Many suggest it can help them 
better respond to regulatory requirements in areas such 
as reporting (e.g. SFDR1). Others suggest it is a 
requirement of their internal corporate policies or from 
investors or debt providers.
Many fund managers also see ESG as a key differentiator 
with clients. “We see ESG as being of primary 
importance in fund raising. It helps us distinguish us from 
other organizations,” explained an ESG leader at an 
infrastructure fund. Such ESG-funds then naturally need to 
ensure that its investments fall in line with the fund’s 
ESG-related priorities – and ESG DD is a key tool to 
achieve that outcome.
08
2022 EMA ESG Due Diligence Study
Something exciting is happening
1 SFDR refers to the EU’s “Sustainable Financial Disclosure Regulation”, a 
landmark legislation related to ESG disclosures of asset managers and 
other financial market participants, effective since 10 March 2021. For more 
information, see: What is the SFDR? Sustainable Finance Disclosures - 
KPMG Ireland (home.kpmg)
Figure 4:
Why have you conducted / are you going to conduct ESG DD on your deals (multiple choice)?
0 (0%)
5 (6%)
We believe in the monetary value of 
identifying risks and upsides related 
to sustainbiltiy pre-signing
54 (65%)
33 (75%)
1 (13%)
88 (65%)
We believe that by conducting ESG DD, we are 
better able to respond to regulatory requirements 
in areas such as reporting (e.g. SFRD)
35 (42%)
28 (64%)
1 (13%)
64 (47%)
Our corporate policy requires it 
as a matter of standard
27 (61%)
2 (25%)
56 (41%)
Our investors are requiring us to 
conduct ESG DD on deals
19 (23%)
30 (68%)
53 (39%)
Our debt-providers are requiring us 
to conduct ESG DD on our deals
14 (17%)
10 (23%)
27 (20%)
Our financing products are designed 
for ESG as dedicated ESG funds
7 (16%)
5 (6%)
0 (0%)
12 (9%)
Other
1 (2%)
6 (4%)
Our deal insurance provider 
is requiring it
2 (2%)
1 (2%)
0 (0%)
3 (2%)
27 (33%)
4 (50%)
3 (38%)
Total
Corporate investors
Financial investors
Independent board members & advisors
Source: KPMG EMA ESG Due Diligence Study (2022)

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02
There are still major challenges to be 
solved, however
As ESG DD is becoming more common and as dealmakers 
enhance their maturity around ESG-related issues, several 
challenges and complexities remain to be solved.
Challenge #1: Agreeing on terminology and scope
First and foremost, the term “ESG Due Diligence” suffers 
from a similar degree of confusion as the term “ESG” 
often does on a broader scale beyond just deals. “The 
term ESG is vast, complicated to define and to fulfill,” 
noted one PE fund sustainability director. Or, as a chief 
sustainability officer of another PE fund noted: “I do not 
like the term ‘ESG’. I do not discuss ‘ESG’ matters. I try to 
find key areas that will have an impact on the company, 
which naturally cover the ‘E’, the ‘S’ and the ‘G’ – but 
these are not necessarily labeled as ‘ESG’.”
In our view, the reason for this confusion lies in the 
inherent broadness of the term “ESG”.  The term co-
mingles a multitude of distinct topics under each of the 
respective letters that are quite different in their nature. 
For example:
• “E” could include topics like greenhouse gas 
emissions, climate change, biodiversity, soil 
contamination, water contamination, air pollution, the 
protection of marine resources, etc.
• “S” brings together topics like living wages, child labor 
and human rights in the supply chain, diversity and 
inclusion, data security and privacy, social practices, 
product labelling, etc.
• “G” relates to topics like anticorruption, business 
ethics, anticompetitive behavior, responsible tax 
records, whistleblower mechanisms, etc.
 
Clearly, not all these topics are equally applicable to all 
targets and transactions.
09
2022 EMA ESG Due Diligence Study
There are still major challenges to be solved, however

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To cut through this complexity, mindful upfront scoping is 
paramount. Yet, this is a step that many investors are 
struggling with. The survey results indicate that selecting 
a meaningful, yet manageable scope is the number 
one challenge faced by ESG DD practitioners (see 
Figure 5).
“The basic problem with ESG DD is understanding what 
to look at in the first place,” admitted one industrial 
manufacturing M&A leader.
To better understand the depth of this challenge, survey 
participants were asked to rate a set of twenty potential 
ESG DD scope items according to: (a) Whether they are 
important at all and (b) if so, whether they should be 
included in an ESG DD workstream or in another 
workstream such as environmental DD, HR DD, tax DD, 
legal DD, etc. The results (shown in Figure 6) show that:
• While the respondents agreed that all 20 items are 
important to some degree, there is no clear market 
consensus on whether they should be part of an ESG 
DD or not. Specifically, for 16 of the 20 items, only 40-
60% or respondents agreed that they should be part of 
an ESG DD product.
• Some degree of consensus (~70%) can be seen only 
on three topics: 
- Climate-related matters generally appear to be 
viewed as belonging in a ESG DD product (e.g. a 
target’s understanding of its climate related-risks, as 
well as its own carbon footprint and the presence of 
a credible decarbonization plan) 
- There was similar consensus that issues such as  
tax transparency and cybersecurity may belong in 
other workstreams (presumably tax and IT, 
respectively). 
10
2022 EMA ESG Due Diligence Study
There are still major challenges to be solved, however
Figure 5:
What are the key challenges you have encountered, or you expect to encounter in conducting ESG DD  
(multiple choice)?
Selecting a meaningful, yet 
manageable scope, considering the 
breadth of ESG
5 (63%)
48 (57%)
25 (48%)
78  (54%)
4 (8%)
Difficult to quantifying potential 
findings
4 (50%)
37 (44%)
30 (58%)
71  (49%)
Lack of robust data or written policies of allegedly 
followed practices at the target
4 (50%)
38 (45%)
29 (56%)
71  (49%)
Lack of common understanding of what “ESG DD 
means” between us, the target, and / or other parties 
in the process (e.g., advisers, banks, lawyers)
22 (26%)
11 (21%)
35  (24%)
Don’t know how to approach 
ESG DD (no framework, limited 
experience available in-house)
2 (25%)
11 (13%) 18  (13%)
Low level of 
knowledge / training / common 
terminology in our own organization
Difficult to find a knowledgeable 
adviser
0 (0%)
9 (11%)
5 (10%)
14  (10%)
Encountered no serious challenges
2 (2%) 6  (4%)
Difficult to find relevant benchmarks
1 (1%)
1 (2%) 2  (1%)
2 (25%)
5 (10%)
2 (25%)
12 (14%) 18  (13%)
4 (8%)
0 (0%)
0 (0%)
Total
Corporate investors
Financial investors
Independent board members & advisors
Source: KPMG EMA ESG Due Diligence Study (2022)

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Important and 
should be part 
of ESG DD
Important, but 
should be part 
of another DD 
work stream
Unimportant in 
the context of 
my deals
Don't know
Climate – a target’s understanding of its carbon footprint, 
science-based decarbonization targets and a credible 
decarbonization plan
69%
15%
12%
4%
Climate – a target’s understanding of its exposure to climate 
change related risks
68%
14%
14%
5%
Contamination – risks from soil or groundwater 
contamination
59%
27%
13%
1%
Waste & resource efficiency – maturity of a target’s  
waste & resource management practices
58%
21%
18%
3%
ESG controversy screening – whether the target has had  
any controversy that may impact their ESG performance  
and wider reputation
58%
23%
10%
9%
Link to business strategy – degree to which ESG 
considerations are embedded in a target’s strategy and 
business model (e.g., whether to play in a certain product 
category, geography, etc.)
54%
30%
11%
5%
Regulation - a target’s understanding of existing or emerging 
sustainability-related regulation relevant to its business
53%
34%
11%
2%
Certifications & ratings – degree to which the target has 
obtained well-recognized sustainability certifications & 
ratings
52%
27%
18%
3%
Governance – a target’s sustainability-related governance 
structures (e.g., management roles & responsibilities, link  
to executive pay, etc.)
51%
33%
12%
4%
EHS – strength of a target’s employee health & safety 
records and policies
50%
39%
8%
3%
Labor practices – strength of a target’s labor policies and 
practices (e.g., human rights, living wages, modern slavery, 
child labor)
47%
41%
11%
1%
Diversity & inclusion – strength of a target’s Diversity & 
Inclusion policies and performance
44%
30%
23%
3%
Product safety – strength of a target’s product safety  
records and policies
44%
47%
7%
3%
Biodiversity – a target’s understanding of its impact and 
dependency on biodiversity, related targets and action plans
43%
17%
30%
10%
Corruption – strength of a target’s anti-corruption policies  
and processes
42%
49%
7%
2%
Materiality – whether a target has a robust understanding  
of its material areas
41%
39%
11%
9%
Data & systems – maturity of a target’s ESG data, systems, 
and processes
41%
34%
21%
4%
Compliance – degree to which a target has mature 
compliance processes and a strong compliance record
40%
55%
3%
2%
Tax transparency – degree to which company makes use  
of aggressive tax planning; risks of tax avoidance / evasion; 
non-regulatory disclosure of tax-related information
24%
71%
3%
2%
Cybersecurity – strength of a target’s cybersecurity policies 
and track record
23%
70%
3%
4%
Figure 6:
In your view, which are the key sub-areas of sustainability that an ESG DD work stream should make enquiries 
about?
Source: KPMG EMA ESG Due Diligence Study (2022)
11
2022 EMA ESG Due Diligence Study
There are still major challenges to be solved, however

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In KPMG firms’ experience a meaningful scope of an 
ESG DD needs to be defined on a case-by-case basis, 
considering the sector, size and maturity of the target, as 
well as the investors’ sustainable investment strategy. 
We will elaborate on this in Chapter 3.
Challenge #2: Securing the right data from the target
Dealmakers say they are struggling to gather the 
relevant data and documentation of allegedly followed  
ESG practices at a target, making it difficult to assess the 
relevant areas in a fact-oriented manner (see Figure 5 
above).
On a positive note, this situation should be expected to 
gradually improve in the near future, as many companies 
are required by regulation to measure and report on many 
aspects of sustainability in a more standardized and 
transparent manner2. Indeed, as the recent KPMG global 
Survey of Sustainability Reporting 2022 has shown, 
sustainability reporting is adopted at fast rates across the 
globe3.
However, in the meantime, dealmakers need to find 
solutions to this challenge. For many, the absence of 
sufficient data or documentation is a relevant finding in 
itself, suggesting the existence of potentially 
undiscoverable risks or an overall lack of ESG maturity of 
a target.
Additionally, KPMG firms are seeing buy-side 
practitioners start to become more creative in the way 
they find and assess target data. For example by:
• Making use of innovative data and analytics tools, such 
as internet scrapers, which can be used to screen large 
amounts of external data for ESG-related controversies 
in connection with a target 
• Making use of some of the methods typically applied in 
other DD workstreams where reliable documentation 
is rare – for example, Commercial Due Diligence 
workstreams regularly speak to large numbers of 
customers, suppliers, or competitors to fact-check 
alleged characteristics of the target’s product or 
service. The same could be done to sanity-check 
certain claims of management with regard to ESG;  
e.g. launching a survey or interview program with (ex-)
employees, suppliers, or customers to fact-check 
whether indeed the target is perceived as having acted 
as described orally by management  
• Where there are gaps in documentation, discuss with 
management about why these exist and what it would 
take to close them – in many cases, they exist because 
a target is still developing on a particular matter, and in 
certain cases such a gap can turn out to be a potential 
source of value creation post-closing
At the same time, sell-side advisors should take note. If 
buyers struggle with proper target documentation, this is 
an opportunity for sell-side advisors to create additional 
value by properly documenting (and ideally improving) a 
target’s ESG-related performance in advance of a sales 
process – an activity that KPMG firms still do not see 
embedded into standard sell-side vendor assistance 
services frequently enough.
Challenge #3: Quantification of findings
Even in situations where the scope of the ESG DD is 
clear and reliable target data is available, dealmakers 
often struggle to quantify their findings and assess 
the financial impact on the deal (see Figure 5 above).
In large part, this reflects challenges in obtaining readily 
available, fit-for-purpose benchmarking data. Once again, 
such data should be expected to become more readily 
available in the near future due to the increase in public 
reporting described above. In fact, there is already a 
dynamic landscape of start-ups focused on addressing 
this need in the market.
However, in some instances, even if a relevant 
benchmark can be found and if a target turns out to be 
“below par” or “above par”, it can still be difficult to 
quantify the potential financial deal impact of such 
performance on a specific ESG-related factor. As one 
senior ESG industry practitioner noted: “Let’s  say I find 
out that a target company has not been paying up for all 
its carbon certificates. I can probably quantify the 
financial risk this may cause. But if I find that the target’s 
management team is somewhat lagging in its diversity 
and inclusion – what’s the financial impact of that on a 
deal? How much less should you pay for a few 
percentage points of lower D&I?”
One workaround KPMG firms see applied in practice is to 
quantify such gaps by estimating the expected costs to 
bring a target up to the level expected by the investor. 
Taking the D&I example from above, the investor could 
consider which particular skills and profiles are missing in 
the target’s management team and how much it would 
cost to re-shuffle the team accordingly in the post-closing 
phase.
2 For example, EU legislation such as the Corporate Social Responsibility 
Directive (CSRD) or the EU Taxonomy. For further information on these acts, 
see Corporate Sustainability Reporting Directive – The CSRD – KPMG 
Ireland (home.kpmg) and EU Taxonomy disclosures – setting a baseline - 
KPMG Ireland (home.kpmg)
3 According to the KPMG Survey of Sustainability Reporting 2022, 
sustainability reporting rates among the Top 100 companies in terms of 
revenues across the 58 geographies worldwide have climbed from 64% to 
79% in the past decade. For further information see: Big shifts, small steps 
– KPMG Global (home.kpmg)
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2022 EMA ESG Due Diligence Study
There are still major challenges to be solved, however

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03
What does best practice look like?
This survey and KPMG firms’ experience highlight seven 
key actions that the more mature dealmaking teams are 
taking with the aim of achieving real value from their ESG 
DD processes. 
Action #1: The leaders conduct ESG DD on every 
transaction 
The first recommendation is as basic as it is important: If 
an investor indeed believes ESG-related factors are a 
source of either risk or value, then ESG DD should be 
performed on transactions as a matter of standard.
The survey shows that ESG DD is impactful. For example, 
consider the responses shown in Figure 7. It shows that 
those investors who performed ESG DD more 
frequently were more likely to say they had unearthed 
material findings. Conversely, investors who performed 
ESG DD less frequently were more likely to say that they 
hadn’t uncovered any material findings – or, perhaps more 
worryingly – that they didn’t know whether they had 
identified any material findings in the past.
The consequences of these material findings can be 
significant (see Figure 8). More than half of the 
respondents suggested some material findings could be a 
‘deal stopper’. A similarly high share of respondents said 
that ESG DD findings can result in a need to request an 
additional representation, warranty or indemnity from the 
seller, a need to reduce the value of their bid, or a need to 
change the deal structure, timeline or closing conditions. 
In other words: ESG-related findings have the potential to 
derail a deal. Consider the sidebar for a real-life example 
of a deal derailed by an ESG-related issue.
A case in point… 
Consider the example of an industrial manufacturing 
company in the Nordics where an ESG-related 
finding resulted in a deal stopper. This company had 
identified a target in the same industry for a bolt-on 
acquisition. Since the industry involves significant 
indirect sales, the investor wanted to put particular 
focus on the target’s business ethics and bribery-
related processes and practices as part of their ESG 
DD. During the DD phase, indications of kickback 
payments were discovered. Upon making this 
finding, the investor gave the target an opportunity 
to improve performance – but when meaningful 
changes were not effectively made over the next 
year, the investor walked away from the deal.
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What does best practice look like?
Yes
I don’t know
No
Respondents who do ESG DD rarely (0-20%)
0
40
80
20
60
100
9%
9%
23%
60%
25%
17%
29%
29%
30%
30%
30%
10%
Respondents who do ESG DD occasionally (20-50%)
Respondents who do do ESG DD frequently (50-80%)
Respondents who do ESG DD very frequently (>80%)
Figure 7:
Have you ever had a material finding in an ESG DD that has had a significant deal implication (by frequency  
of conducting ESG DD)?
Source: KPMG EMA ESG Due Diligence Study (2022)

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Figure 8:
What consequences did those material findings have / could such material findings have for you (multiple choice)?
Financial investors
Independent board  
members & advisors
69%
68%
Deal  
stopper
69%
64%
Request for 
an additional 
representation, 
warranty, or 
indemnity from 
the seller
58%
66%
Reduction of 
valuation
73%
58%
Change of  
deal structure / 
timeline / closing 
conditions
35%
11%
Impact on 
post-signing 
integration 
priorities
No significant 
impact, neither 
on pre-signing 
negotiations nor 
on post-signing 
priorities
Change of deal 
scope
100 (66%)
97 (64%)
93 (62%)
92 (61%)
29 (19%)
4 (3%)
1 (1%)
Corporate investors
Source: KPMG EMA ESG 
Due Diligence Study (2022)
Clearly, the only way to make these consequences 
actionable is by uncovering ESG-related issues during the 
pre-signing phase. And this can only happen if systematic 
ESG DD is performed. Those investors who forego ESG 
DD processes do so at their own peril. 
Action #2: The leaders link their ESG DD approach to 
the overall corporate ESG strategy
As part of the survey, dealmakers were asked how 
mature their ESG DD approach is overall. Additionally, they 
were asked to comment on the strength of the link 
between their company’s overall ESG strategy and their 
ESG DD approach in deals. The combination of these 
questions revealed an interesting pattern shown in Figure 
9: There is a clear link between the maturity of an 
organization’s ESG DD approach and its alignment to the 
corporate ESG strategy. The most mature unanimously 
say they have strong and direct alignment with the 
corporate ESG strategy. Many of the least mature 
suggest that there is only a weak link or that their 
organizations don’t even have a formal ESG strategy (see 
Figure 9).
Figure 9:
In your view, how well connected is your pre-signing ESG DD approach to your ESG strategy?
Strong, direct link
100%
Somewhat linked
Weak link
Not relevant – we don’t 
have an agreed ESG 
strategy
0%
60%
10%
35%
45%
0%
3%
20%
2%
25%
0%
Share of respondents who believe their 
approach is “early days, quite immature”
Share of respondents who believe their 
approach is “reasonably mature and 
effective, but still in the learning phase”
Share of respondents who believe their 
approach is “top notch / market leading”
Source: KPMG EMA ESG Due Diligence 
Study (2022)
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This finding is strongly supported by the work of KPMG 
firms’ deal practitioners across the EMA region. If there is 
no agreed ESG strategy at the corporate level, or if the 
corporate ESG strategy is not sharp enough – for 
example, by not clearly differentiating the material 
sustainability areas, or by not setting a clear ambition – 
then scoping a meaningful ESG DD is difficult for the 
responsible M&A departments.
The more mature organizations – financial investors in 
particular – tend to have a clear view of how their ESG DD 
aligns to their overall ESG strategy. They assess sectors 
and subsectors for unique risks and opportunities. “We 
systematically look at ESG topics based on a checklist. 
Before the non-binding offer, we cover around 10 different 
topics that help us scope what needs to be addressed in 
terms of ESG issues during due diligence”, one ESG 
leader at an infrastructure fund explained.
Corporate investors tend to face a less complex process, 
as most of them are only active in a small number of 
adjacent sectors. Nonetheless, going “back to basics” 
and understanding their overarching ESG strategy and 
ambition first is equally applicable to corporate investors, 
as the example in the adjacent sidebar illustrates.
Action #3: The leaders link their ESG DD to clear post-
closing actions
Uncovering ESG risks and opportunities during the due 
diligence process is not the same as managing those 
risks and opportunities. The more mature ESG DD 
teams put significant effort into making sure the 
findings of their ESG DD reports are used to drive a 
clear post-closing action plan (see Figure 10).
As one PE fund Sustainability Director noted, “There is a 
direct link between our findings and the action plan that is 
put in place right after the closing. We use our findings to 
drive an 18-month post-closing program in which we 
assess ESG issues together with the management and 
create a roadmap around the ESG priorities.”
A case in point… 
Consider the example of a food & beverage 
company, whose M&A department was tasked 
with incorporating ESG considerations into their 
due diligence procedures. Initially, the team 
struggled. The topic seemed broad. The number of 
potential KPIs to be requested from targets was 
overwhelming. The inability of targets to provide 
the relevant information was frustrating. So, the 
M&A team took a step back, sat down with senior 
leadership and worked with them to identify which 
areas of sustainability were material to their 
company overall, and to set their ambition. Today, 
the team has an agreed, short list of non-negotiable 
topics that are successfully incorporated into every 
deal process.
Figure 10:
How well do you make use of the findings of your ESG DD reports to establish a post-closing action plan? 
Strong, direct link
82%
Somewhat linked
Weak link
Not relevant – we don’t 
take any ESG-related 
post-closing
63%
26%
29%
50%
5%
11%
3%
13%
9%
0%
9%
Share of respondents who believe their 
approach is “early days, quite immature”
Share of respondents who believe their 
approach is “reasonably mature and 
effective, but still in the learning phase”
Share of respondents who believe their 
approach is “top notch / market leading”
Source: KPMG EMA ESG Due Diligence 
Study (2022)
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Others indicate that their strong link between their ESG 
DD and their post-closing action plan often allows the 
team to move forward on deals that might otherwise be 
seen as too risky. “We recognize that our targets won’t be 
as mature as us on the ESG agenda,” said the head of 
M&A at an industrial manufacturing company. “But we 
then focus on bringing them up to that level post-closing.”
Action #4: The leaders look beyond risks to find value
Avoiding risks is important – but in addition to avoiding 
risks, the most mature ESG DD practitioners put 
significant focus into helping investees tap into ESG-
related value creation opportunities during the post-
closing stage (see Figure 11). More than nine-in-ten of the 
most mature say they focus on the opportunities they 
uncover during their ESG DD process. Perhaps not 
surprisingly, more than a quarter of the least mature see 
no link between their ESG DD and their plans to enhance 
the value of their investments.
Among some of the more mature investors, ESG-related 
transformation is a core investment theme, as one Private 
Equity practitioner explained: “Our main objective is to 
transform our portfolio companies. Thus, sustainability is 
approached from a strategic point of view and not from a 
“tick-the-box” compliance point of view. We work hand-in-
hand with the CEOs of our portfolio companies to 
integrate sustainability in their vision, mission, purpose, 
DNA and strategy.” 
Interestingly, the approach taken by the target also says a 
lot to some investors about the quality of the target’s 
management. As one Private Equity fund leader noted,  
“If the president or CEO of a company responds to ESG 
questions from a pure compliance point of view and  
with conformism, this is a clear red flag for us as 
investors.”
KPMG firms’ experience suggests that risk mitigation is 
clearly important. However, risk mitigation alone tends to 
be viewed as an immediate cost item. To achieve more 
financial value from sustainability-related interventions, 
dealmakers need to follow the lead of the most mature 
practitioners and embrace the focus on commercial and 
operational improvement levers related to sustainability.
A case in point… 
Consider the example of a Private Equity fund that 
conducted an ESG DD on a company in the oil and 
gas sector. As part of the process, they talked with 
the owner about what it means to be present in the 
oil and gas sector today, and how the target could 
potentially reduce their carbon footprint. A few 
months later, the owner of the company called the 
fund manager to say that he had signed a 
partnership with a well-established company to 
develop their decarbonization plan – a direct result 
of the ESG DD that the PE fund conducted.
Figure 11:
To what extent are the findings of ESG DD relevant in the value creation plans of your investments? 
Share of respondents who believe their 
approach is “early days, quite immature”
Share of respondents who believe their 
approach is “reasonably mature and 
effective, but still in the learning phase”
Share of respondents who believe their 
approach is “top notch / market leading”
We focus on the opportunities 
identified in ESG DD to help our 
investees take advantage of them
91%
We focus on the risks identified 
in ESG DD to help our investees 
mitigate them
ESG DD findings are irrelevant in 
our plans on enhancing the value of 
our investments
55%
34%
85%
61%
2%
28%
82%
0%
Source: KPMG EMA ESG Due Diligence Study (2022)
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Action #5: The leaders are clearly defining their DD 
workstreams
Based on the survey data, there appear to be two 
distinct operational models of running ESG DD in the 
market – the “fragmented” model and the “dedicated 
workstream” model (see sidebar for a deeper look at 
both models).
The dedicated workstream model was most popular 
among respondents (see Figure 12). However, there 
was also a significant minority of proponents of the 
“fragmented model”. Interestingly, the difference 
between these responses is almost entirely driven by 
the difference between financial and corporate investors. 
Among financial investor respondents, the dedicated 
workstream model was hugely popular, with 85 percent 
saying they maintain a separate workstream for ESG 
DD, while amongst corporate investors both models are 
prevalent.
And dealmakers have good arguments for both of these 
approaches.
Some proponents of the “fragmented” model argue that 
it is difficult to put all “E”, “S” and “G” topics under one 
roof. “To us, having a dedicated ‘ESG’ ad-hoc workstream 
does not make sense. The topics are just too broad to be 
covered by one workstream”, said one sustainability 
director of a Private Equity fund. Others argue that for 
historical reasons, the relevant ESG topics are already 
well addressed through existing workstreams, as this 
A closer look at ESG DD 
operational models
Fragmented model: In this model, 
practitioners define the individual “E”, “S” and 
“G” topics relevant to their transaction and 
embed these into existing workstreams (such 
as environmental, legal, HR, etc.), without an 
overarching ESG DD workstream. Findings flow 
together at the level of the M&A deal leader but 
are not necessarily grouped or labelled as ESG 
DD findings. 
Dedicated workstream model: In this model 
a dedicated workstream is appointed, which 
defines the relevant “E”, “S” and “G” topics 
and owns them. ESG DD is therefore treated at 
the same level as other, pre-existing 
workstreams streams. In some instances, 
expert inquiries into selected “E”, “S”, and “G” 
topics are left with previously existing 
workstreams if they already were a functioning 
part of the investors’ historical M&A playbook 
(e.g. soil pollution risks may stay with 
environmental DD, bribery may stay with legal 
DD, labor practices may stay with HR DD, etc.), 
but all ESG-related findings on pre-defined 
material topics are at least pulled together 
centrally by the ESG DD workstream in order to 
create a particular focus on them.
49 (54%)
44 (85%)
5 (63%)
34 (37%)
5 (10%)
A separate DD 
product that 
analyses the 
material risks 
and opportunities 
across a wide 
spectrum of 
sustainability-
related sub-topics, 
from a business 
perspective, 
connecting the 
dots between the 
various technical 
work streams (e.g., 
environmental, HR /
social, etc.)
A catch-all term 
for technical DD 
products that 
have existed 
for a long 
time across 
other DD work 
streams (e.g., 
environmental 
DD, HR / social 
DD, etc.)
Other
8 (9%)
3 (6%)
1 (13%)
2 (25%)
98 (65%)
40 (26%)
13 (9%)
Figure 12:
Which of the following descriptions best fits your 
understanding of “ESG Due Diligence” in deals?
Corporate investors
Financial investors
Advisory firm or indep. board member
Source: KPMG EMA ESG Due Diligence Study (2022)
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business development professional at a chemicals 
company explained: “Our material areas mostly relate to 
environmental and health & safety topics. They have 
always been important to us and they have always been 
covered by an EHS workstream.”
While this may be true in many cases, those who follow 
the fragmented model will need to ensure they aren’t 
missing out on the strategic layer of sustainability. An 
EHS workstream may, for example, be well versed in 
assessing a target’s compliance with, say, carbon trading 
schemes. But it may not have the capabilities to assess 
the viability of and the value creation opportunities in a 
target’s decarbonization plan. A fragmented model also 
runs the risk of allowing some material ESG issues to fall 
into obscurity.
Not surprisingly then, proponents of the dedicated 
workstream model, tend to argue that their approach 
enhances the focus on the material ESG-related topics.  
As one deal practitioner at an industrial manufacturer said 
in our interviews, “In my view, the ESG DD team should 
be a separate one because otherwise the relevant 
information would be too scattered. A separate stream 
allows the relevant dimensions to be investigated with 
the required focus.”
There are also some more nuanced views that suggest a 
dedicated ESG DD workstream can be complimentary to 
existing DD workstreams: “We run a separate ESG DD 
workstream. But there is typically some overlap, particularly 
between the legal DD and ESG DD workstreams. The legal 
team is usually focused on gathering documentation to 
compile a checklist of policies and documentation. They do 
a “tick-the-box” type of exercise – but they don’t really 
investigate whether such policies are actually 
implemented,” noted a healthcare sector investor. “This is 
where the ESG DD workstream adds value for us in 
combination with the existing legal workstream.”
In KPMG’s view, neither of these approaches is necessarily 
right or wrong. Ultimately, the right operational set-up will 
likely depend on multiple factors, including a dealmakers’ 
historically established processes, potential resource 
constraints and the importance of ESG-related factors in 
the context of its wider business strategy. The key lesson 
for investors is to think explicitly about which of these 
models suit them best and to manage the potential 
downsides of either approach accordingly.
Action #6: The leaders are securing appropriate 
resources to be effective
The survey suggests the majority of dealmakers are 
underinvesting in ESG DD relative to other DD 
workstreams. Indeed, when respondents were asked 
what they considered an appropriate external advisor 
budget for ESG DD, the majority returned a figure below 
EUR50,000 – even on large transactions worth more than 
EUR1 billion in value. 
Given that ESG DD is central to assessing a company’s 
actual value and the broad variety of topics covered under 
the workstream, it seems that ESG DD budgets are 
lagging behind those of other workstreams such as 
commercial, financial or legal.
One area where many dealmaking teams often hope to 
cut costs is in site visits. Site visits tend to require 
significant time investments from senior experts, as well 
as travel costs and other costs. However, KPMG firms’ 
experience suggests that site visits can be crucial in the 
context of ESG DD and are often the only tool available to 
help dealmakers ensure what they are seeing in the data 
is borne out in the reality on the ground (see sidebar for 
an illustrative example). 
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2022 EMA ESG Due Diligence Study
What does best practice look like?
A case in point… 
Consider the example of a member firm client who 
was looking to acquire a datacenter operator in the 
US. For this investor, the target’s greenhouse gas 
footprint was a material area they wanted to 
understand better during ESG DD. Desktop analysis 
revealed no critical findings – the target seemed to 
understand its as-is carbon footprint and appeared 
to be in compliance with the local “cap & trade” 
carbon credit trading system, which requires 
companies to own certificates for their carbon 
emissions. However, upon visiting its site, the 
investors’ ESG DD team did a walkaround of the 
exterior of the building and noted the presence of 
diesel generators placed behind the facility, used by 
the target to bridge the occasional local power 
outages. These generators had not been 
mentioned in the documents provided by the target 
through the virtual data room. Upon enquiry, the 
ESG DD team noted that the emissions for the 
generators were not reported, which were 
significant given their size and that the company 
had failed to secure the required air permits for the 
generators, essentially rendering the target 
non-compliant with local carbon trading regulations 
and thereby creating a financial risk to the deal. This 
issue would not have been uncovered without a 
site visit.

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Earlier sections described that ESG DD is a potentially very 
broad workstream. In addition, its findings can be as 
significant as de-railing a deal or supporting an investors’ 
ability to pay a significant price premium for a compliant 
target. In this context, it appears to the authors that ESG 
DD budgets have not yet caught up with the emerging 
importance of the topic.
To put it in the words of one Private Equity partner: “ESG 
is an investment. An investment may or may not have a 
return. Thus, as any investment, ESG must be managed as 
such. You have to put in energy, be engaged, allocate experts 
on the subject (for ESG DD for example) and budget. I am 
convinced that ESG increases the value of a company.”
Action #7: The leaders are continuously improving 
their approach
KPMG firms’ experience shows that the more mature 
dealmaking teams are constantly seeking to improve 
their approach to ESG DD. They recognize that the ESG 
agenda continues to shift and that approaches continue 
to improve. And they are looking to other leaders – 
and outside advisors – to help them identify and 
capture best practices. 
Interestingly, the data indicates that financial investors 
tend to be somewhat ahead on the ESG DD maturity 
curve. For example, financial investors were more likely 
to say ESG considerations are on their agenda (see 
19
2022 EMA ESG Due Diligence Study
What does best practice look like?

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Figure 13), more likely to rate themselves as ‘top notch/
market leading’ in their approach (see Figure 14), and they 
reported having performed more ESG DD in the past than 
corporate investors (see Figure 15).
KPMG professionals asked a number of senior 
dealmakers – both corporate and financial – why financial 
investors might be ahead. Many suggest that the EU’s 
Sustainable Finance Disclosure Regulation (SFDR) may 
Figure 13:
Are ESG considerations currently on your M&A agenda?
94%
Financial
investors
4%
2%
77%
Corporate
investors
19%
4%
No
Yes
I don’t know / prefer not to answer
Resonably mature, but still learning
Top notch / market leading
Early days, quite immature
38%
Financial
investors
21%
60%
Corporate
investors
40%
40%
Figure 14
Overall, as how mature would you describe your ESG DD approach?
Source: KPMG EMA ESG Due Diligence Study (2022)
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Figure 15:
Historically, for what share of deals did you 
involve ESG DD?
32%
19%
20%
19%
11%
15%
12%
12%
8%
54%
Corporate 
investors
Financial  
investors
Very frequently (>80%)
Frequently (50-80%)
Occasionally (20-50%)
Rarely (0-20%)
Never (0%)
100%
100%
Source: KPMG EMA ESG Due Diligence Study (2022)
have catalyzed financial investors to start thinking early 
about how they might position themselves in a world 
where sustainability is becoming increasingly important. 
“We really formalized our ESG best practices after 2018 
when we saw how ESG was rising up the agenda for 
German, Nordic and European funds at the time,” noted 
an infrastructure fund leader. “Today, we have gone even 
further, offering specific SFDR Article 9-branded funds.”
Privately, some corporate M&A practitioners acknowledge 
that their financial peers may currently be more mature in 
terms of ESG DD. “Although in-house corporate M&A 
teams don’t like to hear it, financial investors are probably 
ahead of the curve on this,” admitted one. “They are 
professional dealmakers, after all”.
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04
What should dealmakers do?
Based on the findings described in the preceding sections 
and KPMG firms’ experience in working with leading 
investors in the market, here are four recommended 
steps for dealmakers who wish to embed ESG into their 
due diligence procedures more thoroughly.
Step #1: Establish link to corporate sustainability 
strategy
As discussed in the preceding chapters, establishing a 
direct link between your ESG DD approach and your 
company’s overall sustainability strategy is a key step to 
cut through the complexity of the broad term of “ESG”.
If you have not already done so, ask yourself.
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2022 EMA ESG Due Diligence Study
What should dealmakers do?
• Do we have clarity on our overall corporate 
sustainability strategy?
• Does it articulate which “E”, “S” and “G” areas we 
consider material? 
• Does it say anything about our company’s overall 
sustainability ambition? For example, is our 
objective simply to be “compliant with regulation”? 
Or are we seeking to use sustainability as a 
competitive advantage, perhaps even looking to 
become an industry benchmark? 
• Does our corporate strategy aim to capture the 
commercial upside potential unlocked by the 
sustainability revolution? For example, by 
mandating the creation of new products or services 
for consumer segments that particularly value 
sustainability? If so, what does this mean for your 
M&A approach (e.g. target search, due diligence, 
integration)?
If your existing corporate sustainability strategy does not 
answer these questions, insist on that conversation being 
initiated with your company’s leadership.
Once you have answered fundamental questions such as 
the above together with your leadership team,  
articulating the most relevant areas for ESG DD will 
become easier.
Step #2: Develop your framework
Having created alignment with your corporate 
sustainability strategy, the next step is to develop your 
blueprint for ESG DD, both in terms of its intellectual 
framework, as well as from an organizational perspective.
If you have not already done so, ask yourself.
• Have we explicitly defined which sub-areas of ESG 
we will consider material in the context of 
transactions? Which ones will we need to monitor 
in every transaction versus on a case-by-case basis?
• Do we know what we will measure our targets 
against (e.g. industry peers? Relative level of 
performance compared to us?). Are there any 
levels of performance we would consider red lines?
• Should our ESG DD approach focus on risks only? Or 
do we have an appetite to explore potential sources 
of financial value creation connected to ESG?
• Would a fragmented or a dedicated workstream 
model be most appropriate? In this context, have 
we properly demarcated the scope of ESG DD and 
where it interfaces with other existing 
workstreams?
Step #3: Secure appropriate resources
Make sure you have the appropriate resources, budget 
and capabilities to ensure your ESG DD delivers on your 
corporate ESG strategy. Where needed, look for additional 
support that can also help enhance your own in-house 
capabilities. 
If you have not already done so, ask yourself:
• Who should run an ESG DD workstream?
• Do we have sufficient budget for the additional 
workstreams and expertise required for ESG DD?
• What capability gaps might we experience as we 
evolve our ESG DD approach and how can we fill 
them?

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23
2022 EMA ESG Due Diligence Study
What should dealmakers do?
• Are we securing the right level of budget for deals 
and are we using the budget efficiently?
• What resources are our competitors putting 
towards their ESG DD approach and are we 
lagging? 
Step #4: Implement & improve
With a basic framework in place and resources 
earmarked, the best advice is to just get started. Rather 
than waiting until you achieve a high level of ESG DD 
maturity, work with what you have and focus on 
improving as you learn – even if you still feel the pain of 
the challenges described in Chapter 2.
Many of the most mature dealmakers in the market have 
reached their level of maturity through trial and error, by 
refining and adopting their approach as they went along. 
Many of them continue to develop their approach  
further.
If you have not already done so, ask yourself:
• How can we capture best practices, lessons and 
material findings to ensure we continuously 
improve?
• What organizations and peers should we be 
watching as industry benchmarks?
• Are there external advisors that can help bring best 
practices to the table?
• How might those topics we deem material evolve 
over the medium-term and how are we monitoring 
those shifts?

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1
2
3
4
05
How KPMG can help
As some of the world’s leading deal advisory and sustainability service providers, 
KPMG member firms are at the nexus of the intersection between M&A and ESG. 
Through their daily work, KPMG professionals are at the forefront of the developments 
taking place in this rapidly evolving field. They are working with many of the leading 
corporate and financial investors to identify and develop ESG-related deal strategies 
and processes that meet their unique needs and objectives.
Leading investors and dealmakers around the world look to KPMG firms to help them:
Develop the corporate sustainability strategy: 
For investors who do not have a sufficiently sharp corporate sustainability strategy in 
place, KPMG professionals can help review, develop and sharpen your corporate 
sustainability strategy. They can help identify which areas should be considered 
material. They can help align ambition with the strategic context of your sector and 
overall business strategy. And they can help articulate pathways towards achieving 
your ambition. 
Link the M&A strategy to corporate strategy: 
For investors who have a sharp corporate sustainability strategy in place but who 
have not yet explicitly linked it to their M&A strategy, KPMG professionals can help 
ensure your M&A strategy reflects and aligns to your corporate sustainability strategy. 
They can help make the linkage stronger. They can help assess acquisitions or 
divestitures based on sustainability-related criteria. And they can assist investors to 
articulate the material areas that should be reflected in the deal process. 
Develop an ESG DD framework: 
KPMG professionals can help investors develop their ESG DD framework. For those 
seeking to include standard ESG DD approaches going forward, KPMG professionals 
can help identify areas that should be considered material in all transactions and those 
that will be material on a case-by-case basis. And they can help you consider what 
operational approach would be most effective for your organization.
Perform ESG DD procedures: 
KPMG professionals can help investors execute against their framework on live 
transactions. They can help perform not only ESG DD procedures, but a wide range of 
different DD workstreams. And they can help enable a seamless integration across 
the DD environment to maximize value.
How can KPMG help your organization? To find out, please contact your local member 
firm or any of the authors listed at the back of this publication.
24
2022 EMA ESG Due Diligence Study
How KPMG can help
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© 2022 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 
About the study
This report is based on a survey conducted across the EMA region using a two-step process. In the first step, 
dealmakers completed a standardized online survey. The second step involved additional interviews with 
selected respondents to dig deeper into the survey results. 
A total of 151 valid and complete responses were received in the first step. Ninety-three percent of 
respondents reported conducting at least one transaction per year ranging from less than EUR10 million to 
more than EUR1 billion in size. Respondents were split across sub-regions, ownership status and investor 
type as follows: 
By sub-region
No. of responses
DACH
71 (47%)
Benelux
25 (17%)
Southern and Western Europe (Italy, France, Spain)
24 (16%)
U.K. & Ireland
18 (12%)
Middle East, Africa & India4 
8 (5%)
Nordics
5 (3%)
Total
151 (100%)
By ownership status
No. (and share) of responses
Privately held
98 (65% of respondents)
Publicly traded
45 (30% of respondents)
Government owned
8 (5% of respondents)
Total
151 
By investor type
No. (and share) of responses
Corporate investor
91 (60% of respondents)
Financial investor
52 (34% of respondents)
Independent board members and advisors
8 (5% of respondents)
Total
151 
To find out more about the survey sample – or to view further breakdowns of the results – please view the 
interactive dashboard online. 
4 For the purpose of this study, India was a part of the EMA perimeter
25
2022 EMA ESG Due Diligence Study
About the study

Contacts
Lead author
KPMG Switzerland
Florian Bornhauser
Senior Manager, Global Strategy Group, Deal Advisory
fbornhauser@kpmg.com
Your local ESG Due Diligence solution leaders
KPMG Austria
Katharina Schönauer
Senior Manager, Head of ESG Team Advisory
kschoenauer@kpmg.at
KPMG Belgium
Stijn Potargent
Partner, Deal Advisory
spotargent@kpmg.com
KPMG Denmark
Niclas Buch Mahler
Associate Director, Deal Advisory
nfmahler@kpmg.com
KPMG Finland
Tomas Otterström
Head of Sustainable Finance and Corporate Sustainability
tomas.otterstrom@kpmg.fi
KPMG France
Nicolas Cottis
Associate Partner, Head of ESG Transaction Services
ncottis@kpmg.fr
KPMG Germany
Frank Hengelbrock
Partner, Advisory, Head of ESG Due Diligence in Deals
fhengelbrock@kpmg.com
KPMG Hungary
Ákos Pájer
Director, Deal Advisory
Akos.Pajer@kpmg.hu
KPMG India
Shivananda Shetty
Partner and Practice Lead, ESG
sshetty6@kpmg.com
KPMG Ireland
Shane O’Reilly
Director, KPMG Sustainable Futures
shane.oreilly@kpmg.ie
KPMG Italy
Stefano Giacomelli
Associate Partner, Sustainability & Climate Changes Services
SGiacomelli@KPMG.it
KPMG Netherlands
Jeiran Ebrahimi
Director, Deal Advisory, Transaction Services
Ebrahimi.Jeiran@kpmg.nl
KPMG Norway
Anne-Julie Jøssang
Senior Manager, Head of ESG Reporting and Performance Management
Anne-Julie.Jossang@kpmg.no
KPMG Spain
Ramón Pueyo Viñuales
Partner, Head of Sustainability and Corporate Governance
rpueyo@kpmg.es
KPMG Sweden
Tomas Grendal
Director, Head of Deal Strategy
tomas.grendal@kpmg.se
KPMG Switzerland
Florian Bornhauser
Senior Manager, Global Strategy Group, Deal Advisory
fbornhauser@kpmg.com
KPMG U.K.
James Holley
Partner, ESG Transaction Services
James.Holley@kpmg.co.uk
Additional key contributors
Additionally, we would like to thank the following people for their support and contributions to this study: Clive Adendorff (COO, KPMG EMA ESG 
Hub), Verena Thiriet (Assistant Manager at KPMG in Switzerland), Martin Lenke (Senior Manager at KPMG in Switzerland), Aniko Kraft (Manager 
at KPMG in Ireland), Carlos Jimenez Lazaro (Senior Manager at KPMG in Spain), Johanna Hashagen (Senior Associate at KPMG in Austria), Gabriel 
Gage (Senior Manager at KPMG in the Netherlands), Riikka Weber (Manager at KPMG in Finland), Elsa Stetinger (Manager at KPMG in Germany), 
Anand Kulkarni (Director at KPMG in India), Jonathan Szöke (Associate Director at KPMG in U.K.), Kirk Caron (Director at KPMG in the U.S.)
home.kpmg/esg-dd 
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