ESG considerations 
for companies that have completed 
or are contemplating a SPAC merger

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ESG considerations for companies that have completed or are contemplating a SPAC merger  | Eperchil mi, odit officto
ESG considerations for companies that have completed or are contemplating a SPAC merger | Introduction
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Introduction
The task of communicating with investors can be daunting for 
new public companies, but it also represents an enormous 
opportunity. If your company has recently completed a merger 
with a special purpose acquisition company (SPAC), or is 
moving in that direction, there is a seemingly endless stream of 
information you are communicating to the public markets for the 
first time–such as company risks, segments, earnings per share, 
and information regarding related parties. There are probably 
moments that feel frustratingly reactionary as you respond to 
new requirements and look for examples of how to meet those 
requirements.

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ESG considerations for companies that have completed or are contemplating a SPAC merger | ESG
The weight of these communications can 
be significant for any company, but it is 
important not to lose sight of the identity 
and long-term success of your company in 
the noise of right now. While you are in a 
position of transition, it may be a perfect 
time to identify your values and goals. 
Once established, you can leverage this 
information to facilitate long-term benefits 
in a shifting public market. 
Environmental, social, and governance 
(ESG) disclosures allow you to 
communicate certain strategic goals with 
investors, highlighting your values, your 
progress toward meeting those goals, and 
how it fits into your operational strategy. 
The ESG disclosures can further facilitate an 
analysis of your company’s operations, as 
you communicate how you plan to harness 
these factors to help drive performance and 
create value by taking advantage of related 
growth and strategic potential while building 
your company’s brand.
Transparency on ESG initiatives can present 
an opportunity for companies to capture 
strategic value, facilitate effective investor 
relations, and access a whole 
new set of investors through 
ESG-focused funds. Particularly for 
companies operating day in and 
day out in the green economy, whether they 
are a carbon capture company or an electric 
vehicle manufacturer, ESG will be an 
integral piece of their go to market strategy. 
The market has spoken: Investors want 
to align their investment dollars with 
companies who deliver on carbon reduction 
goals, providing this and other elements of 
ESG reporting as benefits to the broader 
community.
Environmental
Social
Governance
We are already seeing carbon capture, carbon credit, 
electric vertical takeoff and landing vehicle (eVTOL), 
electric vehicle, or other environmental technology 
companies seeking capital via a SPAC or other 
investment vehicles.

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ESG considerations for companies that have completed or are contemplating a SPAC merger | Looking ahead
Looking ahead
Don’t let ESG take a back seat simply 
because it is not required…yet. Early 
adoption of ESG practices may present a 
strategic advantage. Already, ESG issues, 
as well as the responses of governments, 
companies, and individuals to those 
issues, are beginning to reshape the global 
economy. This transformation is changing 
the calculus for analyzing the costs and 
benefits of existing strategies in real time, 
while creating new tactical advantages for 
those who are able to identify and seize 
them. ESG reporting may translate to 
operational success as you incorporate 
these key issues into your existing business 
model and execute on the related strategies.
In addition to the strategic importance, 
there is an expectation that it is only a 
matter of time before regulations come 
into effect requiring ESG disclosure. The 
Securities and Exchange Commission (SEC) 
released a proposed rule on March 21, 
2022, that would require public companies 
to disclose both their greenhouse gas 
emissions and climate related risks, as well 
as the climate impacts within the 	
	
financial statements themselves. The 
assurance requirements referenced in the 	
proposed rule further signals the movement 
toward calling for, not just comparable 
information, but more reliable information.
Globally, regulators have signaled 
their intentions to make ESG reporting 
mandatory. On April 21, 2021, the European 
Commission adopted a proposal for a 
Corporate Sustainability Reporting Directive 
(CSRD), which reached political agreement 
in June 2022, which contemplates the 
adoption of EU sustainability reporting 
standards to be made available in Q4 2022, 
with earliest mandatory reporting to occur 
as from January 1, 2024 for companies 
already subject to the non-financial 
reporting directive. On November 3, 2021, 
the International Financial Reporting 
Standards (IFRS) Foundation announced the 
creation of the International Sustainability 
Standards Board (ISSB) to establish global 
disclosure standards to provide investors 
with “high quality, transparent, reliable and 
comparable reporting on… [ESG] matters.” 
Once these standards are developed, 
the IFRS Foundation states that it will be 
up to jurisdictional authorities to decide 
whether to mandate their use, similar to 
their approach in developing accounting 
standards through the International 
Accounting Standards Board.
Whether operational strategy or the 
inevitability of regulation drives your 
interest in ESG reporting, there are 
plenty of reasons to get started today to 
prepare your company for the 
environment you will face tomorrow.

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ESG considerations for companies that have completed or are contemplating a SPAC merger | What does it take?
What does it take?
ESG reporting encompasses a wide array of non-financial information, and 
not every element of that framework is or ought to be a focus for every 
company. Your company may want to report on half a dozen topics in an 
ESG report eventually, but there may only be one or two of those topics that 
your company is either ready to begin reporting on or is currently prioritizing 
based on what is most important to your stakeholders. 
Perhaps you are focused on improving your hiring practices to be more diverse or reducing 
your operational water usage or emissions. First, you would need to identify which metrics 
are important or material to your company and then gather the appropriate data to 
effectively communicate your position. 
A great place to start is a materiality assessment, which will help you determine what you 
want to include in an ESG report. This exercise will help you determine the topics most 
important to the company through an evaluation of priority stakeholder interests and 
business impacts. Through a materiality assessment, you can get help looking at your 
existing data and determining next steps based on your priorities.

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ESG considerations for companies that have completed or are contemplating a SPAC merger  | What does it take?
The importance of data cannot be overstated. 
The ability to achieve your ESG reporting goals hinges 
on the ability to collect accurate data. Depending 
on your company’s current position and reporting 
goals, you may need to invest in software that tracks 
your emissions or a reporting tool to reliably house 
the information gathered. Of course, as you are 
implementing any new systems or reporting tools, 
it is also important to take a look at the controls you 
have in place or need to put into place to validate the 
information under consideration. 
Once you have accurate data that you are ready to 
share externally, the effective communication of that 
data becomes paramount. Third parties have been 
known to fact check the claims made in ESG reporting, 
and exaggerated or imprecise claims can be seen 
as “greenwashing,” which may diminish the report’s 
credibility. That’s not to say ESG reporting isn’t worth 
it. Just as you are careful to clearly and accurately 
describe changes in revenue or earnings per share on 
an earnings call, it is important to clearly and accurately 
describe your ESG metrics. This can be achieved, in 
large part, by being open and transparent in describing 
your efforts and successes. While this new area of 
reporting may represent a burden in the near term, 
transparency is a tool that drives value.  
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ESG considerations for companies that have completed or are contemplating a SPAC merger | SPACs grow the market, ESG moves the market 
SPACs grow the market, 
ESG moves the market 
The availability of the SPAC merger as a means of going public has already 
positively impacted the modern investing landscape. SPAC mergers have 
achieved this by engaging with new investors and contributing to the increasing 
number of new public companies in the market. 
Number of domestic public companies
The total number of domestic public companies 	
has been on a downward trajectory for multiple 
decades, declining significantly from its peak of 	
more than 8,000 in 1996 to 4,667 as of October 2021. 
The change is even more significant on a per capita 
basis. According to the St. Louis FRED, the number 
of listed companies in the US per million people 
declined from 30.0 to 13.3 over the 20-year period 
from January 1, 1996 to January 1, 2017. 
SPAC mergers
SPAC mergers, however, are actively growing the 
market. More than 200 SPAC mergers closed in the 
last two years, with 49 of those closing in the first 
half of 2022; and over 700 active SPACs had yet 
to close a merger with a target company as of July 
5, 2022. These SPAC mergers are expanding the 
market and, in turn, growing the economy. 
1996
8,000
4,667
October 2021
Active SPACs
700+
SPACs closed 
in last 2 years
200+
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ESG considerations for companies that have completed or are contemplating a SPAC merger | SPACs grow the market, ESG moves the market 
While the stock market does not represent 
the entirety of the economy, a healthy 
slate of public companies is an important 
element of a well-functioning economy. 
Public companies provide earning potential 
to investors. Providing investors with a 
return on their investment is an important 
role in and of itself, but this only impacts 
a fraction of society. At the same time, 
these companies are also contributing 
to innovation in the marketplace, which 
impacts all of society in a variety of ways. 
The recent influx of companies going public 
via a SPAC merger have not only helped 
counter the downward trend in the overall 
number of public companies, some have 
also broken new ground in their industries 
or operate in industries that are themselves 
breaking new ground in the market at large. 
A recent Harvard Business Review article 
argued that innovation can be broken into 
three elements – discovery, incubation, 
and acceleration – and noted that large 
corporate R&D departments often fail to 
move ideas out of the discovery phase, 
either by focusing on short-term ROI 
or by declining to pursue opportunities 
outside their mission statement or current 
corporate structure. Private companies 
and particularly start-ups may have a 
greater level of freedom to pursue solutions 
wherever they lead. Their flexibility and 
resolve are key competencies in a 
fluctuating business environment.
Unsurprisingly, SPAC activity is highly 
prevalent in the most innovative companies 
of our time, including those focused on 
carbon credits and carbon capture and 
storage. Some of these companies were in 
the above-mentioned incubation phase, and 
the capital infusions received as part of their 
SPAC merger will serve in part as a catalyst 
to drive innovation through acceleration, 
allowing the companies to more rapidly 
scale their ideas. 
With their potentially transformative 
technologies and approaches to addressing 
climate change, these innovative companies 
are also discovering the significant 
accounting complexities associated with 
the financial instruments inherent in their 
operating models. As a result, companies 
that are zeroing in on these highly strategic 
market offerings will face a heightened need 
for accounting expertise related to both 
their financial and their ESG reporting.

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ESG considerations for companies that have completed or are contemplating a SPAC merger | The investor lens
The investor lens
Investors are leading the way in prioritizing 
ESG reporting. Many investment managers 
and funds have focused on specific issues 
such as clean tech, green real estate, 
sustainable forestry, agriculture, education, 
and health. However, not every ESG-focused 
investor is making a values-based decision. 
Many potential investors are simply 
assessing whether the companies they are 
considering investing in are doing a good job 
of capturing value in a changing world. 
Individual investors are not alone in their 
interest in ESG reporting. Public statements 
of institutional investors and the business 
community writ large have elevated this 
topic significantly in recent years. One 
pivotal instance of this goes back to August 
19, 2019, when the Business Roundtable 
announced the release of a new Statement 
on the Purpose of a Corporation. Centrally, 
this statement, which was signed by 181 
CEOs, asserted that corporations had a 
duty to a variety of stakeholders within 
their communities and not just their 
shareholders; and it was credited with 
supercharging the ESG movement.
As the prevalence of ESG-focused funds 
increases, these new innovative companies 
meet not only consumer demand for their 
goods and services but also the demand 
of investors for companies that can deliver 
on stated values that are important to both 
the company and the investor. For many 
new public companies that have a clear 
ESG story to tell, ESG reporting organically 
communicates what the existing focus 
of the company is while also providing a 
connection to these investors and funds.
Transparency on ESG initiatives can 
also help build trust between investors 
and companies that exist in stigmatized 
industries. If you are in an industry with 
traditionally high energy consumption, such 
as crypto mining, but your company has 
worked hard to reduce your energy usage 
or move to renewable energy sources, 
you can get ahead of the story through 
communicating your company’s efforts. 
Benchmarking your energy usage to others 
in your industry or showing your reduction 
in usage over time may not get your 
company added to an ESG-focused fund, 
but it can mitigate the resistance of an ESG-
focused investor to invest in your company.

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ESG considerations for companies that have completed or are contemplating a SPAC merger | Your ESG reporting Journey
Your ESG reporting journey
There are many reasons to pursue ESG reporting as 
a newly public company, whether you are part of 
the green economy or trying to become incrementally 
more sustainable. This pursuit may lead to many 
decisions about your priorities, data, tools, and team. 
With the appropriate team in this process, you can take 
this journey one step at a time and make important 
decisions today to put you in the best possible 
position for success in the future.
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ESG considerations for companies that have completed or are contemplating a SPAC merger  | Eperchil mi, odit officto
Will Braeutigam
Partner, National Capital 
Markets Transactions Leader
Accounting & Reporting Advisory 
Deloitte & Touche LLP
wbraeutigam@deloitte.com
+1 713-982-3436
Robert Kerr
Partner 
Accounting & Reporting Advisory
Deloitte & Touche LLP
rokerr@deloitte.com
+1 404-942-6858
Meggan Gibson
Senior Manager
Accounting and Reporting 
Advisory
Deloitte & Touche LLP
megggibson@deloitte.com
+1 402-997-7222
Nick Accordino
Partner 
Accounting and Reporting Advisory
Deloitte & Touche LLP
naccordino@deloitte.com
+1 216-589-5237
Christine Robinson
Partner, Sustainability 
and ESG Services 
chrobinson@deloitte.com
+1 801-366-6839
Authors

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