Event-Summary: "ESG in Private Equity/M&A"

Every year, a truly unique meeting brings professionals from the private equity, venture capital and M&A sectors to Munich: The pemacom Conference at the Bayerischer Hof. Perfectly organized and facilitated by the international law firm Reed Smith LLP, Dr. Nikolaus von Jacobs, Christian von Sydow and Siddesh Bale presented top-class panels and an intensive exchange of views on contemporary topics and challenges in the industry. Our member of the Board of Directors, Martin Raab, chaired this year's pemacom ESG panel. His guests were: Marcus P. Höfer [basecamp], Dominik Schwarz [Verdane], Matthias Fink ,[Summa Equity] Scott Zuercher [Allianz Group] and Oliver Rathje [ReedSmith].

THE MOST IMPORTANT TOPICS WE HAVE COVERED:

ESG company view

• Reporting to and for stakeholders and investors is still one of the biggest challenges due to sometimes missing data sources and problems with data quality/compatibility.
• Large companies such as Allianz Group are well on track, Scott Zuercher explained, to overcome most regulatory challenges such as the “Lieferkettensorgfaltspflichtengesetz”.
• PE investors are increasingly looking for “Sustainable Transition” as an element of their portfolio companies. “One ST practitioner, for example, is Dominik Schwarz at private equity firm Verdane.
• Matthias Fink at Summa Equity has been very successful in incorporating increased sustainability elements, so-called “impact KPIs”, into his target companies. Sustainability therefore not only offers abstract advantages, but also has a positive impact on EBIT and returns.

Sustainable Finance/ESG Ratings

• Increasingly divided field: some investors ignore sustainability elements in private equity and private debt transactions, others set serious milestones to ensure appropriate ESG alignment, including social and governance elements.
• Our credo has been taken up: ESG risk scores and ESG ratings must be transparent, meaningful and affordable! One of the global pioneers is GGX.

ESG litigation / legal aspects

• The SEC is the most active force in ESG litigation among the leading global regulators
• Non-governmental organizations and self-proclaimed “climate heroes” continue to bring many, sometimes questionable, lawsuits [including unjustified ones] against large companies accusing them of “greenwashing”.
• Still no court cases in ESG matters among industry peers.
• ESG due diligence is becoming an increasingly important factor in the preparation of cross-border private equity and M&A deals.

For ongoing information and selected events, including the Sustainable Investors' Circle, please visit the LinkedIn company page of GGX.