ESG Due Diligence FAQs

Find below a selection of FAQs we face relating to ESG Due Diligence, our investigative platform and Due Diligence Reports.

Why is ESG risk assessment important?

Non-compliance with ESG regulations could lead to legal liabilities and fines for the buyer, while they may also inherit reputational damage. For private equity and investment firms looking to acquire a business, conducting ESG due diligence will help to prevent uncovering damaging information further down the line.

We already conduct ESG due diligence. What is Neotas’s differentiation?

We provide an external lens that does not rely on ‘self-reporting’. We can proactively monitor, in almost real-time all the key ESG risk factors. Beyond regulatory compliance, we can help predict future ESG risks and save losses (both monetary and reputational).

Does Open-Source Intelligence (OSINT) help the ESG decision-making process?

Yes. As ESG data is generally time-lagged, open-source intelligence techniques built into our Platform (ESG ‘trackers’) can generate almost real-time information. This will give you a clear picture of the ESG risks now and help to predict any potential issues. See more from Coller Capital on the use of OSINT for ESG due diligence.

When should you conduct ESG due diligence?

As early as possible in the due diligence process. Whilst we can quickly highlight any ‘red-flag’ issues, these may take time to rectify. These ‘red flags’ may delay a transaction, but we view this as preferable to later, writing down the valuation!

Will considering ESG risk give me a competitive advantage?

ESG compliance enhances a company’s valuation as well as reduces business and reputational risks. It also attracts quality investors and ensures compliance. Fixing ESG issues later can be very costly and can damage shareholder value.

How does ESG create value for organisations?

Companies with high ESG ratings typically exhibit a lower cost of capital, less volatile earnings, and lower market risk than companies with low ESG ratings. However, the lack of standardisation between ESG benchmarks as well as an incentive to provide AAA ratings might raise concerns as to the rigour of these checks – Neotas can help to ensure that your supply chain is as sustainable and as compliant as you claim.

What are the key risk indicators covered by ESG due diligence?

We will look at all aspects of a ‘digital footprint’ to uncover risk, whether that be financial crime, fraud, modern slavery, exploitation of works, unsafe workplace practices, environmental concerns. We have often uncovered risks where the client least expected it.

Can you provide international ESG risk management?

Yes, our investigations are global. We process over 200 languages and we are not limited by international jurisdictions. We select only the relevant ESG factors tailored to your circumstances and offer a complete service.

Is ESG due diligence a separate service provided by Neotas?

We are able to provide ESG due diligence either as a standalone service, or as an integrated part of our wider enhanced due diligence services. Our team will develop a solution that fits your business needs and budget.

What do your reports contain?

Our reports provide clearly flagged risks using a traffic light system (red/amber/green) with detailed evidence, a network association visual map, an audit trail and a list of all the sources used. We also look to enhance our reports by providing context to all the risks flagged.

If your question hasn’t been answered here, then we would love to hear from you. Contact us directly, or schedule a call below.