CMS have published new guidance in two areas related to climate change – firstly addressing ESG in the M&A process and secondly navigating the upcoming EU regulation on Supply Chains.
1. Giving a deal the green light
ESG policies are no longer just a result of compliance with regulatory requirements and are increasingly implemented on the basis of a company’s global citizenship and in response to customer expectations. Not being transparent about a company’s ESG record, or in extreme cases greenwashing, increases the risk of scrutiny by authorities and by the public (potentially including activist organisations), and can negatively impact a company’s value.
It comes as no surprise that the CMS M&A Study shows that ESG considerations are beginning to appear specifically as part of the due diligence process and in transaction documents – 33% of European M&A deals involved specific ESG due diligence and 45% of SPAs signed included specific ESG provisions. The CMS M&A Study also shows, however, that ESG was a factor that influenced the choice of target in only 3% of transactions.
To read the full summary click on the link.
https://cms.law/en/gbr/publication/giving-a-deal-the-green-light
2. CMS CSDDD Navigator
Against the background of the European Green Deal, the European Commission adopted a proposal for a directive on ‘Corporate Sustainability Due Diligence (‘the CSDDD’). The CSDDD promotes sustainable and responsible corporate behaviour and embeds human rights and environmental considerations in company’s operations and governance in order to support the sustainability transition and help the EU to become the first net zero continent.
The proposed new rules aim to ensure that companies that fall into the scope of the CSDDD address the adverse environmental and human rights impacts of their actions within and beyond Europe, in particular in their value chains, i.e. supplier and customer relationships.
The requirements of the CSDDD will apply to large EU companies, but also to large non-EU companies with significant turnover in the EU. SMEs are not caught directly but may be affected indirectly as part of the value chain of an in-scope company.
Although the CSDDD still needs to pass the Trilogue negotiations and amendments are expected, it then needs to be transposed by Member States into national law, don't risk being caught unprepared! Use the CMS CSDDD Navigator to find out how ready you are.
To assess how prepared your company may be click on this link.