Anthropogenic climate change is one of the most pressing issues facing mankind today. Irreversible consequences of planetary warming are fast approaching, impacting the most disaffected parts of the globe the most.
People are also becoming more concerned about social injustices, and it is for these reasons that ESG factors are becoming increasingly prominent in today’s investment landscape. This is especially applicable to agri-investing, as many environmental and social factors are intrinsically linked to agricultural activities.
Not only are there financial penalties and reputational damage for failing to consider ESG risks but incorporating ESG into investments has also been shown to improve performance.
ESG Due Diligence
ESG due diligence involves the assessment of risks and opportunities relating to the environmental, social and governance implications of an investment. Before undertaking an investment in agribusiness, there are a range of factors to investigate.
Environmental issues to consider include:
- Pollution and resource use
- Biodiversity and ecosystem services
- Climate change
Social issues to consider include:
- Community health and safety, particularly in underprivileged areas
- Labour practices and working conditions
- Land rights and tenure
Governance issues to consider include:
- Executive pay
- Track record of management
- Shareholder’s rights
Farrelly Mitchell: ESG Due Diligence experts
Environmental and social factors are intrinsically linked to agricultural activities and can play a major role in the overall performance and reputation of any agrifood business. For this reason, ESG performance must be considered an essential component of any due diligence process, and given equal weight to the commercial, technical, and operational aspects of an investment.
Our agrifood consultants provide a wide range of supports for investments, mergers & acquisitions. In addition to our commercial, technical, and ESG due diligence services, we offer feasibility & financial modelling, risk analysis & management, and value creation & implementation. Contact us today to leverage our commercial expertise and maximise your return on investment.
