Seven Trends in Environmental Due Diligence

By: Bruce Martin

In a highly competitive market, the success of your next deal hinges on speed, accuracy, and timing. It is also important to understand the evolving landscape of environmental matters and their potential to impact your transaction. As we enter into an era of increased awareness of environmental issues, the assessment of environmental risks and impacts extends ‘beyond the basics’ with an emphasis on sustainability, equity, and technology.

Here is a look at seven recent environmental due diligence trends that should be on your radar when it comes to your next deal.

  1. Regulatory and Legal Compliance: Compliance with environmental laws and regulations remains a key aspect of environmental due diligence. As the regulatory landscape continues to evolve, it is critical to stay up-to-date with changes in environmental policies, standards, and enforcement as compliance risks are assessed.
  2. Climate Change and Resilience: Evaluating the potential impacts of climate change on a target property’s value, insurance costs, and long-term viability has become an important consideration as it relates to climate-related hazards including extreme weather events and wildfires. Environmental due diligence now may include assessing the risks and resilience of properties to climate-related hazards such as sea level rise, extreme weather events, and wildfires.
  3. Renewable Energy and Sustainability: Evaluating properties for their potential to generate renewable energy such as solar, wind, or geothermal systems. As investors seek alignment with sustainability goals and regulations, considerations around green building certifications, energy efficiency, and water conservation are gaining popularity.
  4. Environmental, Social, and Governance (ESG) Factors: The environmental impact and sustainability performance of a business or acquisition target are becoming a key component of assessment prior to an acquisition. Carbon emissions, waste management, labor practices, community engagement, and corporate governance are some of the key ESG metrics being evaluated.
  5. Environmental Justice and Equity: Not only is it important to understand a property’s history as it relates to environmental impacts, but consideration must also be given to potential social and community impacts and engagement with local stakeholders. Environmental justice and equity are gaining attention regarding environmental due diligence and potential disparate impacts of environmental contamination, pollution, or other related risks within marginalized communities.
  6. Technology and Data Analytics: To streamline the assessment process and improve accuracy, technology, and data analytics are being incorporated into the environmental due diligence process. Remote sensing, data management systems, and geographic information systems (GIS) are just a few of the tools being used to assess environmental risks, make data-driven decisions, and evaluate property during due diligence.
  7. Circular Economy and Waste Management: Waste reduction, recycling and reuse, and resource consumption is the focal point of the circular economy concept that is gaining traction. Evaluation of a target’s waste management practices provides insight into waste generation, recycling, and disposal as well as opportunities for implementation of future waste reduction strategies.

Keep in mind that environmental due diligence requirements tend to vary by industry, location, and buyers’ risk tolerance To maintain the momentum with your next deal, consult with qualified environmental professionals and legal experts for up-to-date guidance on your specific transaction.

Reach out to Bruce Martin today and explore how the EHS Support Team can help you stay in compliance and achieve your goals.

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