ESG due diligence
Integrating ESG into the due diligence process
ESG due diligence is a critical component of a complete and future-proof investment decision. Our ESG due diligence service enables investors and other stakeholders to systematically identify and quantify material sustainability risks and opportunities, assess ESG performance and maturity, and translate these insights into clear, decision-ready outcomes that support financial value creation and long-term impact.
In an increasingly regulated investment landscape, ESG due diligence is essential to substantiate SFDR classifications under Article 6, 8 or 9. We support investors in assessing material sustainability risks, identifying and evaluating Principal Adverse Impact (PAI) indicators, and determining whether ESG ambitions and disclosures are credible, measurable, and aligned with regulatory expectations.
With Good Growth Collective as your partner, ESG is not a compliance exercise but a strategic asset. We help you integrate ESG into due diligence in a way that drives smarter investment decisions, mitigates risk, and builds resilient, future-ready portfolios.
Curious to know more? This is how we can help:
- Understanding key ESG topics
- ESG data collection
- ESG scoring
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Understanding key ESG topics of your target company
We conduct a high-level ESG screening of the target company by reviewing its sustainability reports, policies, certifications (such as ISO 14001, B Corp and Eco Vadis), and the existing ESG strategy. This is complemented by a focused bad press analysis to identify material topics. In parallel, we assess the investor’s ESG priorities and regulatory context, including SFDR Article 6, 8 or 9 classification and relevant Principal Adverse Impact (PAI) indicators. We analyse both the company’s impact on people and the environment and its exposure to financially material ESG risks, enabling a clear view on alignment, key risks, and ESG value creation opportunities.
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Collecting ESG data of the target company
Based on the identified ESG topics, we collect relevant qualitative and quantitative data through a combination of data room analysis (including a targeted ESG data questionnaire), interviews with management, and benchmarking against publicly available ESG information from industry peers. The scope and depth of the data collection are tailored to the target company and the investment context. Data points may include, among others, environmental metrics such as GHG emissions and energy use, as well as social and governance information related to working conditions, policies, controls and governance structures.
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Scoring ESG performance and quantifying risks and opportunities
We assess ESG performance through two lenses: a structured business review and a forward-looking risk and opportunity analysis. ESG performance is evaluated using topic-specific scoring scales, tailored to the distinct nature of environmental, social, and governance themes. For Environment and Social, we assess performance across relevant topics by applying dedicated scoring scales per topic. Governance performance is evaluated based on the presence, quality, and level of implementation of governance structures, controls, and policies. The resulting ESG scores provide investors with a clear and consistent view of current ESG performance, key risks and opportunities, and their potential financial and strategic implications.
The value of ESG due diligence
Identifying cost-saving and EBITDA levers
ESG due diligence goes beyond risk identification by uncovering concrete cost-saving opportunities and operational efficiencies. Insights related to energy use, resource efficiency, waste reduction and governance practices can translate directly into lower operating costs and measurable EBITDA impact, forming a clear basis for value creation during the holding period.
Managing downside ESG risk
A robust ESG due diligence provides early visibility into material ESG risks that may affect valuation, deal execution or exit attractiveness. This includes regulatory exposure, compliance gaps, reputational risks, and weaknesses in policies, controls, or governance. Identifying these risks upfront allows investors to price them in, mitigate them through deal structuring, or address them proactively post-acquisition.
Post-deal ESG action plan
ESG due diligence delivers more than an assessment; it results in a prioritised and actionable ESG roadmap. The findings are translated into a clear post-deal action plan that supports integration, aligns with SFDR requirements, and provides a practical starting point for ESG improvement, monitoring and reporting throughout the holding period.
Turning sustainability into financial value
Data to Impact
As highlighted in our MenA feature, working alongside TIC Advisory within de Jong & Laan, we translate sustainability metrics into concrete financial insights through a three-layered methodology: Basic (identifying compliance and regulatory risks), Operational (uncovering efficiency gains and cost-reduction opportunities), and Strategic (spotting growth levers and competitive advantages). The article explores how this approach helps investors quantify ESG's impact on EBITDA and valuation in a market increasingly shaped by CSRD and SFDR.
Want to know more about ESG due diligence?
ESG due diligence links ESG performance to risk control, EBITDA and long-term value creation.
Why is ESG due diligence important for your business?
ESG due diligence is critical because sustainability issues have a direct and measurable impact on risk profiles, value creation, and investment outcomes. It provides early insight into material ESG risks that can affect valuation, operational performance and exit attractiveness, as well as opportunities for cost savings and EBITDA improvement.
In an increasingly regulated and ESG-driven market, ESG due diligence also enables investors to substantiate SFDR positioning, anticipate future regulatory requirements, and meet the expectations of limited partners and buyers. By identifying ESG risks and value levers upfront, investors avoid post-acquisition surprises, reduce downside risk and strengthen decision-making throughout the investment lifecycle.
For which companies is ESG due diligence relevant?
ESG due diligence is relevant for any investor or company where sustainability factors influence risk, value creation, or regulatory positioning. It is particularly critical for private equity, venture capital and institutional investors during acquisitions, portfolio management and exit preparation, where ESG findings increasingly affect valuation, deal terms and buyer appetite.
For family offices and long-term investors, ESG due diligence provides clarity on sustainability risks and opportunities that may impact resilience, reputation and intergenerational value creation. For target companies, it offers an objective assessment of ESG maturity, highlights improvement areas, and strengthens readiness for future ownership, reporting and exit requirements.
From a regulatory perspective, ESG due diligence supports funds with different SFDR classifications. Article 8 funds rely on ESG due diligence to substantiate sustainability characteristics and identify relevant PAI indicators, while Article 9 funds use it to assess impact credibility, alignment with sustainable objectives and data availability. Article 6 funds benefit from clear insight into material ESG risks that could affect financial performance.
When should you conduct ESG due diligence?
ESG due diligence should begin during preliminary screening or the early due diligence phase. For SFDR compliance, it must be completed before investment decisions. Post-acquisition reviews within the first 100 days help set improvement roadmaps. Companies preparing for exit should assess 12 to 18 months in advance to maximise valuation. Ongoing portfolio monitoring, annually or bi-annually, ensures continuous compliance and long-term growth.
What are key ESG risks and opportunities typically uncovered during due diligence?
ESG assessments often reveal risks such as regulatory uncertainties, reputational exposure, and supply chain vulnerabilities. Common findings include ESG compliance gaps, limited governance practices, and a lack of climate transition plans. Opportunities often include operational efficiency, stronger stakeholder engagement, and differentiation. Using a double materiality perspective, we evaluate both your company’s impacts on people and the environment, and vice versa how external ESG factors could affect your financial performance.
What makes our SaaS model unique for ESG due dilligence?
Our Sustainability-as-a-Service subscription transforms ESG due diligence from a one-off snapshot into a continuous value driver across the investment lifecycle. We maintain updated risk profiles, monitor progress, and provide actionable guidance to implement improvements. For companies without in-house ESG expertise, this means predictable access to knowledge and support without the cost of building a team. By combining ongoing analysis with periodic expert engagement, we enable faster execution, reduced risk, and stronger positioning for future transactions. For PE firms, this model offers scalable ESG integration and recurring support aligned with their focus on efficiency and long-term value creation.