SUSTAINABILITY IN TRANSACTIONS About ACCA We are ACCA (the Association of Chartered Certified Accountants), a globally recognised professional accountancy body providing qualifications and advancing standards in accountancy worldwide. Founded in 1904 to widen access to the accountancy profession, we’ve long championed inclusion and today proudly support a diverse community of over 247,000 members and 526,000 future members in 181 countries. Our forward-looking qualifications, continuous learning and insights are respected and valued by employers in every sector. They equip individuals with the business and finance expertise and ethical judgment to create, protect, and report the sustainable value delivered by organisations and economies. Guided by our purpose and values, our vision is to develop the accountancy profession the world needs. Partnering with policymakers, standard setters, the donor community, educators and other accountancy bodies, we’re strengthening and building a profession that drives a sustainable future for all. Find out more at www.accaglobal.com Copyright © March 2024 by the Association of Chartered Certified Accountants (ACCA) and Association of Chartered Certified Accountants and Chartered Accountants Australia and New Zealand (CA ANZ). All rights reserved. Used with permission of ACCA and CA ANZ. Contact insights@accaglobal.com for permission to reproduce, store or transmit, or to make other similar uses of this document. About Chartered Accountants Australia and New Zealand Chartered Accountants Australia and New Zealand (CA ANZ) represents more than 136,000 financial professionals, supporting them to build value and make a difference to the businesses, organisations and communities in which they work and live. Around the world, Chartered Accountants are known for their integrity, financial skills, adaptability and the rigour of their professional education and training. Find out more at www.charteredaccountantsanz.com About this report Addressing the issues of sustainability, including environmental, social and economic impacts of the transition to a net-zero economy, represents a key challenge for most organisations. Despite this, business activity continues, with the investment and divestment cycle remaining another fundamental part of organisations’ activities. Corporate acquisition and disposal transactions, including those that are private equity (PE) funded, are a fundamental part of many economies. The interrelationship between these two areas of focus, mergers and acquisitions / divestment and sustainability-related issues, is the subject of this report. Using the insights of nearly 50 accountancy and finance professionals from across the world, many of whom are members of ACCA or CA ANZ, this report provides a context for this interrelationship between sustainability and these major corporate transactions. The report is not a detailed explanation of the transaction process; rather, it is intended to support chief financial officers (CFOs) and their teams in identifying appropriate sustainability-related considerations during the investment and divestment workflows. Foreword Sustainability criteria are increasingly important considerations in investment and divestment processes. As organisations transform their operating models, often through or as a byproduct of merger and acquisition transactions (M&A), the application of a sustainability lens presents opportunities and risks that cannot be ignored. Helen Brand OBE chief executive, ACCA Yet despite this, the application of a sustainability filter to transactions is by no means uniform across organisations, industries, and countries. This presents opportunities for accountancy and finance professionals who continue to upskill their sustainability knowledge as the accounting profession evolves. They are often at the heart of these transaction processes, including the due diligence phase, bringing specific expertise and an ethical lens that enables them to quantify risks, assess outcomes, and identify ‘deal breakers’. The completion, or otherwise, of a transaction is often influenced by this discovery process. Having the skills to place the transaction-related information in context is essential, regardless of whether the initial assessment relies upon the expertise of others. We encourage our members to draw on the expertise, learning resources, support, and networks provided by professional membership organisations incl