Business Advisory: Sustainability and ESG

DLA Piper was appointed by a NYSE listed company to undertake comprehensive due diligence for a USD16 billion (AUD23 billion) acquisition of a SEK listed company. 

ESG due diligence was significant for this transaction given: 

• Controversial industry and strategic importance of ESG performance for future social license 
• Significant disparity between ESG ambition, performance and disclosure between Offerer and Target 
• Multi-jurisdictional landscape for company operations, supply chain and distribution channels 

Business Advisory was engaged to undertake Sustainability and ESG workstream due diligence.

Given the review was part of a wider due diligence process, a bespoke ESG review was carried out on key risk areas for the client. 

Purpose:  

• Provide analysis of key Sustainability and ESG issues against transaction materiality thresholds and stakeholder expectations 
• Determine disparity in ESG ambitions and performance between client and target, and maturity / rigor of data collection processes and systems in place 
• Provide guidance of priority integration activities and resources required post acquisition to ensure adequate risk management and social license is maintained 

Methodology:  

• Developed bespoke scope of due diligence topics based on industry specific ESG sensitivities, transaction materiality thresholds and ESG ambitions relating to sustainability and social license  
• Conducted assessment of ESG risks using publicly available company information and data room documentation 
• Submitted verification questions to address key issues and information gaps 
• Calibrated ESG performance against relevant jurisdictional, industry and stakeholder standards  
• Developed risk ratings to differentiate between transaction materiality and implementation priorities and risks 
• Produced Key Issues Report comprising executive headlines, due diligence findings and post transaction advisory guidance (not typically included in traditional ESG DD)

Key deliverables included:

• ESG Key Issues Report (45-pages) documenting ‘risk-rated’ due diligence observations and guidance across 24 key Sustainability & ESG issues 
• Meetings with Head of Sustainability to obtain feedback on ESG due diligence scope, focus and areas of concern 
• Meetings with key stakeholders (Board, DLA Piper deal team and Head of Sustainability) to share initial findings of due diligence and executive headlines

We delivered:

• A bespoke ESG due diligence approach to meet expectations of all internal stakeholders (Board and Head of Sustainability) 
• Advisory guidance beyond transaction due diligence: value add for our client and a point of differentiation against competitors
• Influential engagement with Offeror Board to support Head of Sustainability integration efforts
• Transition guidance: creating opportunities for ongoing law firm and business advisory expertise 
• Ongoing dialogue with Sustainability team (ie. new touchpoints for deeper client connection) 

The government agency is one of two entities that form the overarching Sports Commission (ASC). The ASC is the government organization responsible for supporting and investing in sport. The agency exists to build sustainable winning systems for athletes that are measured through consistently producing podium success over multiple cycles, inspiring the next generation of athletes. 

The agency works with a number of other key national sporting bodies and other key partners involved in high-performance sport at the global level. There is broad recognition that gender imbalance is entrenched in the HP functions of many of the Olympic funded National Sporting Organizations. This is not simply a national experience, but rather one that is perpetuated across the world in a number of sporting contexts.

The agency has an objective to correct gender imbalance in key HP roles for Olympic and Paralympic funded sports, with stated gender diversity aspirations potentially achieved by the 2032 Olympics. We took a business-led change approach to ensure the leaders and people affected by the change assumed full accountability for making the change.

Together, key stakeholders came together to:

• jointly agree and define the nature of the problem;
• develop a project scope and set of objectives;
• co-design the engagement approach, outlining how key stakeholders will actively participate in the project;
• collectively consider and agree initiatives and activities that will contribute to the achievement of the agreed objectives; and
• map the execution of the initiatives and activities over agreed timelines.

This staged approach ensured the Agency, and the organizations that make up the NSOs, assumed collective accountability for driving their own change and implementing the required actions / changes deemed critical to the achievement of any agreed objectives.

Key deliverables included:

• Project governance and oversight in place
• Testing existing research, hypotheses, aggregation of insights and benchmark reporting
• High level whole of project roadmap with supporting integrated communications plan
• Development of a clearly articulated pilot model in preparation for stage 4
• Development of a detailed implementation and engagement roadmap to support the pilot model and repeatable engagement process
• Development of a repeatable process – informed by pilot learnings – to roll out to remaining sports via a cohort led approach
• A series of initiatives and commitments, aligned to the achievement of the strategic objectives of the project, determined by the sports involved in the engagement process
• An implementation plan that outlines how relevant activities and commitments will be planned and executed in line with agreed timeframes

The government agency will:

• have clarity on the work done to date and ideas existing inside and outside the sports system;
• reach agreement on the status of existing initiatives and how they will progress;
• develop shared understanding of what works and what hasn’t historically;
• deepen their understanding of the Australian context and multitude of approaches taken to address this challenge;
• have key stakeholders that feel informed and are confident about the platform and direction of the project;
• have key stakeholders feeling clear on next steps (as per the high-level roadmap) and aware of how best to communicate these to their respective stakeholders;
• experience accountable alignment between key stakeholders including the Agency, Sport Australia, the NIN, and funded sports;
• realize, through the execution of a co-designed engagement approach, overwhelming support and positivity for the project and roadmap;
• experience an uplift in internal capability due to the involvement of personnel in the design and implementation of the project; and
• have a clearly articulated vision for the achievement of gender diversity aspirations by the 2032 Olympics.

A large regional infrastructure company with four distinct lines of business engaged DLA Piper to review their procurement activities.  

“We talk a good game on sustainability, but our practices don’t match our ambitions.” 

This engagement was with an existing client of DLA Piper and consisted of both legal and advisory work by Business Advisory and the law firm. 

A phased approach was taken for the engagement to help build the foundations of the business need and using this to take stakeholders on the journey before embarking on the transition to the target state.

Phase 1 – Review current state and outline sustainable procurement framework 

Purpose:  

• Analyse capabilities of current procurement function and create outline of sustainable procurement framework 

Methodology:  

• Analysis based on our expertise and experience with local and global peers 

• Stakeholder interviews to capture internal perspective and validate our views 

• Development of sustainable procurement framework tailored to client current state 

Phase 2 – Build stakeholder support for renewed procurement function 

Purpose:  

• Identify and engage relevant stakeholders to build accountable ownership for their role in delivering sustainable procurement function 

Methodology:  

• Roadshow led by procurement team with our support, featuring an initial meeting to present the plan and answer questions, and a second meeting to endorse approach 

Phase 3 – Build procurement function

Purpose:  

• Conduct detailed design and build of procurement function  

Methodology:  

• Implement robust answers to the five questions of sustainable procurement across each stage of the procurement process – this is a significant piece of work 

Key deliverables included:

Phase 1: 

• A review of the current state of the procurement function 

• A sustainable procurement framework providing a suggested structure on which to build a robust procurement function 

Phase 2: 

• Support for stakeholder engagement

Phase 3: 

• Design and delivery of sustainable procurement function 

For the client we:

• Created a map of their end-to-end procurement process that made clear roles and responsibilities, and identified gaps in the implementation of sustainable procurement

• Revealed gaps in the client’s procurement team capacity and capability resulting in the recruitment of additional procurement resources

• Delivered a greater understanding of the sustainable procurement process to key internal stakeholders and emphasized the importance of procurement to delivering on their sustainability ambitions. 

• Laid out a clear roadmap for the design and implementation of a robust sustainable procurement function