Corporate due diligence is undergoing a major transformation. Traditionally focused on identifying financial and operational risks, this analysis has evolved to include ESG — environmental, social, and governance — criteria. This shift reflects a growing global awareness of sustainability, increasing regulatory pressures, and stakeholders’ demand for more ethical, transparent, and responsible business practices.
More than a passing trend, ESG Due Diligence has become an essential strategic tool. It is a thorough assessment aimed at identifying risks and opportunities that may impact a company’s operations, reputation, and long-term sustainability.
The process begins with the definition of clear objectives — ranging from regulatory compliance assessments to the mitigation of environmental and social risks or the identification of sustainable business practices. Data collection is broad and diverse, encompassing internal reports, interviews, field investigations, and technical analyses. The gathered information is then examined through the lens of the three ESG pillars:
- Environmental: carbon emissions, use of natural resources, waste management, and impacts on biodiversity.
- Social: working conditions, respect for human rights, diversity and inclusion, and community engagement.
- Governance: board structure and independence, compliance policies, transparency, and risk management.
An ESG-based approach prepares organizations to navigate increasingly complex regulatory landscapes. A key example is the Corporate Sustainability Due Diligence Directive, currently under discussion in the European Union. This directive aims to hold companies legally accountable for environmental and social impacts across their value chains.
Yet, integrating ESG criteria into due diligence goes far beyond legal compliance. It serves as a strategic lever. Companies that adopt sound ESG practices not only reduce exposure to environmental liabilities or social controversies but also strengthen their reputation and attract investors focused on sustainable business.
ESG Due Diligence is no longer just a passing trend — it is a growing requirement in a market that values responsibility, transparency, and sustainability. Companies that acknowledge this new reality and adapt proactively are better positioned for the future.