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2016's Ones to Watch in Environmental Due Diligence

Arcadis is the leading global design and consultancy firm for natural and built assets. There are a number of reasons why we are leaders in the field of natural and built asset consultancy. Perhaps one of the biggest factors is that we apply deep market sector insights and collective design, consultancy, engineering, project and management services, which allow us to work in partnership with our clients and deliver exceptional and sustainable outcomes.

Arcadis takes tremendous pride in the fact that our company has been successfully running for over a century. Arcadis was founded in the Netherlands in 1888, whilst Hyder Consulting, which Arcadis acquired in 2014, can trace its history back to 1875.
From this strong Dutch heritage, Arcadis has grown organically and through acquisition to be one of the leading global natural and built asset design and consultancy firms with over 27,000 people active in more than 70 countries worldwide.

As a result of our wealth of experience and expertise, we support a diverse range of clients that goes right across the spectrum of companies that deal with built and natural assets. These include clients across the following sectors, financial institutions, chemical and pharmaceutical, oil and gas, manufacturing/ conglomerates, power and utility.

Although we provide a number of services for our clients, they can be broadly categorised into five different areas.
• Firstly, we provide ESG, sustainability and property due diligence during acquisitions, divestitures, mergers, joint ventures, and IPOs.
• Secondly, we also provide due diligence for project finance against the Equator Principles and International Finance Corporation (IFC) performance standards.
• Thirdly, we deliver value through the implementation of ESG policy and strategy development and
• Fourthly we provide analysis of reserves, provisions, asset retirement obligations, and financial reporting.
• Lastly, but certainly not least, we provide postmerger integration support.

From our years of experience, we find that the best approach to investing is one where a well thought out due diligence programme is strongly aligned with the nature of the business being acquired. Whether it’s an investment by a major corporate client or a financial institution following the Principles for Responsible Investment, the increased focus on investment decisions by stakeholders makes the due diligence process more important than ever before.

At the same time, we also need to recognise that every transaction is different and presents a unique set of risks and opportunities. As such, we tailor the scope around ESG (Environmental, Social and Governance), sustainability and property, and work closely with our clients to determine what the key issues are and then produce an output that delivers commercial value at both deal stage and beyond.

The principal aim of the ESG process is to encourage responsible investment and to help companies identify environmental factors that may need to be addressed to minimise risk to the environment and society, as well as delivering commercial value. As such, it is important to consider the wider context of the business from a sustainability standpoint and consider issues such as raw material supply and use, supply chain issues, product stewardship, social impacts, energy and water use. However, any actions under an ESG banner should seek to deliver a benefit to the environment, society and ultimately the balance sheet.

For the majority of transactions, the key to a successful outcome is technical competency, communication and speed. At Arcadis, we have the ability to field global teams with strong technical expertise, allowing our clients to commission large components of the deal all through a single provider. Our experienced team of advisors then work closely with the other members of the deal team to share knowledge and maximise value for our clients.

Studies increasingly show that where ESG factors have been incorporated into the business model, private equity (PE) houses and their portfolio companies are better able to identify wider (sometimes non-financial) opportunities to drive value to the triple bottom line during ownership and to maximise value at exit.

With this in mind, we can expect a growing focus on ESG Principles, linked increasingly with the delivery of enhanced financial returns. What is clear, is that whilst many organisations have the philosophy or desire to adopt an ESG based approach they often lack the process and/or ability to implement this within their wider organisation. As such, they are missing out on the potential financial gains that are being achieved by those that have well established ESG systems and processes in place.

Arcadis brings greater transparency to financial clients on ESG issues and works with the newly acquired business using a proactive approach to deliver ESG value post transaction. However, we appreciate that any such process must be tailored to fit each organization’s investment strategy, approach and available resources.

Alongside this expertise, we are also using our global expertise to assess, reduce and monitor environmental risk and, coupled with our deep asset knowledge, we are increasingly advising private equity clients on their investment decisions. With the growing emphasis around ESG issues and the ability to combine these with our infrastructure, water, sustainability and buildings capabilities, Arcadis is able to offer a turnkey solution that manages risk throughout the deal stage and delivers value to the triple bottom line post transaction.

Although we achieve some exceptional results, our company is much more than just numbers. Our people are critical to the success of the company and it’s essential that they can adopt both a technical and commercial approach during the transaction process to ensure that we are delivering the best outcomes for our clients.

Looking towards the latter half of 2016 and beyond, we are confident that our company will continue to grow and prosper. Our global transaction services team is in a period of significant growth and the biggest challenge is finding experienced personnel with the right blend of technical knowledge and commercial awareness. However, we are confident that we are well equipped to meet this challenge and move towards continued success.

THE ESG CHECKLIST:
Considerations

  • Environment;
  • Existence of policies and certification o Natural resources consumption (including water);
  • Energy efficiency;
  • Carbon management;
  • Impact to the environment (air and water emissions, waste);
  • Development of green products and service;s
  • Contaminated land risks;
  • Soil and groundwater potential and known liabilities;
  • Bulk chemical storage;
  • Environmental permitting and compliance o Building contaminants;
  • Flood risk.

Social

  • Existence of policies and certification of Health and safety
  • Staff turnover and absenteeism rate;
  • Training and qualification of workforce o Maturity of workforce;
  • Social climate;
  • Relationship with business partners;
  • Employee diversification.

Governance and ethics

  • Compliance with applicable laws;
  • Product Stewardship;
  • Anti-Bribery and Corruption policies and implementation;
  • Role and responsibilities of governance bodies o Transparent financial communication;
  • Litigation risks.

Company: Arcadis
Name: Tim Strongman
Email: tim.strongman@arcadis.com
Web: www.arcadis.com
Address: 34 York Way,
London, N1 9AB,
Phone: 44 (0) 7818 525939

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Copyright Acquisition Intl. 2016