Environmental Social Governance Due Diligence

ESG Due Diligence

Investors are increasingly recognizing the importance of incorporating sustainability and ESG analysis into their investment process. That analysis is used to ensure adherence to responsible investing mandates or as a risk management tool. Issues such as energy efficiency, decarbonization, water scarcity, pipeline safety, consumer reputation profile, and the accompanying regulatory and policy risks are gaining wider investor interest. Meanwhile, third-party activists, and environmental and consumer advocates are playing a larger role in driving not just regulation, but also scrutiny of business practices, posing “headline” and reputational risks to companies across the energy, financial services, technology, and healthcare sectors.

We Can Help

Our ESG team leverages its relationships with third-party advocates, industry groups, and regulators to analyze the risk profile of potential investments and create actionable best practices to mitigate risk to companies and investors over the course of an investment.

Capstone works with clients to tailor the scope of our ESG due diligence projects on the basis of factors specific to an investment, such as sector, geography and business model.  Examples of ESG services Capstone provides include:

  • Identification of environmental, social, and governance factors that present risks or opportunities to a company’s valuation and/or reputation
  • Reputational and “headline” risk assessments
  • Reputational assessment of a company relative to its competitors
  • Litigation and environmental risk profiles
  • Third-party stakeholder engagement (consumer advocates, environmental advocates, landowner advocates, industry advocates)
  • Identification of best practices to mitigate going-forward risk
  • Assessment of a company’s capacity, commitment, and track record (CCTR) as it relates to the company’s capacity for ESG management
  • Analysis of consumer lending practices relating to subprime or predatory lending concerns
  • Infrastructure development: assessment of adherence to best practices
  • Identification of best practices for sustainable development and to mitigate reputational risk
  • Creation of ESG action plans to ensure continuous risk management throughout the life of an investment