ESG DUE DILIGENCE

Lower your risks today

Understand and Mitigate ESG Risk

Environmental, social and corporate governance (ESG) due diligence should play a key role in modern due diligence procedures. Not considering ESG risk can have significant damaging impacts on the long term performance of a business or investment opportunity. 

In what can be a complex operational setup, there’s a growing need for understanding and accountability when it comes to who we are engaging with. ESG risk management should consider the breadth of a business’ operational relationships; from management, governance, suppliers and any other significant stakeholders. 

Neotas’ blend of open source intelligence, machine learning and natural language processing enables us to provide detailed insights into ESG risks, identifying issues that would not be covered in traditional due diligence processes. 

Our proprietary systems process vast quantities of public online data in over 200 languages and are not limited by global jurisdictions. This technology, combined with our deep industry expertise allows us to deliver zero positives and lower ESG investment and operational risks. 

As the focus on ESG risks continues to grow, now is the time to embrace due diligence procedures that help truly measure the sustainability and societal impact of an organisation.

Cost effective AI-driven open source EDD

Process data in over 200 languages

Zero false positives

Not restricted by global jurisdictions

Uncover international supply chain risks

Download our Coller Capital ESG Due Diligence Whitepaper

What do we search for?

We are able to harness public online data to uncover ESG risks on a global scale, risks that aren’t considered as part of traditional due diligence checks. In the absence of on-site visits, addressing localised public online data is a crucial tool in your risk assessment armoury. 

Our searches interrogate non-financial data to better understand investment or organisational risks. These can include supply chain risks, product reviews and sustainability questions, social impact reports, compliance, corruption allegations, anti-money laundering (AML) and more. 

An ESG due diligence report from Neotas can be used to understand or evidence an organisation’s commitment to sustainability and social responsibility. 

We provide you with a clear, accurate ESG risk report identifying relevant red flags only, with zero false positives. We also have outstanding solutions in place to provide continuous monitoring if required, particularly useful for risk managers that have ongoing exposure.

    Frequently Asked Questions

    Within the next decade, assessing and accounting for the sustainability impact of investment decision-making needs to be a core part of investment activity. While there is no current legal framework for assessing the sustainability of an investment, changes are expected and are being supported by projects like A Legal Framework for Impact

    Non-compliance with corruption or governance regulations could result in fines, while ignoring sustainability or social responsibility risks can lead to damaging reputational crises. All of these scenarios are damaging to the parent company’s value and long term reputation.

    Much like other enhanced due diligence practices, the purpose is to understand and mitigate risks associated with a business or investment. For ESG due diligence specifically, particular attention is paid to short and long term risks relating to environmental, social responsibility and corporate governance.

    For private equity and investment firms looking to acquire a business, not considering ESG due diligence could lead to inheriting the target company’s risks. Non-compliance with ESG regulations could lead to legal liability for the buyer, while they also may inherit the reputational insecurities that come with public risk fallout.

    As ESG data is generally lagged, open source intelligence helps by using NLP to process data on a more real time basis. Using open source intelligence alongside traditional due diligence practices helps establish a clearer picture of the risk ongoing and residual risks of an organisation.

    In short – as early as possible. For private equity and investment firms looking to acquire a business, not considering ESG due diligence could lead to inheriting the target company’s risks. Non-compliance with ESG regulations could lead to legal liability for the buyer, while they also may inherit the reputational insecurities that come with public risk fallout.

    Yes. Not only can identifying ESG risks influence company value but when considering two companies that display similar financial results, analysis of ESG criteria can help differentiate between the two.

    Companies with high ESG ratings typically exhibit a lower cost of capital, less volatile earnings, and lower market risk than companies with low ESG ratings. As a result, sustainability should be our new standard for investing. For years analysts have considered good governance as a key trait for successful companies. Similarly, in more recent times, companies that have proactively reduced emissions and are environmentally aware are being more actively considered by consumers.

    We will look at all aspects of a digital footprint to uncover risk, whether that be financial crime, fraud, modern slavery, exploitation of workers, unsafe workplace practices, environmental concerns. The list goes on and is dictated by what we uncover through open sources.

    Most ESG due diligence practices consist of sending a questionnaire to the company in question and waiting for their responses. If your ESG due diligence consists of sending a questionnaire, are you getting the full picture? We proactively look for what sits in the public domain and we don’t rely on what a company tells us as to what their practices and processes are.

    The core issue with self-reporting is that it relies on firms to divulge information that could harm their reputations. There may be a grey area between what businesses will choose to report and how much would be revealed with a full investigation. If the assessments are reduced to box-ticking and that’s never audited, you’re reliant on complete honesty from organisations whose number one interest will always be self-preservation.

    Yes, we operate globally and aren’t limited by international jurisdictions. Through our in-house skills and machine translation tools, we can review data in 200 languages on a global scale. 

    We look at all available content.

    Our ESG due diligence goes beyond adverse media database checks by extending and including the modern definition of “media”, which includes social media and the entirety of the Internet. The regulators, including the FCA, expect information in the public domain to be used in risk-based decisions and describe open source Internet checks as best practice for EDD. 

    We are able to provide ESG due diligence either as a standalone service, or as an integrated part of our wider enhanced due diligence services. Our team will develop a solution that fits your business needs.

    Our outputs provide clearly flagged risks, detailed evidence and an audit trail including source, screenshot and relevance. We always provide context of all the risks flagged and our outputs can be used to supplement your other findings on the subject.  

    What We Search For

    Clear Actionable Outputs & Risk Categories

    Secure Client Portal & Dashboard

    Associate Networks & Charts

    Pricing

    How much does ESG due diligence cost? The implications of not considering all of the risks can prove costly, both financially and to your reputation.

    Our cost-effective risk management solution can help safeguard your business by monitoring and identifying global ESG risk using public online data.

    We create bespoke packages to suit all of our clients needs. To find out more about ESG due diligence pricing or to discuss our service further, contact our team here or schedule a call directly.

    Contact us for ESG due diligence pricing

    "A fast and responsive team, providing us with easy to understand, comprehensive and cost effective outputs."

    CEO, Investment Firm

    "Neotas have become an important partner, helping us develop our due diligence capabilities as we expand our financing offering into new geographies. Neotas present investigative findings in an easily digestible format. They are responsive to our business requirements and flexible in the way they approach our engagements, key reasons why we continue to expand our relationship."

    Channel Capital Advisors LLP

    Case Study

    ESG Investigation uncovers supply chain risks

    A global private equity firm tasked Neotas to investigate Environmental, Social & Governance (ESG) risk surrounding the subject entity and its supply chain....
    Case Study

    ESG risks uncovered in investigation for global private equity firm

    Investigation into a company and its supply chain revealed major environmental, social and financial risks....
    Blog Post

    ESG Investing & Due Diligence – Q&A with Brendan Bradley

    ESG Investing & Due Diligence - Q&A with Brendan BradleyThe topic of ESG continues to gather momentum as one of the defining trends of this decade. But why has the term seen such a surge in interest and are current reporting systems robust enough to report on evolving ESG issues? How can enhanced due diligence be used to improve ESG...