ERM Annual Review 2008 - (Page 15) “ With the prospect of margins being squeezed and credit conditions tightening, organizations and banks are taking a longer, harder look at EHS issues at the outset of deals.” Property deals have not only moved geographically, but the economic climate has also given rise to a shift in focus to high visibility issues. These include soil and groundwater risk appraisal, sustainable regeneration and climate change; from energy use to green buildings. Our clients, ranging from global wealth management funds to European investment firms, have engaged ERM to assess energy use and related certification, as well as sustainable building issues for transactions in Germany, Hungary and Asia Pacific. Growing Scope includes Climate Change Risks In our experience, approximately one in five deals now have a material climate change element and this trend is set to continue, whatever the fluctuations of the market. Focus is moving beyond carbon calculations to screening climate change risks. The nature of a business, its exposure to severe weather events and rising energy prices needs to be considered and factored into due diligence assessments. In addition, the potential impact of existing and proposed emission trading regimes in Europe, Australia and the US must also be considered. Severe weather events such as flood and drought will also affect insurance premiums and business continuity. We recently assessed the impact of low rainfall and ensuing low river levels on an organization’s distribution capacity, and factored this in as part of a transaction. For another client, we took an annual energy bill of approximately US$30 million and determined projected costs in light of rising prices. This analysis was not only relevant to the transaction value of the business, but useful in the consideration of future investment decisions aimed at achieving greater energy efficiency and carbon compliance. Confidential Consortium Pre-acquisition environmental assessment of the Pennsylvania Turnpike system which includes 532 miles of road and 70 toll collection facilities. Greg Merritt, Rolling Meadows IL, US Bridgepoint Pre-acquisition due diligence across a range of assets owned and leased by a rail logistics company in Poland. Magdalena Dzierzyk Warsaw, Poland Colfax Corporation Pre-Initial Public Offering (IPO) assessment for a global leader in engineered fluid handling products and systems. Andrew Radcliff Manhattan NY, US Kenneth Roth, Boston MA, US ERM Annual Review 2008 15
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