Environmental Due Diligence: Strategies for a Changing Landscape

What is Environmental Due Diligence?

Environmental Due Diligence explores the intricacies of environmental liability during a property or business transaction. The process aims to provide advice to clients regarding the environmental risk of a site or a company’s operations which includes business practices and overall ecological impact. By examining the operational processes and environmental management systems of a company, it aims to uncover risks, identify areas for improvement, and promote sustainable practices across the entire business.

Phase I and II Environmental Site Assessments (ESAs) are the backbone of the traditional environmental due diligence process to identify and quantify risks associated with complicated property histories and operations. In addition to these assessments, Montrose employs a holistic approach to the due diligence process to provide a more comprehensive understanding of material environmental business risks that include environmental regulatory compliance, health and safety evaluations, corporate legacy liability research, and Environmental, Social, and Governance (ESG) performance.      

Here at Montrose, our Environmental Transaction Advisory team specializes in providing environmental due diligence services for strategic and private investors, and our seasoned experts are uniquely equipped to handle customized advisory service offerings tailored to strategic investment, growth, acquisition, and divestment needs. We help clients quantify and manage financial risk and uncover hidden value.

Why does it matter?

Because environmental due diligence serves as proactive risk management for companies, it is a crucial liability protection measure, aiming to prevent unwarranted expenditures. Without due diligence, the extent of potential environmental liabilities is unknown. A lack of a clear understanding of environmental risks can lead to both unexpected costs and potential delays in a transaction. Our primary goal is to assist clients in understanding and mitigating environmental, regulatory, and financial risks. This sets them up for long-term success and future liability management. In addition, we help clients uncover value-added opportunities along the way.

What are common challenges?

Navigating the complexities of the environmental due diligence process presents several inherent challenges. Target markets can vary widely and present differing risks associated with operations and environmental regulations. Whether manufacturing, light industrial, logistics, or commercial real estate, our project experience is varied, and we can cater to highly regulated sectors and industries. Since due diligence windows are often short and strategically paced, our team devises efficient strategies for delivering real-time updates and streamlining the presentation of data to clients and their stakeholders. Effectively communicating materiality adds another layer of complexity. We understand the ever-changing regulatory landscape and the need to effectively convey corrective solutions in business terms. Despite these challenges, the most rewarding moments arise from our ability to meet and exceed client expectations.

How do we stay ahead of changing legislation?

Remaining on the cutting edge of environmental due diligence, our team actively monitors emerging trends and recent changes in the regulatory landscape. Throughout the report creation process, our dedicated focus is placed on researching new regulations so our assessments align with the latest standards. Notably, the rising prominence of PFAS (per- and polyfluoroalkyl substances) in the EPA regulatory field has become a focal point of our attention. To further enhance our understanding and adaptability, our team actively participates in education seminars, staying informed about evolving industry dynamics. Our commitment to excellence extends across all 50 states, with particular attention to states where more rigorous regulations necessitate a nuanced approach to environmental compliance. This proactive stance positions us to navigate emerging trends effectively and provide our clients with insights that align with the current regulatory environment.

What is our process?

We customize our client’s due diligence process and deliverables based on the nature of the mergers and acquisition (M&A) deal including its portfolio size, time constraints, and confidentiality. Navigating the due diligence process with precision and identifying material risks early is paramount to how we approach our clients’ projects. Our commitment to thorough and accurate assessments is underscored by a deep understanding of stakeholder needs and tolerances. Leveraging cutting-edge software tools and our wealth of experience, our process is streamlined and facilitates real-time communication with clients, ensuring transparency and efficiency throughout the entire lifecycle of an M&A transaction.

By becoming a trusted advisor from the board level to EHS staff, we can meet the dynamic needs of clients and their stakeholders in the M&A market. From conducting site visits to researching emerging regulations, we obtain the required information needed to thoroughly understand the risks and opportunities unique to the deal. Through this robust and customized approach, we strive to provide clients with a comprehensive understanding of the environmental landscape associated with the companies they invest in.

How Montrose can help

Client interaction is a cornerstone of our project methodology, and we prioritize transparent communication at every stage. From the initial research phase to on-site visits, our team is committed to swiftly conveying findings and information to our clients. As dedicated partners, we stand by our clients post-close, providing continued support and guidance through the entire investment cycle. Embracing a comprehensive team approach, we continually seek to create efficiencies, add substantial value, and mitigate risks effectively, reaffirming our commitment to delivering holistic solutions tailored to our clients’ needs.

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