THE ROLE OF ESG FACTORS IN SHAPING THE M&A PROCESS

The thesis explores the growing influence of Environmental, Social, and Governance (ESG) factors in shaping mergers and acquisitions (M&A), with a specific focus on the energy and utilities sector in Europe. As sustainability concerns reshape corporate strategies, ESG has emerged as a critical component in deal-making, affecting target selection, valuation, due diligence, and post-merger integration. The research investigates how ESG integration alters financial metrics, introduces green premiums and brown discounts, and impacts the cost of capital. It also evaluates regulatory frameworks, such as the Corporate Sustainability Reporting Directive (CSRD), and their implications for M&A strategies. Through case studies, such as Brookfield Renewable Partners’ acquisition of Neoen and Eni’s renewable energy transition, the thesis demonstrates how ESG-driven M&A can accelerate decarbonization, mitigate risks, and unlock long-term value. Drawing on academic literature, market data, and empirical analysis, the study contributes to the field examining ESG's role in corporate finance. The findings underscore that ESG is no longer a peripheral concern but a core driver of strategic and financial outcomes in M&A, particularly in sectors facing high regulatory scrutiny and stakeholder pressure