Abstract:
Today, we may identify two important trends: sustainability and Mergers and Acquisitions (henceforth, M&A).
In the first place, we hear a lot about companies that need to be sustainable that is to say companies that should balance economic profit with social and environmental interests. This concept is so popular that the United Nations even set targets in this regard: the Sustainable Development Goals (henceforth, SDGs), a set of goals to be achieved by countries by 2025 and related to the protection of the environment and the preservation of human rights.
On the other hand, the global economy faces an impressive amount of M&A operations. In 2017, 50’600 M&A transactions with a total value of more than 3.5 trillion USD were reported. This tendency does not seem to be slowing down in 2018 as reports point to a strong deal activity again.
Therefore, definitely, sustainability and M&A appear as the trends (or fads?) of the 21st century.
In the middle of this agitation, there are the States, which try to regulate as much as they can. How? By legislating (or not) about sustainability and M&A. In the case of M&A, is it effective? The answer is adamant: no. Given the rate of failure of M&A operations (which will be revealed later in this paper), we may doubt the effectiveness of the States’ interventions with respect to M&A. Why affirming that M&A regulations are inefficient? There might be several reasons but I will argue that States tend to focus on economic aspects rather than including sustainability in the mix. Such approach is prejudicial to the extent sustainability might be the crucial aspect that could redress some M&A operations.
In fact, more than sustainability, Corporate Social Responsibility (henceforth, CSR) might be the key to save M&A. According to the European Commission, CSR is “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.” Broadly speaking, it refers to the companies’ commitment to take actions with respect to sustainability (through social and environmental initiatives). The concept shall be developed further in this paper but the purpose of this study is to show how CSR might benefit M&A operations.
Part 1 will point out that M&A operations mostly fail because of the lack of consideration of sustainability and will argue that legislations have been clearly ineffective to regulate M&A, especially when it comes to sustainability. Part 2 will highlight the fact that through sustainability, and more precisely, Corporate Social Responsibility (CSR), legislations might positively impact M&A.
For the avoidance of any doubt, it is worth noting that this paper shall only focus on European and New Zealand legal frameworks. Although some United States cases will be mentioned, the mere European and New Zealand systems are largely sufficient to cover the topic.
