As expectations around sustainability continue to evolve, investors are under growing pressure to demonstrate measurable value from their initiatives. The holding period offers investors time to engage meaningfully with portfolio companies on sustainability, but the foundation for success is laid well before a deal closes during ESG due diligence.
Done right, ESG due diligence provides investors with a clear picture of a target company’s sustainability risks and opportunities before a deal is signed—and sets the tone for engagement later on in the investment lifecycle. Yet, for many, conducting a comprehensive due diligence assessment can feel like a fragmented, resource-heavy process that consistently fails to yield actionable insights.
To help streamline the process and unlock greater value from data, Novata recently launched an ESG Due Diligence solution. The solution combines intuitive technology with in-house Advisory expertise to reduce costs and help deal teams connect diligence data to measurable outcomes across the holding period. Here are three ways teams can leverage Novata to set the firm up for long-term success:
1. Contextualize Data for Stronger Insights
Collecting sustainability data during due diligence helps investors not only identify material risks that can lead to greater costs down the line, it can also provide visibility into opportunities to improve performance and create long-term value. This process yields actionable insights that are crucial for making informed investment decisions and ensuring thorough evaluation.
Novata’s solution starts with an intuitive, data-led workflow to zoom in on how well a target company aligns with your firm’s investment thesis. The platform also enables real-time, side-by-side comparisons of a target company’s performance on material topics against portfolio and industry averages, as well as Novata benchmarks (where applicable). A flexible scoring system in-platform also streamlines the scoring process with assessments tailored to fit the firm’s priorities. With Novata, teams gain a clear and concise set of decision-useful insights.
2. Centralize Workflows for Efficiency
To help centralize an often fragmented process, Novata’s solution enables investment teams to request, review, and contextualize data in a single, secure location. Additionally, metric-level collaboration enables teams to review data together in real time and keep track of data, documentation, comments, and changes in one place.
Diligence teams can communicate directly with the target by flagging data for review and follow-up, assigning data and/or follow-up to relevant management team members and functional leads, and requesting additional context and evidence that is all securely logged at the metric level. They can also request and share information across diligence teams as ESG data overlaps with human capital, legal, cyber, and other workflows.
3. Connect Diligence to Monitoring
Once risks and opportunities have been identified pre-investment, a seamless connection between the diligence environment and monitoring environment can help ensure critical areas are acted upon during the holding period, and performance outcomes are effectively tracked and quantified from diligence to exit.
To facilitate this, Novata connects the due diligence and monitoring environments within the platform to make it easy to track progress against sustainability initiatives during the holding period. This helps reduce the time and cost of onboarding new assets into a new management system, makes it easy to track progress, and maintains accountability across the lifecycle of the investment from diligence to exit, connecting sustainability performance to financial outcomes.
Turn ESG Due Diligence into a Strategic Advantage
In today’s investment landscape, due diligence is a strategic tool for long-term value creation. By pairing technology with expertise, Novata enables investors to contextualize data for deeper insight, streamline workflows, and gain greater value from data across the investment lifecycle. Learn more about Novata’s ESG due diligence solution and how we can support you across every stage of the investment lifecycle.
