Nexus Between Mergers and Acquisitions Strategies and ESG Performance: The Influence of Green Governance Structure

Over the past decade, environmental, social, and governance (ESG) considerations have become increasingly integral to corporate strategic investment decision-making processes, with a particular emphasis on the relationship between ESG factors and mergers and acquisitions (M&As). As businesses face growing pressure to align with sustainability goals, ESG performance has become a key metric for assessing long-term value, fostering responsible business practices, and addressing the concerns of stakeholders. This shift has led corporate boards to reconsider the role of M&As in driving sustainable growth and creating value in a rapidly changing global market. The UK, as a prominent global financial hub, has been at the forefront of these developments, with UK-based firms often using M&A as a tool to enhance their ESG portfolios. In contrast, foreign investors view the UK not only as a gateway to European markets but also as a testing ground for integrating ESG principles within corporate strategies. A notable aspect of this is the UK’s regulatory framework for corporate ESG disclosure, which serves as an important attraction for international investors. A critical factor in driving ESG performance during M&As is the green governance structure, which acts as a pre-decision control mechanism, shaping the strategic direction of M&A deals. This chapter sheds light on the interdependencies between the above-stated constructs.