GREEN PREMIUMS AND VALUATION PARADOXES: HOW ESG INTEGRATION IS RESHAPING M&A DEAL ECONOMICS

ESG criteria are quickly reshaping corporate strategy and have a substantial effect on mergers and acquisitions. Recently, acquirers have started considering ESG not as a risk, but as a driver of value. The term "Green Premium" refers to the tendency of businesses with a strong ESG profile to negotiate higher prices. Businesses are competing for sustainable goals and that investors are willing to pay more for companies with a higher ESG score. However, this trend poses a dilemma: paying a premium for a "greener" goal does not always result in higher returns, particularly if the premium is motivated by perception rather than actual synergies. This essay explores the impact of ESG integration on M&A economics and post-merger value. Regulators across several jurisdictions are tightening disclosure requirements, exemplified by India's implementation of the Business Responsibility and Sustainability Report (BRSR), and with an increase in international ESG reporting standards. As stakeholders seek accountability for overstated and misleading sustainability claims, lawsuits pertaining to greenwashing and misrepresentation are also becoming more prevalent. All these events mark a shift in both the economics and governance of corporate transactions, where ESG performance has evolved from a peripheral to a competitive advantage, expanded legal exposure, and consideration of long-term enterprise value.