Environmental Due Diligence (DDA) is the investigative process that is put in place to analyse the value and condition of a company, or a branch of it, for acquisition or investment reasons.
The purpose of this type of analysis, applied to the environmental sector, is to highlight and measure overt or latent environmental risks, liabilities and regulatory violations that therefore affect the value of a property (entire plants, individual facilities, land or residential buildings).
The procedure takes place in two distinct stages, which are briefly summarised below.
The first phase involves a study of the site and its history. The objective is to identify possible environmental non-conformities and liabilities (e.g. soil or groundwater contamination) and to draw up the corresponding qualitative risk assessment. The analysis usually starts with a site visit and includes an in-depth document analysis.
The second phase involves the execution of the direct investigations necessary to achieve the Due Diligence objectives should the information obtained from Phase I prove insufficient. It essentially consists of on-site sampling in preparation for further subsequent chemical analyses in the laboratory to identify and circumscribe potential liabilities. By way of example, the possible presence of asbestos and other hazardous substances is assessed, the safety and integrity conditions of the facilities are verified, and environmental investigations on soil and water quality are carried out.
The results of the investigations are systematised and reworked in order to define the interventions necessary to enhance the site and ensure compliance with current regulations, allowing the related implementation costs to be calculated.
This phase involves planning one or more site visits to the area under investigation. This is followed by a documentary analysis aimed at reconstructing the recent and past history of the site, its use, and all relevant environmental aspects. For example:
Phase I ends with the identification of documented and assessable environmental liabilities and the definition of potential environmental liabilities, which require further investigation to be properly assessed.
When the first phase shows the need for further investigation of potential liabilities, the next phase is carried out. The sampling and related chemical analyses provide useful information to investigate the current situation at the site. The objective is to confirm and evaluate the presence of potential criticalities and assess their impact.
Reconstructing the situation of the site by means of direct investigations allows the estimates elaborated in Phase I to be refined, resulting in a complete definition of the interventions needed to adapt the site from a regulatory point of view and an estimate of the costs of such intervention. Once all environmental liabilities have been highlighted, it will be possible to understand the cost-effectiveness of the investment for any potential buyers.
SIGE has gained significant experience in the environmental consultancy sector and, in particular, in Due Diligence. If you would like more information on this service or would like to request a quote, please contact us via this page.
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