Environmental Due Diligence is an essential component in mergers and acquisitions (M&A) processes, ensuring that strategic decisions are made based on reliable environmental data. Companies that neglect this step may find themselves with hidden environmental liabilities, compromising the economic viability of the investment and exposing themselves to regulatory risks.

EBP Global Brasil, with its expertise in environmental consulting, offers solutions that ensure legal compliance and minimize risks in corporate transactions. In this article, we will address the importance of Environmental Due Diligence, its main elements and how it impacts large-scale business decisions.

What is Environmental Due Diligence?

Environmental Due Diligence is a systematic process for assessing a company's environmental liabilities. The objective is to identify risks related to soil, groundwater and surface water contamination, regulatory liabilities and compliance with applicable environmental standards.

This process follows internationally recognized technical standards, such as:

• ASTM E1527-13: Environmental assessment standard for contaminated sites.
• ABNT NBR 15515-1: Brazilian standards for preliminary environmental assessment.
• DD038/2017 CETESB: Guidelines for the management of contaminated areas in Brazil.

For mergers and acquisitions, Environmental Due Diligence is essential to determine whether the environmental liabilities of a project may compromise its economic and strategic viability.

Fundamental Steps of Environmental Due Diligence

Environmental Due Diligence may vary depending on the complexity of the project, but generally follows the following steps:

1. Preliminary Environmental Assessment (Phase 1)

This phase involves a historical survey and inspection of the area to identify potential sources of contamination. The following are analyzed:

• Previous and current industrial activities;
• Use of chemical substances;
• Proximity to water bodies and protected areas.

2. Confirmatory Investigation (Phase 2)

If evidence of contamination is identified, a more detailed investigation is carried out, including:

• Collection and analysis of soil and groundwater samples;
• Use of high-resolution technologies, such as MiHPT and OIP;
• Mathematical modeling to predict contaminant dispersion.

3. Risk Assessment and Mitigation Plan

Based on the results, a risk assessment is carried out to determine the impact of contamination on human health and the environment. If necessary, corrective measures are proposed, such as:

• Removal of contaminated soil;
• Implementation of physical barriers;
• Groundwater treatment.

4. Final Report and Decision Making

The data obtained are compiled in a technical report that supports decision making. This document defines:

• Feasibility of acquisition or merger;
• Estimated remediation and mitigation costs;
• Possible future regulatory requirements;

Benefits of Environmental Due Diligence

1. Reduction of Financial Risks: Identifies hidden liabilities that could generate high costs after the acquisition. 
2. Regulatory Security: Ensures compliance with environmental legislation and avoids penalties. 
3. Asset Valuation: Environmentally safe properties have greater market value and liquidity. 
4. Strategic Planning: Allows the company to anticipate challenges and plan sustainable solutions.

Real Cases of Environmental Due Diligence by EBP

1. Free Phase Mapping for Real Estate (2017)

EBP was hired to conduct an environmental due diligence on a plot of land intended for real estate development. Using high-resolution investigation technology, it was possible to map the contamination plume in just two days and deliver a conclusive report in ten days. The client felt confident in proceeding with the acquisition, knowing the remediation costs and risks involved.

2. Locational Feasibility Study for the Fuel Industry (2011-2012)