Avoiding Scope 3 pitfalls, nature risk exposure, and poor ESG due diligence
You’ve got the basics covered—carbon tracking, waste targets, energy efficiency. But ESG expectations are evolving fast, especially in high-stakes M&A conversations (Mergers and Acquisitions).
If your sustainability strategy doesn’t stretch beyond the obvious, it could quietly derail your next investment, acquisition, or partnership.
Buyers and investors aren’t just scanning your emissions summary anymore. They’re digging into your supply chain data, testing the resilience of your ESG reporting, and watching how you manage your environmental impact beyond carbon.
Let’s explore three of the most common ESG blind spots—and how you can close them before they threaten your next big opportunity.
Scope 3 emissions—indirect emissions from your value chain—are often the largest and least understood part of a company’s carbon footprint. Think supplier operations, product transport, employee commuting, end-of-life product use. These aren’t small details—they’re typically 90%+ of your total emissions (McKinsey).
Yet many organisations delay tackling Scope 3 because the data is hard to collect. That’s a mistake.
Investors now expect companies to have a clear roadmap for Scope 3—not perfection, but progress.
What this means in deals:
If you’re unclear on the environmental risks lurking in your supply chain, buyers will question what else you're missing. That lack of visibility can tank a deal, or significantly drop your valuation.
What to do now:
Carbon emissions are just one part of environmental risk. Increasingly, investors are looking at nature-related impacts—biodiversity loss, land degradation, water stress, and deforestation.
Why? Because business models that rely on natural resources are becoming riskier. Supply chain disruptions from droughts, regulations on land use, and biodiversity-linked disclosure rules are all accelerating.
Enter the Taskforce on Nature-related Financial Disclosures (TNFD)—a global framework that’s quickly becoming the go-to for measuring and managing nature-related risk. Over 300 organisations have already started using TNFD, and that number’s only going up.
What this means in deals:
If your company has land exposure, raw material dependencies, or ties to high-impact sectors (like food, fashion, or manufacturing), your investors will ask: What are you doing about it?
What to do now:
This one’s simple: even if you’re doing the right things internally, if your ESG data isn’t deal ready, it’s a liability.
According to Deloitte, over 70% of companies have abandoned a potential acquisition due to ESG concerns. That’s not theoretical—that’s billions in lost value.
It’s no longer enough to have a PDF report and a few PowerPoint slides. ESG must be integrated into your due diligence process—with verifiable data, clear narratives, and risk-relevant insights.
What this means in deals:
You could be delivering strong ESG performance, but if your data is scattered across spreadsheets, or your story doesn’t hold up under scrutiny, it could be a red flag for buyers.
What to do now:
The most investable companies in 2025 will be those that treat ESG as part of business strategy—not just reporting. That means understanding where risk lives beyond your own operations, and building a forward-looking ESG approach that creates both environmental impact and commercial advantage.
Benefits to a strong ESG strategy include:
You don’t need to have a perfect ESG strategy—but you do need to show you’re asking the right questions, addressing material risk, and improving over time.
At Rio AI, we help sustainability and finance teams work together to uncover ESG blind spots, track Scope 3 emissions with confidence, and prepare nature-aligned reporting that withstands scrutiny.
Book a demo today to see how Rio AI can help you stay investor-ready—no matter what 2025 brings.