ESG Integration in Mergers and Acquisitions: A Case Study on the Acquisition by BP of Renewable Energy Companies

Integrating Environmental, Social, and Governance (ESG) factors into mergers and acquisitions (M&A) has emerged as a critical component of corporate strategy, yet the specific processes and challenges of such integration remain underexplored. This study addresses this gap by examining how ESG considerations shape M&A processes through a detailed case study of British Petroleum’s (BP) acquisitions of Finite Carbon, Archaea Energy, and TravelCenters of America. Utilizing a case study methodology and thematic analysis of secondary data, the research explores ESG integration across key phases of M&A, including target valuation, due diligence, and post-acquisition integration. The findings demonstrate that ESG-driven acquisitions enable companies to enhance stakeholder trust, achieve compliance with regulatory frameworks, and align operations with global sustainability objectives, thereby fostering long-term value creation. For instance, BP leveraged its acquisitions to address Scope 3 emissions, scale renewable energy capabilities, and diversify revenue streams away from traditional fossil fuels. This aligns with the objectives of Sustainable Development Goal 13 (Climate Action), as these strategic moves contribute to climate change mitigation by supporting low-carbon transitions. However, the integration of ESG into M&A processes also revealed significant challenges, such as the lack of standardized ESG metrics, the complexity of aligning diverse stakeholder expectations, and cultural resistance during post-acquisition integration. These barriers underscore the need for innovative valuation models, robust frameworks for ESG reporting, and targeted change management strategies. The study concludes that while ESG integration in M&A presents operational and strategic complexities, it offers substantial opportunities for competitive advantage, resilience, and sustainable growth. By linking theoretical frameworks such as stakeholder theory and resource-based view to real-world corporate practices, this research contributes to the growing discourse on sustainable business strategies and provides actionable recommendations for companies navigating the evolving demands of ESG in M&A.