A comparative analysis of corporate governance frameworks’ roles in integrating ESG into mergers and acquisitions in the UK and the US, and how they enable or hinder its integration in mergers and acquisitions.

Abstract

This research examines the role of corporate governance frameworks in the UK and the US in enabling or hindering the integration of ESG in mergers and acquisitions. As ESG has become increasingly significant to transactional outcomes, yet a gap persists in comprehending whether governance integrates as an essential component or permits it to remain optional. This research examines this deficiency through a comparative legal analysis of the framework of the United Kingdom and the United States. This research implements a doctrinal and comparative methodology to examine legislation, soft-law instruments, and case law in both jurisdictions, supported by academic and empirical evidence. The analysis compares the UK’s principled approach, whilst assessing section 172 of the Companies Act 2006, and the US’s prescriptive approach embedded in Delaware’s fiduciary duties. The findings reveal that the UK framework is designed to grant flexibility but is obstructed by inadequate enforcement. In contrast, the US framework provides assurance yet is constrained by its focus on shareholder primacy. Consequently, neither framework completely embeds ESG into M&A, hence its integration is dependent on the board's commitment, investor pressure, and market conditions. This dissertation suggests that corporate governance functions as both a promoter and a hindrance to ESG in M&A, highlighting the necessity for more uniform guidelines, ESG metrics, and to reconcile the disparity between ESG’s theoretical significance and its inconsistent practical application.