Due Diligence and Corporate Governance

16.4: The Product and Raw Materials

16.4: The Product and Raw Materials

Although the vendor may well have a product which does not itself appear to cause pollution, the production process should be checked as it may do so. For example, toxic materials may be used as part of the manufacturing process. In such a case the purchaser is advised to:

  • request sight of environmental policy adopted by the vendor;

  • require information as to how it is implemented; and

  • inquire how the vendor company monitors compliance with its own policy.

In addition it is important to carry out investigations relating to:

  • the process and previous use of the site.

The purchaser needs to find out from the vendor whether the process may cause emissions which could impose environmental liabilities. In addition previous processes need to be checked. Although they are no longer used, they may lead to current or future liabilities. Checking out the previous use of the site may alert the purchaser as to the possibility of the land being currently contaminated, with all the attendant costs for clean up that this could bring.

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