Not long ago, environmental due diligence was simply a matter of checking the scope of contamination on polluted land. It was targeted at industrial companies and provided private equity houses and their lenders with a risk assessment, plus an estimate of potential clean-up costs. It was also pretty much the preserve of international firms as far as emerging markets were concerned. “There has been a perception that if you go into areas such as the former Soviet Union countries, the environmental issues are greater than in the West,” says Craig Carson, M&A advisory partner at consultancy ERM.

Either that, or many firms just didn’t use environmental due diligence in emerging markets because they and their funders didn’t feel the low level of risk justified the expense of having the work done. “A few years ago, private equity investors were less concerned about doing environmental due diligence in emerging markets,” says Mark Thompson, corporate partner at King & Spalding...

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