An ESG fund came to TDI to conduct investigative due diligence as it was considering investing in an India-based polyester production facility and family owned textiles and fabrics supplier.  While the acquisition target claimed to be compliant with local environment and labor regulations, the client was aware of reports that the company had violated environmental regulations at its polyester facility and had used forced labor within its textiles and fabrics business unit. 

TDI conducted inquiries with sources familiar with the target’s operations and management team to assess the overall reputation of the company and its business operations, and to investigate the credibility of the allegations against the target.  Our due diligence investigation—which included confidential site visits to the polyester facility and areas impacted by environmental issues—found that the environmental issues had occurred under a previous owner, and that the current owner had made significant improvements.  However, the investigation also found information to support allegations of forced labor in the target’s supply chain.  As a result of our investigation, the client decided that the potential reputational impact of investing in the target outweighed its expected return on investment and decided against the investment.