Preparing Your Business for Sale with a Sustainability Audit

Article Author: Garry Stephensen
Position: Managing Director
Read time: 4 mins

As more Australian buyers and investors prioritise ethical and sustainable operations, businesses with clear sustainability credentials are increasingly viewed as more attractive acquisition targets. If you are planning to sell your business in the next 1 to 3 years, a sustainability audit may not only identify operational improvements, it could also become a strategic lever that boosts your valuation and widens your buyer pool.

Here is why conducting a sustainability audit before going to market is a smart move, and how to approach it effectively.

Preparing Your Business for Sale with a Sustainability Audit

What Is a Sustainability Audit?

A sustainability audit is a structured review of your business's environmental, social, and governance (ESG) practices. It assesses your performance across areas like:

Energy usage and emissions
Waste and recycling management
Water usage and conservation
Supply chain ethics and sourcing
Labour practices and workplace diversity
Compliance with ESG related legislation
Governance transparency and risk management

Unlike a financial audit, a sustainability audit is not just about compliance, it is about demonstrating that your business is responsible, forward-thinking, and resilient.

Why It Matters in the Australian Context

Australia is undergoing a structural shift toward sustainability, driven by regulation, investor demand, and consumer values.

Regulatory momentum: Federal and state governments are introducing stricter ESG and climate reporting standards. The upcoming mandatory climate-related disclosures (aligned with the ISSB framework) will impact many mid-market businesses.
Investor expectations: Australian institutional investors and family offices are integrating ESG due diligence into acquisitions.
Consumer sentiment: More than ever, Australians are choosing to support brands with eco-friendly credentials and ethical supply chains.
ESG risks: Events like bush fires, floods, and supply chain disruptions make climate and social risks increasingly material for Australian businesses.

In this environment, a sustainability audit is not just a box-ticking exercise, it is a signal of operational maturity and future-readiness.

How Sustainability Impacts Business Sale Value

Buyers (especially private equity firms, corporate acquirers, and ESG-conscious investors) view sustainability as a factor that influences:

Business resilience: Sustainable businesses are less exposed to regulatory risk and environmental disruption.
Reputation and brand equity: Companies with sustainability credentials often have stronger customer and employee loyalty.
Operational efficiency: Many green initiatives (such as energy efficiency and waste reduction) lead to real cost savings.
Valuation premium: A clear ESG strategy can justify higher earnings multiples, especially when compared to competitors with poor sustainability practices.

Key Steps to Conduct a Sustainability Audit Before Selling

Here is a simple road map for Australian business owners preparing for sale:

1. Define Scope and Objectives
Decide whether your audit will focus purely on environmental metrics or include social and governance aspects too. Set goals aligned with your sale timeline.

2. Gather Data
Collect measurable information on:

Energy usage (kWh, emissions)
Waste volumes and recycling rates
Water consumption
Supplier policies
Employee policies (Diversity and Inclusion, fair labour)
Compliance records and risks

Tools like the Australian Government's Climate Active framework or the B Impact Assessment can provide useful benchmarks.

3. Engage a Sustainability Consultant (Optional but Recommended)
Working with an ESG advisor or certified auditor adds credibility and helps identify blind spots. This is especially useful if your buyer is likely to be institutional or corporate.

4. Identify Quick Wins
Before going to market, implement low-cost improvements such as:

Switching to LED lighting
Conducting waste audits
Reviewing supplier sustainability
Publishing an ESG policy on your website

These initiatives show commitment and are often flagged positively in buyer due diligence.

5. Prepare a Sustainability Summary
Include your audit results, certifications, and initiatives in your business sale documents (such as the Information Memorandum). This allows buyers to factor ESG into their valuation model.

Case Study

A Melbourne-based wholesaler in the hospitality sector conducted a sustainability audit ahead of a planned exit. By switching to a renewable energy provider, reducing packaging waste, and publishing a supplier code of conduct, they were able to position themselves as an ESG aligned supplier. A national food service buyer paid a 15 percent valuation premium due to the reputation and reduced compliance risk.

If you are preparing to sell your business, conducting a sustainability audit is more than just good practice, it is a strategic move that can elevate your value, reduce risk, and appeal to a wider range of modern buyers.

In today's market, ESG is not just for listed companies. Australian SME buyers are increasingly ESG-conscious, and by showing them that your business is sustainable, you are also showing them that it is future-proof.

Considering a sale? Talk to a business broker who understands how to leverage your sustainability credentials to get the best price for your business.