ETD

• 'ESG performance'
• 'Green mergers and acquisitions'
• 'location advantages'
• 'pollution manufacturing firms'
• and 'sustainability in M&As.
• institutional theory'

This study examines the impact of green mergers and acquisitions (M&As) on ESG
(environmental, social, and governance) performance and financial metrics of pollution-
intensive manufacturing companies in the United Kingdom from 2013 to 2022. Using a
dataset of 15 acquirer companies listed on the FTSE (London Stock Exchange) and 36 target
firms from the US, Europe, Japan, and the UK. A systematic literature review was conducted.
and the following gaps were identified: insufficient research on high-pollution manufacturing
industries, particularly in the UK; insufficient integration of ESG metrics; and inadequate
studies explicitly linking theoretical perspectives like institutional theory and Dunning’s
eclectic paradigm with GMAs outcomes. We analyse environmental, social, and governance
(ESG) scores alongside key financial indicators such as return on equity (ROE), return on
assets (ROA), and current ratios. Thus, the study presents a rather contradictory picture of the
impact of green M&As on corporate performance. Green M&As by companies resulted in
enhanced ESG scores, especially in the environmental aspect, but financial performance
Metrics were rather inconsistent. The study noticed a marginal decrease in the average ROE
and ROA after green M&As, which may imply short-term economic trade-offs. More
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specifically, the ESG scores were found to be positively related to the deal values, suggesting
that investors appreciate sustainability. The Herfindahl-Hirschman Index showed that green
M&As did not have a significant impact on the market concentration. The regression models
and random forest classifier show that environmental measures are the most significant
drivers of ESG performance. Nonetheless, the effect of green M&As on financial
performance is not unidirectional, and the effects can be positive or negative depending on
the metric used. Therefore, these findings help in explaining the relationship between
sustainability-driven M&As and both non-financial and financial corporate performance to
managers, investors, and policymakers in the current context of sustainable business models.
The findings also carry practical implications for policymakers aiming to influence green
M&A activity and companies that want to balance their sustainability objectives with
financial performance. Future research should also explore the impact of regulatory dynamics on GMAs.