No documents are signed before a Due Diligence report is on the table,’ says technical operations director Halfdan Kverneland Olafssøn of Coca-Cola’s Nordic and Northern Eurasia Division. As part of the company`s environmental policy, all properties under consideration for purchase or acquisition are being assessed before any transactions take place. ‘It enables us to get the total costs on the table before any decision is made.’

Coca-Cola has made it policy to carry out environmental assessment studies at all its enterprises worldwide. The risks and liabilities identified by the environmental due diligence process are then appropriately reflected in the purchase agreement.

This kind of policy covers economics, resources and reputation, says Kverneland Olafssøn. The environmental status of our real estate predicts safety and continuity in production wherever we are in the world. If deficiencies are found, this is stated in the agreement. This enables us to foresee possible business risks, clear the line for a good cooperation with local and national authorities and public, and make a good ground for a business agreement suitable for both buyer and seller.

Investigating consequences
DNV has executed Due Diligence reports on three of the latest purchases by Coca-Cola in the Nordic countries. A Due Diligence Audit is a matter of quick handling and thorough work. The decision to have such a report is often made in the final stage of a purchase, perhaps 2-3 weeks before signing the contract. The risk of buying an existing manufacturing plant can be serious if, for example, a source of pollution has been missed before closing the agreement; this could have severe economic consequences for future production.

Identifying the liabilities
The purpose of an Environmental Due Diligence Audit is to identify the environmental characteristics of property which a company is considering for acquisition, sale or lease. The risk and liabilities identified through an audit are taken into account in agreeing the transaction.

DNV has been carrying out Environmental Due Diligence Audits in several European countries since 1990, based on the DNV standard EDDA (Environmental Due Diligence Audit). DNV is developing EDDA as an international service, from its existing bases in Britain, Sweden and Norway.

EDDA in three phases:

• Phase 1: A non-invasive evaluation of the environmental status of a property to address hydrogeological considerations, historical land use, government regulatory information, and on-site reconnaissance.
• Phase 2: An evaluation involving systematic sampling and testing of environmental media to determine whether potential environmental liabilities identified in Phase 1 actually exist.
• Phase 3: An analysis involving further detailed invasive investigation to determine more completely the extent of problem areas, and to provide proposed solutions.