Integrating ESG into Mergers and Acquisitions Due Diligence: A Business Process Management Approach for Sustainable Capital Allocation at PT Astra International Tbk

Abstract

Background: Integrating Environmental, Social, and Governance (ESG) considerations into mergers and acquisitions (M&A) remains challenging when sustainability is treated as a peripheral compliance activity rather than as part of the transaction process. Objective: This study aimed to develop an integrated ESG due diligence framework for M&A at PT Astra International Tbk using a Business Process Management (BPM) approach. Methods: A qualitative process development approach was applied through semi-structured interviews with cross-functional stakeholders and document analysis. The BPM Lifecycle was used to diagnose the existing M&A workflow, identify ESG integration gaps, and design a To-Be process. Analytic Hierarchy Process (AHP) was employed with 12 stakeholders to prioritise ESG aspects and establish materiality weights. Results: The diagnostic analysis identified three structural gaps: insufficient early-stage ESG filtering, lack of assessment standardisation, and unclear ESG ownership and accountability. AHP ranked Good Corporate Governance and Business Ethics (0.273), Value Trade-off and Internal Carbon Pricing (0.163), Energy Management and Emissions (0.101), and Occupational Health, Safety and Environment (0.088) as the highest-priority aspects. The redesigned framework incorporated four sequential instruments covering Initiation, Due Diligence, Negotiation, and Post-Closing Integration, supported by a Responsibility Assignment Matrix that positioned the Sustainability Division as the ESG process owner. Conclusion: The framework demonstrates how BPM-based process redesign can embed ESG into M&A decision-making and strengthen sustainable capital allocation.