Building ESG Into Your IPO

Environmental, social, and governance (ESG) factors have become hugely important in initial public offerings (IPOs). Here are a few key considerations for strategically incorporating ESG into your IPO process:

The legal perspective:

  • Investors want to fully understand the ESG footprint of any business tapping into capital markets. 
  • There’s an increasing number of ESG provisions and regulations that companies need to consider when setting their IPO strategy.
  • The IPO prospectus should address the company’s ESG footprint.
  • ESG doesn’t go away after an IPO. ESG should form part of the daily operational business (ex. when selecting candidates for executive or supervisory board positions). 

The communications perspective

  • A strong ESG equity story is crucial for a successful IPO and long-term success.
  • Investors and journalists expect ESG to be incorporated into the IPO process. 
  • IPO candidates should analyze their ESG readiness at an early stage and begin to develop an ESG strategy based on their corporate strategy framework. 
  • Companies should use all the relevant milestones in the IPO process to actively communicate their ESG strategy.
  • Companies should increase visibility about ESG activities on a dedicated platform (like a corporate website) to present priorities, track records, and regular progress. 

Learn more about ESG in the IPO process here.