As the build up to next week’s London Stock Exchange IPO Forum continues, today we ask MHP Corporate Advisory and Capital Markets’ ESG specialist Rachel Farrington what companies with IPO ambitions should be thinking about when it comes to #ESG communications

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How do ESG communications play a pivotal role in the Initial Public Offering  (IPO) process?

For any company looking to IPO, ESG communications are now a critical part of the process that influence investor perceptions, risk assessments and the overall success of the offering. Companies that effectively communicate their ESG strategies and achievements can enhance their appeal to a growing segment of the investor community that prioritises sustainability and responsible corporate behaviour. At the same time, by not having a credible ESG strategy, you risk cutting yourself off from pools of capital.

Regulation continues to be a driving force across the capital markets, with an increasing focus on ESG disclosures. A number of key regulations have phased adoption schedules and are impacting broader segments of the market over time and setting the direction for corporate disclosures. By putting in place robust ESG practices from the outset, a business can demonstrate to potential investors that it has strong governance in place and that it is proactively managing both the risks and opportunities related to ESG.

In practical terms, what should companies considering an IPO be thinking about/doing when it comes to ESG communication?

What this means in practice is that companies need to be proactive and strategic in presenting their ESG credentials as part of any IPO. We would recommend taking the following steps:

1. Establish a clear and robust ESG framework that aligns with recognised standards and frameworks, such as the Global Reporting Initiative or the Sustainability Accounting Standards Board. Set measurable ESG goals and targets that are ambitious yet achievable.
2. Engage with your stakeholders, including investors, customers, employees and communities, to understand their ESG expectations and concerns. Use the stakeholder feedback to inform your ESG strategy and communications.
3. Commit to transparency in ESG matters by providing clear, accurate and comprehensive information about your corporate ESG performance. Even if you are just starting out on your sustainability journey, being transparent about your progress will help position your approach as credible and authentic. To find out more about our approach to ESG communications during an IPO, please get in touch.

MHP is delighted to be partnering with the London Stock Exchange on its flagship IPO Forum on Thursday 9 May 2024. With a full afternoon of insights, panels, and networking, an expert team of legal, financial and communications advisers will join a host of private companies considering an IPO, as well as members of the investor community and recently listed businesses to discuss the IPO process and the challenges and opportunities of becoming a public listed company. Find out more here