No IPO (initial public offering) without an ESG story
Wiesbaden, June 18, 2021. A good ESG story is essential for listed companies. Investors want to know how sustainable the company they are investing in is. However, this non-financial risk information on ESG issues is also particularly relevant for IPO candidates. They, too, should start thinking about their ESG story as soon as possible.
The year 2021 is already considered “a year of IPOs”. 15 IPOs have already taken place this year in Germany, including those of Deliveroo and Vantage Towers. Later in the year, for example, the agricultural chemicals group Syngeta, the fashion online store About you and cherry AG, a manufacturer of gaming and office keyboards, still want to take the final step. This year, cometis AG has also already managed the IPO communication of the e-mobility company hGears. Last year, we supported the charging station manufacturer compleo and the pharmaceutical company Pharma SGP with their IPO communications.
IPOs require a successful ESG story
What is striking here: ESG data has never been as important in IPOs as it is now. As the importance of sustainability issues has risen sharply in society, among investors and companies, this also has an impact on the IPO process. Investors already want to know from IPO candidates how good or bad their ESG performance is. Companies should definitely have their answers ready – and integrate them into their equity story.
A successful equity story has always been indispensable for IPOs, because it contains all the arguments in favor of buying shares in a company. This is precisely why it must also include the area of ESG, because investors want to know how the company’s business is to be viewed from a sustainability perspective. They are not only interested in the E aspects, such as how good a product is for the environment, but also in the S and G data.
But since banks and companies cannot make up the respective arguments, any company planning an IPO in the future should build a foundation for this ESG story. Investors and other stakeholders expect transparent communication and concrete facts – not vague assertions. Only then can investors properly assess the company’s financial risk, which is now significantly influenced by ESG factors.
ESG data does not arise by itself
Collecting ESG data is not as easy as it seems at first glance. The company’s IT system will not somehow “spit out” the necessary data – the data requirements of ESG issues are far too diverse for that. This process takes time, as it requires the collaboration of many stakeholders and reliable data sources. This means, that every company should start systematically collecting its own ESG data as early as possible. By looking at the ESG rating results of peer companies that are already on the stock market, it is possible to find out what ESG information this important stakeholder group expects from a company. Those that can be collected even before the IPO should be evaluated and used to create a suitable ESG story.
The company should make commitments and set firm goals in this regard. The ESG story shows what the company has already achieved (or perhaps not achieved) and where it wants to go. This allows asset owners and managers to see why it is worth investing in the company in the long term. Therefore: No IPO without an ESG story!
Do you need help creating a good ESG story for your company and collecting the necessary data? Then get in touch here. We will be happy to help you.
Michael Diegelmann: Founder and General Manager
Michael Diegelmann has gained experience in over 150 communications projects (IPOs, investor relations, M&A, crisis) and has been working in the field of capital market communications since 1997. He is the author of 16 book publications relevant to the capital markets and was previously project manager at an international consulting firm and a Frankfurt brokerage house.
Justus Fischer: Senior Consultant
Justus Fischer has gained experience in various ESG and IR communications projects. He coordinated a cross-media content marketing campaign for an international technology group. Justus studied media studies, rhetoric and literature at the universities of Tübingen, Bielefeld and La Plata (Argentina).