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As featured on BusinessMirror: ESG for newly public companies

Develop an ESG plan pre-IPO to set up a better offering and a more successful public company.

Environmental, social and governance (ESG) has become a business imperative for newly public companies—impacting financial resilience, growth and investor confidence. Evolving stakeholder expectations and sustainability-related reporting regulations are now critical to a company’s successful initial public offering (IPO) and overall performance.

Capital markets readiness efforts have become inextricably connected with ESG principles. As investors realign their portfolios to support a sustainable future, companies preparing for IPOs must embed a solid ESG strategy into their capital markets readiness plan. The following key considerations can help lay the foundation:

Building a strategic commitment to sustainability is crucial for companies preparing to flourish in the public markets. IPO-ready companies that meet ESG criteria can leverage new sources of capital, including avenues for financing debt and lowering corporate financing costs.

While integrating ESG metrics and data into disclosures can enhance insights and decision-making, it is also critical to conform to the IPO timeframe for ESG-related disclosures. Upgrading technology and data capabilities can help drive investor-grade ESG reporting while telling a sustainable equity story.

Incorporating ESG into business strategy:

Developing an effective ESG strategy begins with three key elements—mapping the material ESG topics that are most impactful to the business; the vision of the corporate ESG profile; and operating model enhancements to address material sustainability topics.

Establishing robust corporate governance:

Newly public companies must have strong mechanisms for corporate oversight to measure and assess their progress on corporate ESG commitments and key performance indicators (KPIs), such as board diversity and decarbonization targets. Transparency with investors about their progress can bolster trust and provide a competitive edge.

Embedding ESG risks in the enterprise risk management function:

Private companies on the IPO path must develop a comprehensive risk management function that has the expertise and experience to identify, assess and measure sustainability-related risks. An effective risk framework provides transparent, quantifiable data to key stakeholders on the company’s ability to monitor and mitigate risks while ensuring accountability across the board.

Preparing investor-grade ESG disclosures:

Evolving ESG reporting requirements mean companies must stay up to date on global regulatory reporting developments to stay compliant. The SEC has proposed rules for climate and cybersecurity-related disclosures for public companies, which are expected to be finalized in the near future. Today, a trend has emerged whereby ESG-related themes dominate various sections of an initial registration statement, including the “Risk Factors” section, particularly with over a third of Form S-1s filed with the SEC in 2022 (on a sample basis) referencing climate-related risks.

In the Philippines, ESG has evolved from a mere trend to a business imperative, influencing not only financial resilience but also growth and investor confidence. This shift in focus underscores the need for Filipino companies preparing for an IPO to integrate a robust ESG strategy into their capital markets readiness plan.


By adhering to ESG criteria, IPO-ready firms can open doors to alternative sources of capital, which may include favorable financing options and reduced corporate financing costs. The Philippines, with its rich natural resources and diverse cultural fabric, can effectively leverage ESG principles to differentiate itself and appeal to investors who are increasingly drawn to companies that prioritize ethical practices.


Kristine Aguirre
Advisory Partner and ESG Lead
KPMG in the Philippines


Furthermore, integrating ESG metrics into disclosures offers dual benefits for these companies. Not only does it enhance decision-making processes internally, but it also communicates transparency and responsibility to potential investors. In a nation that faces environmental challenges such as deforestation and pollution, demonstrating a commitment to ESG principles can help companies gain public trust and present themselves as stewards of the environment and society.

Building a strategic commitment to sustainability is crucial for companies preparing to flourish in the public markets.

While integrating ESG metrics and data into disclosures can enhance insights and decision-making, it is also critical to conform to the IPO timeframe for ESG-related disclosures. Upgrading technology and data capabilities can help drive investor-grade ESG reporting while telling a sustainable equity story.

The excerpt was taken from the KPMG Thought Leadership publication:

https://kpmg.com/us/en/articles/2023/esg-newly-public-companies.html

© 2023 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more information, you may reach out to KPMG in the Philippines Advisory Partner and ESG Lead Kristine Aguirre through ph-kpmgmla@kpmg.com, social media or visit www.home.kpmg/ph.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent KPMG International or KPMG in the Philippines.