1. Decide on key metrics and areas of focus
The term “ESG” broadly encompasses environmental, societal and corporate governance factors. IPO-ready companies should establish which industry drivers and internal issues will determine their ESG priorities and benchmarks. The World Business Council for Sustainable Development has identified more than 2,000 ESG reporting indicators requested by 600 ratings and benchmarks, including the UN Sustainable Development Goals (SDGs), the Global Reporting Initiative (GRI) Standards and OECD Due Diligence Guidance for Responsible Business Conduct. However, these frameworks must be translated into measurable criteria relevant to a company’s specific purpose, scope and sector.
2. Identify risks
It is essential that companies preparing to go public develop a robust framework that isolates and tracks risks to their business model, and this is especially true of ESG. Investors and consumers are increasingly using ESG factors, from environmental performance to employee diversity and inclusion, to mitigate risk. Companies that take a deliberate, proactive approach to analyzing and modeling related threats and potential failures will be better positioned for resiliency.
3. Implement a consistent and transparent strategy
By identifying impacts and taking measurable steps to amplify positive outcomes—and minimize negative ones—through a holistic, publicly accountable approach pre-IPO, companies can avoid “greenwashing” and demonstrate an embedded commitment to ESG principles.
4. Leverage insights to predict outcomes
In ESG reporting, it is easier to react to inputs than anticipate future outcomes and impacts. To demonstrate deep understanding rather than basic measurement practice, companies going public must use available data to optimize their processes, analyze how their operations fit within broader environmental and social systems, and foster a culture that values learning.