Corporations are increasingly touting non-financial ESG initiatives to enhance their initial public offerings. While these initiatives can be attractive to investors, capital markets professionals warn that companies that tout their commitment to sustainability should stop short of making specific promises.
“Lawyers will advise their clients to avoid specific forward-looking metrics in public filings and steer them toward ESG ‘themes’ related to their company strategy, Robert Hayward, a capital-markets partner at Kirkland & Ellis, said.
’A client can't just pick up the phone and say, “Hey, when you put together the draft S-1, sprinkle some ESG fairy dust over the disclosure”….you have to have verifiable facts for an IPO.’"
Additionally, “companies are trending toward voluntary disclosures, knowing this expands their pool of prospective investors, according to Sara Orr, an ESG partner at Kirkland & Ellis.”