In 2021, fintech unicorn Wise made headlines when it chose to go public on the London Stock Exchange (LSE) through a direct listing — a vote of confidence in the UK capital markets. Fast-forward to 2025, and the company is now considering a switch to the US, joining a wave of UK firms drawn to the deeper pools of capital across the Atlantic.
Wise isn’t alone. Heavyweights like ARM, CRH, and Flutter Entertainment have either already shifted to the US stock exchanges or are seriously considering it. Their motivations span valuation, investor reach, and sector alignment — but an underappreciated factor sits in the background: ESG reporting obligations.
While often framed as a compliance challenge, ESG has become a strategic lever for IPO success. For finance leaders at the helm of ESG-heavy sectors — infrastructure, fintech, clean tech, and beyond — understanding how regulatory landscapes shape IPO decisions is increasingly essential.
An IPO is no longer just a financial milestone — it’s a public unveiling of how your business operates under scrutiny. ESG, once relegated to sustainability teams, is now a core investor metric, a valuation signal, and a litmus test for long-term resilience.
For CFOs and sustainability leaders, the ESG landscape presents a conundrum:
This creates a paradox. Companies with mature ESG strategies may favour the UK’s transparency, while those with fragmented or immature ESG data might be drawn to the flexibility of the US, even if it comes at the cost of long-term scrutiny.
As global investors increasingly price in climate risk and social governance factors, audit-ready ESG disclosures are no longer “nice to have” — they are fundamental to valuation and investor confidence.
To list on the London Stock Exchange’s Premium Segment, companies must align with the Task Force on Climate-related Financial Disclosures (TCFD). The UK’s Sustainability Disclosure Requirements (SDR) are also incoming, creating a cohesive but demanding ESG regime. Public companies are expected to:
Failure to do so risks investor pushback, regulatory sanctions, and even delisting in severe cases.
It’s easy to see why the NASDAQ or NYSE is attractive. The US boasts:
But here’s the twist: even ESG-ambitious firms like ARM and CRH — both with sophisticated sustainability strategies — have chosen the US. Why?
Because US investors, while increasingly ESG-aware, are less regulated in how they weigh these disclosures.
For companies looking to buy time while building ESG maturity, this can be an attractive window — but it's a short-term gain with long-term exposure.
Ask Rio: Is ESG regulation stricter in the UK than the US?
Yes. In the UK:
In contrast, US ESG regulation is still patchy. While the SEC’s climate rule mandates Scope 1 and 2 disclosures for large firms, it exempts many from Scope 3 (indirect emissions). There is also no federal equivalent to the UK’s mandatory governance and climate risk reporting frameworks.
This discrepancy creates both opportunity and risk for companies navigating cross-border listings.
Listing in a jurisdiction with looser ESG rules may feel like a reprieve — but without robust systems in place, ESG can quickly become a drag on IPO readiness.
Common pitfalls include:
Consider that nearly 90% of institutional investors say they are more likely to invest in companies with transparent ESG practices (Morningstar, 2023). ESG isn’t just a compliance requirement — it’s a cost of capital issue.
With increasing regulatory oversight, audit-ready reporting is no longer optional. It’s the foundation of credible sustainability disclosure.
At Rio AI, we help finance and sustainability teams prepare for capital events like IPOs with confidence.
Our platform supports:
Whether you’re listing in London or New York, our tools ensure you can show not just what you’ve done — but how you’re building long-term resilience.
Wise may be seeking a US listing to capture a higher valuation — but no matter where a company lists, the ESG story will follow.
Regulation might be lighter in some regions, but investor expectations are converging. ESG isn’t going away. It’s becoming more sophisticated, and more critical to access to capital.
At Rio AI, we believe that companies who embrace ESG not just as a reporting requirement but as a business strategy will be the ones that thrive through IPO and beyond.
Whether you’re preparing to list, raise a funding round, or just future-proof your sustainability function, Rio AI is here to help you tell a credible, auditable, and investor-ready ESG story.