When Regulators Sound the Alarm: Reflecting on Professional Standards in the ESG Market Amid Low-Quality IPOs
Regulators issue a rare warning: falling IPO document quality raises industry concerns
Hong Kong’s capital markets have recently experienced renewed turbulence. The Securities and Futures Commission (SFC) and the Hong Kong Exchanges and Clearing Limited (HKEX) jointly issued a rare letter to IPO sponsors, publicly highlighting the “continued decline” in the quality of IPO documents. They noted that some applications fell significantly short in terms of professionalism, rigour, and information disclosure. The tone and severity of the regulators’ message go beyond a technical reminder—they serve as a clear wake-up call for the industry.
According to the regulators, many applications rely heavily on promotional language, excessively embellishing companies while lacking substantive explanations. Some sponsors demonstrate insufficient familiarity with business facts, respond slowly to key issues, and in some cases fail to maintain effective communication with regulators. As market demand grows and time pressures intensify, professional quality is slipping. The regulators’ concern is clear: the reputation and trust foundation of Hong Kong’s capital markets cannot be compromised by low-quality submissions.
IPO quality issues are not isolated: they reflect broader industry realities
As ESG consultants who have long focused on corporate sustainability and the quality of disclosures, we view this regulatory warning not merely as a caution to the IPO sector, but as a reminder for all ESG professionals, corporate clients, and market participants.
The decline in IPO document quality is not an isolated incident. It mirrors structural challenges within the wider industry: under pressure to meet deadlines and capture market share, professional standards are being systematically weakened.
This trend is particularly evident in ESG consultancy sector. In recent years, as ESG disclosure has become a regulatory requirement, consulting firms have proliferated. Some lack a deep understanding of regulations and standards but compete aggressively by undercutting prices. This results in “template-driven” or “copy-paste” reports presented as completed work. On the corporate side, ESG is often treated as a box-ticking exercise, which companies focus on whether a report is submitted, rather than whether it truly reflects governance, risks, and performance.
However, an ESG report is never merely a marketing brochure, nor should it become a formalistic artefact. It encompasses risk management, data integrity, industry benchmarking, and governance mechanisms, reflecting a company’s managerial capability and long-term competitiveness, not its copywriting skills.
The real challenge for the industry: losing professionalism is more dangerous than lacking technical skill
Within the ESG advisory community, the most common issue is not a lack of client data, but that consultants lack the time; it is not that companies are unwilling to cooperate, but that the processes themselves are poorly designed. Many reports are produced quickly, with unverified data, KPIs lacking trend analysis, major risks insufficiently examined, and insights largely absent. What is ultimately delivered is a “seemingly complete” document that adds little strategic, governance, or operational value.
If low-quality outputs continue to dominate the industry, firms that invest in rigorous research and technical expertise become a minority. When the market values speed and price over quality, the purpose of disclosure frameworks is severely undermined.
The recent regulatory spotlight on low-quality IPO documents serves as a reminder: if professional services do not uphold a baseline of quality, regulatory mechanisms, market trust, and corporate sustainability objectives will all be adversely affected.
Quality is the fundamental ethics of professionalism
Whether it is an IPO document or an ESG report, these are not decorative papers, they are essential components of the market’s trust mechanism. Professionals add value by providing information that is accurate, rigorous, verifiable, and insightful, not by embellishing with rhetoric or copying templates to create the illusion of completion.
Companies should prioritise ESG not merely to comply with regulations, but because the risks and opportunities it addresses are real. Advisory firms should uphold professional standards not for appearances, but because professionalism is the very foundation of the industry.
For Hong Kong to maintain its status as an international financial centre, strong systems and market mechanisms must be underpinned by professional quality.
Conclusion: a warning, a reminder, and an opportunity for self-reflection
While the regulators’ letter targets the IPO market, its underlying message applies to all professional fields: do not let time pressures compromise quality, do not let form replace substance, and do not allow professionalism to become mechanical or template-driven.
In the rapidly evolving ESG disclosure landscape, this regulatory letter invites reflection: what standards do we aspire to as an industry, and how much are we willing to invest in upholding professional quality?
If Hong Kong aims to maintain an edge in sustainable development and capital market competitiveness, high-quality disclosure, rigorous professionalism, and reliable data analysis are not optional, they are the shared baseline that must be established. May this regulatory “warning” serve as a starting point for the industry to move forward, rather than merely a transient disruption.
About GreenCo ESG Consulting
GreenCo is a professional ESG advisory firm accredited with ISO 9001 in the Provision of ESG / Sustainability Reporting, Sustainanbility and Climate Disclosures and GHG Accounting Advisory Services. Established in 2016, we were born to tackle ESG and climate risk management challenges. GreenCo has a professional team consists of talents with multiple backgrounds with
- PhD
- Practitioner Member of the Institute of Sustainability and Environmental Professionals (ISEP)
- CFA (the CFA Institute) and Certificate in ESG Investing
- EFFAS Certified ESG Analyst (CESGA)
- GRI Certified Sustainability Professional
- Certified Public Accountant (for assurance in accordance with ISAE 3000)
- Member of Global Association of Risk Professionals
- Master’s degree in envirnomental science
GreenCo has solid track record in ESG advisory for over 70 listed companies in Hong Kong, Mainland China, Singapore and Korea, covering all industries under the Hang Seng Industry Classification System.
