The sports industry needs to step up its game on ESG, says GlobalData

The impact of climate change on sport is undeniable, with events being canceled or postponed due to extreme weather patterns. In light of COP26, and ahead of the upcoming 2022 World Cup being held in Qatar, which has one of the world’s hottest climates, it is time to think about how leagues and clubs can mitigate the impact of climate change on their industry, as well as set a good example on environment, social and governance (ESG), says GlobalData. However, the leading data and analytics company notes that this is easier said than done.

The Sport for Climate Action Framework, led by the UN Framework Convention on Climate Change (UNFCCC), has attracted 244 signatures. Despite this, there is no sign of a weakening relationship between sports companies and high carbon sponsorship. In 2021 alone, the value of high carbon sponsorship deals amounts to an estimated $951m, according to GlobalData figures.

GlobalData’s report, ‘ESG (Environmental, Social, and Governance) in Sport – Thematic Research’, notes that divestment from fossil fuels and high carbon products is crucial to tackling environmental issues in the sports industry.

Charlotte Newton, Analyst with Thematic Research Team at GlobalData, says: “The sports industry is both a driver and reflector of societal thinking and could lead the way on ESG. Brands should tap into social movements, such as athletic activism, which are popular with a younger consumer base. Giving more exposure to underrepresented sporting areas, such as women in sport, opens leagues and tournaments to new audiences and develops commercial potential. Social movements should be considered a win-win situation as they can present financial opportunities for leagues, clubs, and their sponsors.

“However, sportswashing, the practice whereby an individual, group, corporation, or nation-state uses sport to improve its reputation, and poor governance remain key issues in the industry. The industry is a long way off setting a good example when it comes to ESG, despite token gestures such as the recent NFL email scandal, which led to Jon Gruden’s resignation from the Las Vegas Raiders, and teams traveling thousands of miles for meaningless exhibition games. Carbon neutral pledges mean very little when you have mega events where billions are spent on the construction of new stadia instead of focusing on redevelopment. Overall, the sports industry needs to put its money where its mouth is.”

Case studies highlighting the challenges of ESG in sport include:

  • Volvo Ocean Race using its global platform to highlight the impact of plastic and pollution on the ocean’s wildlife.
  • Uefa’s continued strong relationship with Gazprom, and soccer’s overall affiliation with high carbon industries.
  • Puma leading the way on promoting women in sport, partnering with renowned sports organization ‘Women Win’.
  • How stadiums across the globe are adapting to their changing environmental, introducing more eco-friendly measures such as cutting out plastic.

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