Approaching ‘ESG Criteria’ through Major Sporting Events
Environmental, social, and governance (‘ESG’) are issues that are an “ever-growing trend” in world sport. The CEO of the Rugby World Cup France 2023 Claude Atcher who has reiterated this, stating that “France 2023 has embraced a vision: to have a positive impact for rugby, the planet and France by delivering a responsible event that addresses the challenges of today and tomorrow. Rugby World Cup 2023 will be more than a sporting event. It will leave a legacy”. The statement highlights the impact ESG criteria is now having on Major Sporting Events (MSEs) with ESG encompassing a broad range of issues such as gender, diversity, human rights, environmental impact and urban redevelopment.
What are ESG Criteria?
In general terms ESG criteria are a set of standards which convey whether an organisation is operating in a manner that is deemed to be socially conscious. Over the past few years there has been a shift away from the ‘traditional focus on purely shareholder capitalism’ to more modern times, where a company’s success is no longer judged uniquely on the monetary returns it generates for its shareholders. There is now a focus on organisations creating long-term value through incorporating its customers, suppliers, employees, and local communities, to name a few.
What are the elements of ESG?
The first element of ESG is ‘environmental’. This oversees a diverse array of environmental considerations such as energy and natural resources contributed by the organisation. There is also an expanded impact of factors such as carbon emissions as well as climate change and the effect it has on the local environment. Notably, this was incorporated for the London (2012) Olympics by the International Olympic Committee (IOC). Who included measures such as accounting for a bidding country’s ‘planned environment management system to provide detailed metrics on air as well as drinking water quality including integrating its environmental approach into contracts with suppliers and sponsors. The second element is ‘social’, which looks at the relationships an organisation has. This encompasses a variety of stakeholders such as those with a private monetary investment to working conditions and worker rights. For example, UEFA in May 2017 for the first time explicitly referred to human rights as a specific criterion by which bidders will be evaluated for the European Championships taking place in 2024. The final aspect is ‘governance’ which relates to the internal system of practices, controls and procedures implemented by an organisation to ensure good governance. This is achieved through executing policies that are “transparent and fair, avoiding bribery and corruption issues and effectively managing risks.” This has been seen through the emphasis on public relations criteria for the Rugby World Cup 2023.
ESG is not just limited to the sporting world, there are broader implications as highlighted through the Australian Financial Review (‘AFR’), which has a page dedicated to ESG titled the ‘ESG Special Report’. It was also emphasised by Larry Fink, the CEO of the asset management company ‘BlackRock’. He wrote an open letter in 2022 to CEO’s emphasising a point of the importance of ESG considerations in investing.
For a more in-depth look at ESG in a sporting context please click here.
Nick Johnston