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Environmental, social and governance (ESG) standards are the next big thing in the gambling business, according to a panel of industry experts, who see it as a means to create a more sustainable product.
Speaking at the World Gaming Executive Summit (WGES) in Barcelona last week, the panel also discussed how integrating ESG into a business model can benefit brand identity, player retention and shareholder value.
Claudio Caruana, general counsel for Gaming Innovation Group (GiG), takes ESG to mean measuring sustainability and the societal impact of a company, and said that how you see it depends on what kind of stakeholder you are.
“If you are looking for a job, ESG means does this company have the same values as me? If you are a supplier, you might look at ESG to see if your potential partner might bring you down. As an investor ESG will normally tell you the risk management capabilities and sustainability of a business,” Caruana said.
ESG can also help unlock capital and investors for the industry, according to the panel.
Currently, around 65 percent of investment funds around the world still block investments into gambling companies and ESG could hold the key to coming off these blacklists, Caruana said.
ESG can achieve this by adding an extra layer of accountability and transparency as it uses metrics to measure success.
Russell Mifsud, head of gaming for KPMG Malta, stressed that ESG is “not a fad” and it is “here to stay” as it offers a “strategic benefit”.
“There will be challenges for operators who don't take more of a socially responsible stance. It is starting to separate the winners from the losers in our industry. The key aspect is on the investment front, but ESG is a journey and there is no quick fix,” Mifsud.
However, there is not a global metric for these standards and approaches to ESG remain fragmented.
David Foster, director of international regulatory affairs at Entain, said for his company ESG is about sustainability.
“Our aspiration is for a holistic strategy throughout the business, integrated with our values. It's not just an external-facing investment, but more of a cultural thing. ESG is here to stay,” Foster said.
Comparing corporate social responsibility (CSR) with ESG, Foster said the former is a “very woolly phrase” that “lacks accountability and an overarching strategy”.
Tracy Parker, director of the Responsible Gambling Council, agreed that ESG is an opportunity to talk to investors about the gambling industry and do a materiality assessment and that “there is a financial benefit and helps build a business case for the long-term sustainability of the industry”.
However, Parker added that she is most interested in responsible gambling and how we can measure it.
Parker applauded Kindred for its transparency when it comes to revenues from grey markets but is “not sure we are in a system where they will be rewarded for it”.
