I recently attended the ESG in iGaming Conference organised by Deliotte Malta and iGaming Executive Network, these are my thoughts based on the presentations and panel discussions by industry leaders, regulators and experts.
- Event: ESG in Gaming: Opportunities and obligations
- 11 June 2024 | 08.30 – 14.00 CET | Marriott Resort & Spa, Malta
The conference highlighted how Environmental, Social, and Governance (ESG) principles will become increasingly important in the igaming industry, and emphasised the growing necessity for companies to adopt robust ESG frameworks to meet both regulatory requirements and evolving customer expectations. The keynote addresses and panel discussions shed light on various facets of ESG, ranging from regulatory compliance to corporate responsibility and strategic business growth.
The MGA’s Perspective: Beyond Compliance
Charles Mizzi, from the Malta Gaming Authority (MGA), highlighted that the MGA licence is not just a legal requirement but a “social licence.” This concept underscores that licensing involves a commitment to responsible gaming (RG), environmental stewardship, and ethical practices. Mizzi stressed that companies must exceed legal compliance, advocating for proactive ESG strategies to address potential risks, enhance reputation, and distinguish themselves in a competitive market.
According to Mizzi, ESG considerations significantly influence consumer behaviour, with half of igaming customers factoring in ESG aspects when choosing where to play. This is even more pronounced among Gen Z, 40% of whom prioritise ESG over other factors. This shift indicates that robust ESG practices are no longer optional but essential for customer retention and loyalty.
The MGA has introduced a comprehensive ESG code to prepare companies for the Corporate Sustainability Reporting Directive (CSRB). The code addresses the carbon footprint of data centres and other operational impacts. Companies adhering to this code will soon commence their first round of reporting, with 25 companies already signed up. These companies will receive badges denoting their compliance level: Tier 1 for basic adherence and Tier 2 for more ambitious and detailed efforts. Additionally, the MGA has established its own ESG committee to oversee these initiatives.
The Role of ESG: Insights from Industry Experts
Enrico Bradamante, Founder of iGEN and Liesbeth Oost, Head of ESG at JVH Gaming, discussed the broader role of ESG in the industry. Oost emphasised the need for companies to transition to a stakeholder-focused approach, despite the current challenge of accessing transparent ESG information. This transition is crucial as data related to ESG efforts is often buried in financial reports, making it difficult for stakeholders to make informed decisions.
This is precisely the gap that Better World Casinos is intending to address. We will provide an easy-to-understand summary of the ESG practices and initiatives of igaming operators.
A question from the audience noted the significant impact of ESG on employee retention. A staggering 45% of staff are considering changing companies due to a lack of ESG or climate responsibility plans. This statistic underscores the importance of robust ESG policies in attracting and retaining talent.
Governance: The Foundation of ESG
Effective governance is the cornerstone of any ESG initiative. It begins at the top, with board-level policies driving the organisation’s ESG agenda. Governance was highlighted as a critical factor in the success or failure of mergers, with approximately 40% of mergers failing due to inadequate ESG disclosures or practices.
Having an independent advocate for ESG within the organisation is vital to ensure that ESG initiatives are implemented effectively and transparently. This top-down approach ensures that all levels of the organisation are aligned with the company’s ESG goals.
ESG is a vital pillar of the EU’s CSRB directive.
The timeline for implementation of this is important for companies to understand. The directive is expected to be approved as soon as this month (June 20204) and, should that occur, will apply to companies in the following phases:
- By June 2024; companies with over 500 employees.
- By June 2025; companies that meet two of the following criteria:
- revenue over €50 million,
- assets over €25 million,
- staff over 250.
- By 2026; all small and medium-sized enterprises (SMEs).
- By 2028; third-country entities with a significant presence in the EU.
Embracing ESG: Practical Steps and Strategies
A panel discussion on embracing ESG provided practical insights into how companies can integrate these principles into their operations. The panel emphasised a science-based approach (SBT) to reducing emissions, which involves setting measurable and achievable targets.
Betsson shared its climate roadmap, which includes all emissions sources such as travel, offices, and data centres. Betsson is currently investing in sustainability projects and offsetting emissions as an interim measure while striving towards being a net-zero business.
Training at the ‘C’ and board levels was also highlighted as crucial for understanding the full value of ESG. This training ensures that decision-makers are well-informed and can lead the company in a direction that aligns with ESG principles.
The panel concluded that ESG is the sum of all parts: technology, people, and policies. Integrating these elements can drive significant improvements in a company’s ESG performance.
The Path Forward
The key takeaway was the critical importance of integrating ESG principles into the gaming industry. From regulatory compliance to corporate responsibility and strategic growth, ESG is becoming an indispensable part of business operations. Companies that proactively adopt and implement robust ESG frameworks will not only meet regulatory requirements but also enhance their reputation, attract and retain talent, and appeal to a growing base of ESG-conscious customers.
As the industry moves forward, it is clear that ESG is going to mean a fundamental shift in how all igaming businesses operate.
