Redefining The Game: ESG’s Role in Modern Football
Introduction
Football is more than just a game. The influence it has off the pitch is equally as significant as the trophies, fans, wins, and losses. Behind the union of the fans, the roar of the crowd, and the glamour of trophies lies an industry facing serious challenges that go beyond the pitch. The sport has evolved into a focal point for larger discussion on sustainability, inclusivity and ethical governance, covering topics such as the carbon footprint of games and social responsibilities of clubs towards their local communities.
The success of football clubs across 90 minutes of play is no longer the only criterion used to evaluate them as feasible investments. Investors and other stakeholders have now turned their attention to the Environmental, Social, and Governance (ESG) pillars. Recently, we have seen a rise in stakeholders questioning the sport’s effects on the environment, its contribution to social cohesion, and the integrity of internal leadership. This change has spurred innovative initiatives throughout football leagues worldwide, whether it’s Forest Green Rovers’ eco-friendly operations, Arsenal’s launch of campaigns relating to community empowerment, or the tightening of financial regulations by institutions across various leagues to promote fair play.
Environmental Considerations
From massive stadiums to overseas travel, football’s environmental footprint is considerable. The industry emits more than 30 million metric tons of CO2 annually, a figure comparable to the total emissions of Denmark. This blunt reality underscores the urgent need for environmental action.
However, significant progress has been made over the past decade across the football industry worldwide. Investors and stakeholders are now prioritizing clubs that adopt green initiatives and are pushing other clubs to make changes in their environmental strategies to minimise carbon footprints and promote long-term sustainability.
This shift toward environmentally conscious practices is evident in several clubs’ initiatives. One notable example is Tottenham Hotspur’s new state-of-the-art stadium, which can be seen as a benchmark in sustainability. The billion-pound investment features 100% renewable electricity backed by REGO certificates, rainwater harvesting, and zero waste-to-landfill policies. Additionally, the launch of reusable beer cup schemes and carton water bottles has helped reduce the club’s carbon footprint, earning them recognition as the greenest club in the Premier League.
Another noteworthy example is Liverpool FC’s launch of “The Red Way”, its sustainability initiative, which has demonstrated competence in reducing carbon emissions. According to their annual sustainability report, Liverpool FC has reached a new milestone in its efforts to reach Net Zero by 2040, with emissions decreasing by 29% from the 22/23 season in comparison to 20/21 season. This has been achieved through initiatives such as using sustainable packaging in retail, including recycled paper, running 94% of operations on clean energy, and offsetting 100% of emissions from football operations.
Shifting focus from England and the Premier League towards Germany’s Bundesliga, the top-tier German league, we have also seen significant progress in environmental sustainability. For instance, Audi’s sponsorship with FC Bayern München, which helped the club transition to electric vehicles through providing first-team players with e-tron models, thus considerably reducing carbon emissions associated with transportation and team travel.
At the peak of environmental sustainability is Forest Green Rovers, recognised by FIFA as the greenest club in the world. This recognition stems from the club’s implementation of various eco-friendly practices, such as solar panels that provide 20% of its annual electricity needs, EV charging stations, and an organic pitch that recycles rainwater for irrigation, ensuring efficient water management. Not to mention their policy on vegan-only food for players and fans, supporting local brands and cutting waste, thus setting a high standard for environmentally responsible football operations.
Social Considerations
Football has a profound social impact, and ESG investors assess clubs based on their contributions to societal well-being. However, the football industry has long struggled with major issues such as racism and underrepresentation. From incidents of discrimination to lack of diversity, the sport has been plagued, and its reputation has been stained worldwide.
Over the years, clubs and institutions have taken proactive steps to address these issues. An interesting example of this effort is Arsenal’s away kit this season, designed by Foday Dumbuya, a British-African designer. The kit, while not a direct solution to racism, features Pan-African colours, symbolizing the club’s commitment to empowering and uniting fans of African origin, promoting inclusivity, and celebrating the diversity of the football community.
As for underrepresentation, various initiatives have been launched to tackle this issue. One noteworthy example is Hollywood’s Sound of Gol Foundation partnership with Watford FC Women, which aims to make the game more accessible for Latina women. This foundation is now also represented on the Watford FC Women board, marking a significant step toward greater inclusivity in football leadership.
As a Manchester United fan, it fills me with pride to see the club’s commitment towards social responsibility through its “United Foundation”. The foundation has a long-standing tradition of supporting educational programs and youth development in Manchester. It also fosters a positive environment by having first-team players actively engage with young fans suffering from disabilities, making dreams come true for youth fans. Additionally, it consistently makes great contributions towards charities to help alleviate poverty in the surrounding area. This demonstrates the club’s dedication to community welfare, and its commitment towards having a more inclusive environment for all stakeholders.
Governance Considerations
Governance, the third pillar of ESG, relates to the internal practices that ensure a football club operates with integrity and accountability. Investors are increasingly scrutinizing the governance structures of clubs, as healthy governance is linked to financial stability.
One of the key aspects’ investors consider is transparency in financial reporting. For instance, clubs with clear financial statements and ethical sponsorship deals are more likely to attract ESG-focused investors.
However, corruption and scandals have been prevalent in the sport, often occurring through violations of Financial Fair Play rules, bribery, and match-fixing. Football institutions have been actively fighting such issues to achieve greater accountability in the sport’s governance. A notable example is Reading FC experiencing significant turbulence under the ownership of Dai Yonagge, who faced major criticism for his poor management of the club. They were handed a 6-point deduction in the EFL as a penalty for a cumulative breach of financial regulations.
Nonetheless, strong governance practices not only ensure compliance with regulatory standards but also build trust with fans, attract ESG aware investors, and the wider community, contributing to the long-term success of football organizations.
Future Outlook
Throughout this piece, I have highlighted some examples of the growing influence of ESG considerations in football, from sustainability initiatives to evolving financial strategies. As the sport continues to evolve and adapt, more sustainable stadiums and operations will become standard practice, with countries like Saudi Arabia incorporating eco-friendly designs in preparation for the 2032 World Cup. ESG reporting requirements for clubs are gradually becoming stricter, with governing bodies like FIFA and UEFA setting formalised guidelines and benchmarks for football clubs. Additionally, green bonds are emerging as a key financial tool for funding future infrastructure projects and sustainability efforts.
These trends highlight the growing recognition of ESG principles as essential to football’s financial and operational strategies and underscore the importance of establishing ESG practices to appeal to potential investors.
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