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Why we need to make sports ecosystem more sustainable

Why we need to make sports ecosystem more sustainable

Integrating ESG in sports would be an attempt to engage with the key stakeholders in the ecosystem to create value for fans and local communities and drive sustainable development

As governing bodies, sports federations have to be the torchbearers of inclusivity and equity in sports As governing bodies, sports federations have to be the torchbearers of inclusivity and equity in sports

The 2020 Summer Olympics held in Tokyo may be over, but the experiences and memories of the event will stay on with many of us for a very long time. 

It does not feel like a stretch to say that Tokyo may very well have altered the future of sports in India. The 2020 Summer Olympics were the first gender-neutral Olympics, setting the foundation for more socially equitable mega-sporting events in the future. The organisers also embraced a sustainability plan to "Be better, together - For the planet and the people."  
 
In the context of sustainability in sports, the question to address is - how does ESG, where 'E' or the environment factor is concerned with how operations impact environmental systems, 'S' or the social factor examines the relationship of organisations with people, institutions, and communities, and 'G' or the governance factor is concerned with the internal practices and procedures adopted by organisations to regulate their conduct, apply to the various stakeholders of the sports ecosystem and to what extent? 

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How can each stakeholder adopt ESG principles to fundamentally alter and enhance the sporting world? We identify four key stakeholders and deliberate on what ESG means for each of them - i) sports teams/owners, ii) sports federations/associations, iii) sports equipment and merchandise manufacturers and iv) sports event organisers. We believe that managing and leveraging ESG issues are critical for all the stakeholders. 

 
Sports teams/owners 

A number of sports teams across the world have adopted ESG policies, both as an explicit demonstration of their commitment to sustainability as well as to become attractive for conscious investors. 

Football clubs such as Ajax Amsterdam and Wolfsburg are transitioning towards using green energy in their stadiums and training facilities, while Manchester United and Juventus have published comprehensive sustainability policies.  
 
Sports teams can impact environmental outcomes by demonstrating their awareness of and commitment to waste management to achieve zero-waste goals and promoting environmentally responsible operations at training centres and sporting facilities. 

Through their integral role in the development of a sporting community, it is imperative that sports teams embed principles of equity in their composition as well as develop and nurture such principles in supporting local communities.  
 
Sports equipment and merchandise manufacturers 

ESG and sustainability strategies have become a business imperative in the manufacturing sector as a whole, and multinational sports equipment and merchandise (SEM) manufacturers are not immune to this need either. 

There is a case to be made for a much larger and strategic adoption of ESG principles, and extending the reach of the same, to the entire range of suppliers and consumers of these SEM entities. 

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Minimising environmental impact should be a key component of ESG strategies for such businesses by ensuring circularity, striving towards net-zero manufacturing and distribution, and transitioning to low-carbon emissions and renewable energy for all business requirements, including distribution, use and disposal of their products. 

Such practices should also be extended to cover the entire value chains of SEM manufacturers and work to improve the ESG performance of their suppliers and other business partners, many of whom can often be much smaller operators with limited capacities. 

The use of recyclable materials, renewable energy and clean technology must be prioritised by the manufacturers and suppliers of sports goods.  
 
The issue of ethical sourcing has often been a contentious one for SEM manufacturers. Adopting fair labour management practices, mandating health and safety protocols at manufacturing facilities, and ensuring that suppliers adhere to labour standards are steps that SEM manufacturers must take.  
 
It is necessary for large SEM entities to engage with suppliers on ESG. This also requires having transparency in sourcing and procurement, supported by investment in innovation and research and development (R&D) in green manufacturing solutions. 

The latter also needs to be disseminated across the value chain with a focused campaign to improve the capacities and capabilities of all the partners for SEM businesses.  
 
Sporting event organisers 

It is necessary that planning for such events requires ESG parameters to be considered for minimising and mitigating ESG risks. 

Sporting events, especially the major ones, are often attributed a positive externality for local communities due to an increase in the number of local jobs during the build-up of the event. 

They can also help kick-start a slew of economic activities associated with the event, such as higher tourist/spectator inflow and improved infrastructure. Incorporating strategies and initiatives that help maintain the momentum gained through these events is an essential planning activity.  
 
Such large-scale sporting events also result in significant usage of environmental resources and generate large quantities of waste. 

Event planning efforts should be aimed at minimising and incorporating the principles of circularity and resource efficiency at each stage. 

Understanding climate change and its impact on the local climate can be part of key planning activities, especially for events focused on outdoor sports as such considerations are often outside the ambit of traditional event planning and organisational responsibilities. 

Large events should evaluate undertaking pre- and post-event environmental impact studies and put in place a management and mitigation plan in collaboration with local authorities.  
 
Sports associations/federations 

Sports associations/federations have the mandate for governance and are a critical element in the ecosystem. 

They are not only responsible for framing and implementing the rules for the sports under their jurisdiction but can also become key enablers for the development of sports in a sustainable manner by promoting ESG principles in all sporting activities as well as within the operations of all affiliated and connected entities.  
 
As governing bodies, sports federations have to be the torchbearers of inclusivity and equity in sports. 

As rule-makers and regulators, federations are also liable for taking adequate anti-corruption and anti-doping measures. These values and policies should apply to all organisations affiliated with federations as well as all business partners within their ecosystem.  
 
As organisations that play key roles in planning and scheduling sporting events, it is essential that each association embeds sustainability into organising sporting events and develops and mandates the adoption of comprehensive ESG principles and actions for such events.  
 
Conclusion 

The sports ESG matrix provides an overview of key issues that are relevant for different stakeholders in the sporting ecosystem. 

Each key stakeholder has a role to play at different stages and can become an influential partner guiding the conduct and impact of others in the ecosystem. 

Therefore, it is important that stakeholders understand the importance of ESG and embed such principles into their own operations as well as within their sphere of influence. 
 
Sports has always been a driver of positive change in society not just at a material level, but often at emotional and psychological levels. 

Integrating ESG in sports would be an attempt to engage with the key stakeholders in the ecosystem to create value for fans and local communities and drive sustainable development.

(Shivanshu Chauhan is Partner and Leader - Urban Infrastructure, PwC India. Co-authors: Shubhra Jain and Soumit Mishra also contributed to the article.)