Public concerns around global warming, social equality, community involvement, and other urgent issues have increased over the last two decades, forcing world economies to respond and adapt.
ESG awareness is rising throughout the sports industry — particularly among stakeholders like federations, teams, leagues, athletes, and sponsors.
Learning about ESG, its reasoning, challenges, and solutions could help sports executives and decision-makers:
- Set expectations for future operations
- Identify and develop long-term strategies and sustainable solutions
- Allow for the creation and development of new business opportunities
An ESG Rating — calculated by data aggregators such as MSCI, Sustainalytics, RobecoSAM, and CDP using hundreds of data points — will measure a company’s resilience to ESG risks, exposure, opportunities, and management relative to its peers.
Such standards are increasingly popular with younger generations: A survey from Morningstar has even found that millennials and Gen-Z are highly interested in impact investing and more likely to factor ESG into investment decisions.
The metric has also gained significant ground in public markets. According to the Global Sustainable Investment Review (GSIR), ESG-oriented investing topped $35.3 trillion in 2020 — up over 10% since 2018 and almost 12x from 2004.
Additional research suggests that companies with a high ESG score are generally positively correlated to valuation and profitability, have less overall volatility (risk), and are considered good capital allocators.
For sports organizations, engaging in ESG and sustainability practices increases their opportunity to become leaders in diverse movements, commit to a mission to improve the world, enhance their reputations, and generate new revenues derived from commercial sponsorships with third parties.
Want to learn more? Check out the full ESG report here.
ICYMI: Last week, we published a new Report on microtransactions in sports gaming. You can access that report and our entire catalog of research at Pro HQ.
