Over the years, the gaming sector has faced frequent criticism about its impact on society.
The introduction of ESG poses a great opportunity for gaming companies to leverage and improve its reputation within certain segments of society, by transforming the industry into one that is leading the challenge to make the world a better place.
While the gaming sector is not one that is perceived to pollute our environment in the same way a major airline does, there are certain measures that need to be taken by gaming companies to improve its negative impact on the environment.
Gaming companies are required to store and process large volumes of data, which currently creates substantial levels of carbon emissions. Gaming companies could therefore focus on reducing such carbon emissions by shifting to alternative energy sources.
Furthermore, gaming companies tend to require significant human resources that work in large offices. This provides gaming companies with an opportunity to concentrate on reducing resource consumption and waste, including the conservation of water and electricity, the elimination of food waste and the reduction or recycling of plastic waste.
Stakeholders of the gaming sector expect companies to dedicate substantial energy and resources to protect customers from the negative consequences of betting.
Most gaming companies already promote “safe-betting” policies and procedures as well as digital tools that allow them to identify problematic behaviour. The public expects gaming companies to continue to build on such measures to protect customers from addiction. More importantly, gaming companies are expected to foster a responsible gaming culture through employee training specifically on problem gambling.
In addition, gaming companies can also be the leaders in other crucial social incentives, such as gender equality, employee inclusion and diversity.
From a governance point of view, gaming companies are no different to any other company operating in a completely unrelated industry.
Gaming companies are expected to assess and report on corporate governance matters as well as corporate behaviour, including but not limited to board diversity, business ethics, tax transparency as well as anti-bribery and corruption measures.
How can ESG create more value for gaming companies?
Reducing carbon emissions and investing in alternative energy is expected to result in immediate cost savings for gaming companies, but ESG is much more than that.
In a world in which investors are increasingly viewing ESG matters as critical to understanding the risk profile of a potential target, then ESG should be seen to represent a critical tool in increasing the value of the company. This can only be achieved if gaming companies adopt the correct ESG measures and ensure that they are embedded within the fibres of the business, its culture and its people.
The introduction of ESG requires businesses to create key performance indicators (KPIs) in order to measure improvements in environmental, social and governance matters. Attributing a rating or a score to certain environmental factors, such as water and electricity usage for example, may easily be calculated if the right technology and procedures are adopted. However, attributing a rating or score to social matters is expected to be more challenging. It is therefore vital that substantial effort is immediately invested to ensure that ESG is tackled from all angles.