For a sport played on grass, asking what is not ‘green’ about football may seem an odd question. Looked at from an environmental, social and governance (ESG) perspective, though, football’s ‘green’ credentials appear less convincing. Yes, it is a social sport. Yes, it brings lots of people out into the fresh air, exposing large numbers to physical activity and (often) stress management exercises. What, however, do football clubs do when it comes to sustainability and transparency, especially the top- flight teams that are businesses with major franchises, a global following and role models in their communities?
Big league business
These days, football IS business. And big business at that. In 2013/14, the cumulative revenue of the ‘big five’ European leagues exceeded EUR 11 billion, which is over half of the overall size of the European football market of more than EUR 20 billion (source: Deloitte annual review of football finance 2015). Many are market-listed as well. The STOXX Europe Football index covers 23 listed clubs that represent the breadth and depth of the European football industry and include current and former top-tier teams such as AFC Ajax, AS Roma, Celtic and Galatasaray.
Naturally, such clubs pay a lot of attention to spending, new signings, sponsorship, attendance and the weekly results. Indeed, these are factors that can affect a club’s share price. But many clubs have a central role in their community. They can have a considerable economic impact, ranging from the building and maintaining of stadiums and other facilities to offering people jobs from players to groundsmen and stewards. Not to mention ancillary work for people including the sellers of hot dogs and clobber for the fans. There are non-financial effects too. In social terms, many clubs have diversity and youth programmes and run community activities.
A win-win – on the pitch and the market
For investors, an emphasis on socially responsible behaviour matters. Research has established that such behaviour enhances shareholder value. Implementing best practices in the fields of social and environmental responsibility and governance – collectively labelled best ESG practices – has been found to enhance a company’s performance both on the pitch and on the stock market.
Do football’s top revenue earners, such as Juventus, Paris Saint-Germain, Bayern Munich and Borussia, shed much light on the role of ESG in their businesses? Is there any clarity in Europe’s largest competition by revenue, the UK Premier League, on socially responsible behaviour?
Juventus: blazing the trail
There is some. However, the focus is typically on charitable foundations and community projects. All socially worthy efforts, of course, but hardly the kind of insightful and transparent sustainability reporting that many listed companies provide in the investor relations sections of their websites. There is a bright side, however. Juventus has shown itself to be a trail-blazer with a 100-page sustainability report – arguably one of the stronger efforts in the history of football management.
What does it tell us? Beyond promoting numerous charitable initiatives, Juventus has established a code of ethics and sought to raise awareness among fans and players of hot topics such as racism and discrimination. It has adopted a sustainability budget, drawn up according to the internationally recognised guidelines of the Global Reporting Initiative (GRI) for sustainability budgets across a variety of different industries. The GRI formally approved the budget in October 2014.
Juventus has committed to using clear, transparent methods to confront the most sensitive issues affecting the club and its stakeholders, seeking a two-way dialogue. In Report one – Towards sustainability in football, Juventus lists issues such as health and anti-doping, stadium safety, no to racism, anti-corruption, fair play on the pitch and corporate governance, fair and responsible behaviour of fans and the environmental impact of the club’s stadium, including minimising waste. It points out that the priorities for the report were identified by engaging key stakeholders.
Still plenty of room to improve
A praiseworthy start, one could argue, and an example worth following. While there is much for businesses to learn from football – including attracting and managing talent, building an effective team, dealing with fan and shareholder involvement and merchandising – it would appear there is still plenty of room for football clubs to improve their ‘green ‘scores. Especially for the growing group of investors who believe in the added value of assessing investments through ESG-tinted spectacles. So while there still seems to be plenty that is not ‘green’ about football, at least there are green shoots starting to appear.