SiGMA Insight: Paving the way for ESG in the gaming sector
Everyone wants to go green – every corporate and every business likes the idea of a strategy with a strong commitment to ESG (environmental social governance). Companies are feeling pressure because ESG is a moving target. Some are proactive and want to be amongst the first to become ESG compliant and others are lagging behind but eventually they will have no choice other than to follow.
Becoming ESG compliant is a priority for Malta’s gaming regulator. The Malta Gaming Authority (MGA) has launched a voluntary ESG reporting platform for iGaming companies registered in the jurisdiction to report their ESG results and monitor progress. The Corporate Sustainability Reporting Directive (CSRD) requires companies to report on ESG performance from 2024.
Environmental degradation hinders economic growth
Malta Council for Economic and Social Development‘s Chairman, David Xuereb, speaking at PKF’s renewable energy and ESG conference in Malta this week, said that a large number of organisations have started to implement an ESG strategy. Voluntarily, without any funding, many corporates have started the process of transition. This usually means that the CEOs and board of directors of these companies have a mature outlook and have conducted relevant risk assessments. By measuring the company’s carbon footprint, they can compare the company’s benchmark with that of its competitors. With a good and accurate forecast, they can implement the right plan to start the process of transition from where the company is and aim for net zero by a certain date.
Xuereb addressed the conference by speaking about the transition to a greener and more sustainable economy. He said that the commitment to our communities will create a cultural shift and all companies will need to have an ESG strategy in place. Listed companies are required to formalise their reporting procedure of their entire supply chain. Xuereb pointed out that economic growth will always need to use natural resources but nature has an ability to regenerate itself. Even renewables require mining so the transition is not so simple, he adds.
The major risk of ESG is green washing. I have learnt that unless anything is measured, for example actions with KPIs etc, then it is green washing. We know we want to achieve a carbon neutral economy by 2050. I would not want to see a country that does not do likewise.” David Xuereb, Chairman – Malta Council for Economic and Social Development (MCESD)?
Xuereb explained that transitioning relies heavily on the collaboration between the public and private sectors. Governments play a critical role in establishing regulatory and fiscal conditions that will support the implementation of the changes required towards becoming carbon neutral. The magnitude of this change is being likened to the industrial revolution. and the changeover requires huge investment. Those wishing to take this agenda forward will need to push in all directions to create opportunities that will lead to economic growth.
Implementing the ‘E’ in ESG
“We have discovered that beyond regulatory issues, there are many good reasons why ESG is a necessity,” said the Chairman of MCESD, adding that the most compelling reason why the ‘E’ in ESG is important is that there already is a lot of knowledge and awareness on the topic. He is convinced that the younger generation are more committed to a green future and well informed about this topic. And partly because of this reason education, reskilling and training are vital to the success of this mega shift so that “we will realise that the ways of the past are gone and that the ways to a cleaner future are here to stay”. He strongly believes that policy makers should come up with new ways of how to educate the public on the matter.
I am not an expert in this field and I would rather focus on what our mission has to be. Why is the ‘E’ in ESG a priority? The general public give it way more importance than they did before and this makes it an easier point to understand what ESG is all about.? I would like to work with as many people as possible to transition. This is my main calling. I am committed to it” David Xuereb, Chairman – Malta Council for Economic and Social Development (MCESD)?
Put simply, Xuereb sums up the importance for stakeholders to maintain the highest level of integrity with an ethical approach to corporate governance. Companies are being asked to be accountable and to apply this approach to every facet of their operations down to their interactions with stakeholders.
AI and new emerging technology
How the EU’s non-financial reporting framework can assist in achieving Malta’s sustainability goals was one of the topics explored by a panel? at the conference moderated by financial services lawyer Dr Robert Spiteri. Xuereb, one of six panelists that also included the participation of Dr Marthese Portelli, CEO of the Malta Chamber of Commerce, focussed on emerging technologies and said that AI will play a major role to support and measure up ESG. Digital transformation for ESG will be led by ‘intelligent’ tools using the latest technology to record and optimise energy usage, reduce carbon emissions and increase water efficiency. “Technology alone will not solve our climate change problems nor will it compromise returns,” Xuereb argued “in fact technology will transform the economy and transform the country.”
Panel explores the EU’s non-financial reporting framework during PKF’s ESG conference
Malta ESG Alliance
Malta ESG Alliance (MESGA) was set up in 2022 as a platform to support businesses to achieve a global ESG goal. Leading by example, the 13 founding members of the collaboration come from various industry sectors. The alliance acts as a liaison by working with policy makers to attract “small, medium and large companies to join forces and contribute to a resilient and responsible” business community.
Case Study: Boyd Gaming
The story. Casino operator Boyd Gaming currently operates 28 gaming and entertainment properties in ten states in the US. It manages a tribal casino in northern California, and owns and operates Boyd Interactive, a B2B and B2C online casino gaming business. The Company is also a strategic partner of sports betting giant FanDuel with an equity holding of 5 percent.
The challenge. The company pledged to an ongoing commitment to protect the environment and treat stakeholders with “respect and integrity” while at the same time consistently delivering the best interests to the community. Its ESG agenda pledged to reduce the consumption of energy, usage of water and combat climate change by reducing its carbon footprint and minimizing the volume of waste sent to landfills. As a gaming company, Boyd also promises to implement and promote responsible gaming throughout its operations. The company also invested heavily in human resources to ensure it employed more Asian Americans, Pacific Islands, Hispanic and Latin Americans for a more diverse workforce.
Boyd champions diversity. The company consistently raises awareness in diversity and inclusion of minority groups which make up 63 percent of the company’s workforce with 55 percent of employees being female. Boyd Gaming also formalised and implemented a global Human Rights Policy. In terms of communities, Boyd Gaming proudly boasts that its workforce reflects diversity in its composition with at least 17 percent of its employees being Asian-American and Pacific Islanders, while African Americans represent 16 percent of the brand’s workforce. 14 percent of permanent staff are Hispanic or Latin American.
The ESG approach. Caring the Boyd way is the company’s ESG philosophy. Boyd Gaming announced the positive results of its ESG strategy by publishing an Environmental, Social and Corporate Governance Report with its progress of its key initiatives. The findings reported a downturn in energy consumption of 31 percent when compared to its usage in 2017.
President and CEO Keith Smith pledged his commitment to operating with the highest integrity and ethical condition.
As outlined in this year’s report, the entire Boyd team made excellent progress advancing our strategic ESG initiatives in 2022, as we continued to positively impact our stakeholders and the communities we call home.” Keith Smith, President and CEO – Boyd Gaming?
The result. The company’s greenhouse gas emissions were 35 percent lower and water consumption was reduced by over 30 percent. Waste was cut down by recycling initiatives to “re-use rather than discard” and in 2022 the total diversion rate was recorded at nearly 54 percent – a diversion that included over 2 million kilos of materials from landfill waste year over year.
ESG compliance in Malta’s iGaming jurisdiction
The Malta Gaming Authority (MGA) announced that from 2024 all large and listed companies will be required to follow a code of practice under the corporate sustainability reporting directive. In an initiative to enhance Malta′s reputation as a leading gaming jurisdiction, and to “remain at the forefront of innovation”, a voluntary ESG code of good practice will be developed for the iGaming sector.
This will assist licensees in the Maltese jurisdiction to be compliant with ESG legislation and to benefit from a sustainable approach to business. The MGA added that the directive for the iGaming sector will apply to all stakeholders to take into account their ESG impact on the community.
MGA launched a survey with consultation from licensees and key stakeholders in order to raise awareness and promote transparency and accountability in the industry.
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David Xuereb is Chairman of the Malta Council for Economic and Social Development (MVESD). He was speaking at the PKF Conference on Exploring the Links between ESG and Renewable Energy on 12 April held in Malta.? An architect by profession, Xuereb is former President of the Malta Chamber of Commerce.
PKF is an international organisation with over 400 offices worldwide, operating in 150 countries across five regions specialising in audit, assurance, tax and advisory services.
The Malta Council for Economic and Social Development (MCESD) is an advisory council that issues opinions and recommendations to the Maltese government on matters of economic and social relevance.
