ESG in Sports: A Sustainable Future for the Global Industry

ESG and Sports 

The concept of environmental, social, and governance (ESG), introduced in 2004, has been widely disseminated globally, with a significant presence in Europe, America, and other developed countries. ESG is a framework for disclosing non-financial information about companies, an investment philosophy, and corporate evaluation criteria that focuses on non-financial performance (Guo et al., 2023). This concept is closely linked to responsible investment, which is defined as “a strategy and practice of integrating ESG factors into investment decisions and exercising active ownership.” (Principle for Responsible Investment, n.d.).  Thus, its principles are primarily employed in businesses to demonstrate exceptional practices and improve investment attractiveness (Li et al., 2021). The sports industry embraces ESG as a standard business practice. In recent years, the sports industry has made significant progress in implementing ESG frameworks, with many organizations recognizing the benefits of sustainability and corporate responsibility for their long-term success. This article aims to shed light on the current ESG trends in sports and demonstrate how stakeholders, notably sports associations and government agencies, can harness ESG business plans. The potential of ESG in and through sports is illustrated using case examples of sports federations and a spotlight case in Singapore.

The sports sector is acknowledged to be a significant economic contributor because of its global market influence. In industrialized countries, sports contributes approximately 1-2% of GDP (Ritchie & Adair, 2002). In Britain, sports generated around £39 billion in the economy, accounting for roughly 1.5% of the country’s GDP. In Asia, China, Singapore, and Malaysia, 1.4%, 0.5%, and 1.1% of their GDP comes from sports, respectively. It is important to note that sports mega-events provide significant opportunities for local and regional economic development, tourism growth, and short-term employment. The global sports industry was estimated to be worth $486.61 billion in 2022, and it is anticipated to expand in the years to come, with a predicted market size of $623.63 billion by 2027. 

The Economic Scales of Sports as Businesses

Global markets can be segregated into several key segments. 

1. Professional Sports: The professional sports industry is a multi-billion-dollar business, generating billions of revenue annually. In the United States, NFL, NBA, NHL, and MLB are the largest sporting competitions. Meanwhile, soccer dominates the professional sports market globally.
2. Recreational Sports: The global recreation market, in which the sports market is a segment, reached a value of nearly $1,435.4 billion in 2018, growing at 4.5% since 2014. 
3. Sports Equipment: The revenue of the global sporting equipment market amounted to more than $160 billion U.S. dollars in 2023. The Sports Equipment market worldwide is expected to generate a revenue of US$172bn by 2024. 
4. Sports Apparel: The global sports apparel market size was valued at USD 203.26 billion in 2023 and is projected to grow from USD 211.57 billion in 2024 to USD 298.06 billion by 2032, exhibiting a CAGR of 4.38% during the forecast period. 

The list does not encompass sports technology or AI-driven sports companies, which are projected to have a significant influence on this rapidly expanding domain. Given the significant influence of sports on both national and international economies, this sector is likely to attract increased attention in the future. Ensuring proper governance and investment in sports is crucial to guarantee their development and prevent exploitation of the spirit of sports (product), community (people), and the environment (planet). Sustainability is the central focus of this discussion.

Rationale and Footprints of ESG in Sports

Sports and sustainability are increasingly intertwined as the global community recognizes the profound impact that sports can have on promoting sustainable development. By integrating environmentally friendly practices, fostering social inclusion, and ensuring economic viability, sports organizations can contribute significantly to the United Nations’ Sustainable Development Goals (SDGs). The sports sector serves as a powerful platform for advocating and implementing sustainable practices by reducing carbon footprint through green stadiums and eco-friendly events to promote equality and community engagement.

Building on the principles of sustainability, the ESG concept in sports emphasizes the importance of comprehensive and responsible management practices. ESG is regarded as a metric system that can be used to gauge a corporation’s performance in various facets of social responsibility. In the realm of sports business, the significance of ESG principles can be encapsulated within three overarching themes. First, ESG principles play a pivotal role in shaping the community and economic impacts of sports businesses. For instance, NBA Cares promotes education, youth support, health, and local community development through community outreach and facility improvement, impacting the economy and society positively. This is manifested through their influence on communities and economies, the establishment of best practice benchmarks, and the rising awareness of their importance. Second, ESG principles are integral to strategic planning and resilience in sports. They provide a measure of a company’s resilience to ESG risks, aid in the development of long-term strategies and sustainable solutions, and facilitate informed decision making. FIFA’s Sustainability Strategy, particularly for events such as the World Cup, demonstrates how ESG principles are integrated into strategic planning and resilience. This strategy covers environmental protection, social development, and economic impact. Finally, ESG principles contribute to environmental and governance improvement. They are instrumental in mitigating the environmental impact of sports businesses and in enhancing governance and transparency. Formula 1 (F1) has launched an ambitious sustainability plan aimed at achieving a net-zero carbon footprint by 2030. This initiative highlights significant advancements in environmental and governance improvements through ESG principles. Essentially, ESG principles guide sports businesses to operate responsibly, manage risks, and foster sustainable growth. To meet the ESG needs of corporations, governments and non-profit sports associations can utilize the ESG requirements of sports businesses and engage in mutually beneficial strategies with these organizations.

Developing Sports through ESG of Businesses 

Besides sport businesses, multinational companies engage stakeholders in sport to showcase their commitment in the ESG principles. Several international sports federations (IFs) have jumped on the bandwagon of ESG and are profiting from partnerships with major corporations. For instance, the Union Cycliste Internationale (UCI), the world governing body for sports cycling, collaborates with Shimano, a leading cycling-component manufacturer, to promote cycling as a sport for all while enhancing environmental sustainability during cycling. Shimano’s dedication to minimizing the environmental impact of its products aligns with UCI’s sustainability initiatives, which include promoting eco-friendly events and products. This collaboration demonstrates the significance of effective governance and transparency in achieving environmental objectives and illustrates how ESG principles can foster positive change in sports. DHL, another non-sport corporation, actively involves sport stakeholders in mega sport events. As a logistics partner of World Rugby, DHL has implemented several sustainability initiatives such as carbon-neutral shipping and promoting environmentally friendly practices at rugby events. This collaboration enables World Rugby to enhance its sustainability efforts and align with global environmental, social, and governance (ESG) trends, while DHL demonstrates its dedication to reducing environmental impacts and supporting global communities. These instances exemplify how International Federations (IFs) can collaborate with companies that have strong ESG practices to achieve their sustainability and social responsibility objectives, while also benefiting from enhanced brand reputation and stakeholder engagement resulting from such partnerships.

National Sports Associations (NSAs) are affiliated with IFs and operate on a smaller scale, governing sports at the national level. Despite their smaller scale, NSAs can utilize IFs as antecedents to launch ESG partnerships with both multinational and local businesses. Quick research into current practitioners highlighted that a few NSAs in Singapore have strategically collaborated with companies committed to ESG and under the Global Reporting Initiative (GRI). One of the most iconic examples is the partnership between the World Rugby and HSBC in the HSBC World Rugby Sevens Series (SVNS). HSBC is a key corporate driver in global sports development, leading to the promotion of four Olympics sports: rugby, badminton, football, and golf (HSBC Group, 2024). Through the HSBC SVNS, the HSBC is committed to diversity and inclusion at every level, delivering gender parity with all seven rounds (including Singapore) and the Grand Final featuring combined men’s and women’s competitions and equal participation fees (HSBC SVNS, 2023). The Singapore Rugby Union is the governing body of rugby in Singapore. The NSA and Sport Singapore are responsible for organizing and overseeing the event, which includes logistical arrangements, venue management, marketing, and ensuring that the tournament runs smoothly. In fact, the long-standing event has been instrumental in creating large talent pools in Singapore, establishing rugby as a major sport in Singapore, and generating significant tourism attraction for the nation since its partnership with HSBC and the World Rugby (Sport Singapore, 2023). 

Singapore, behind the track record of being the hub of sports and events of Southeast Asia, benefits from the forward thinking and structured sports development laid out by different government agencies’ strategic plans. Singapore’s Sports Vision 2030 aims to promote sports to improve health, community bonding, and national pride. This initiative underscores the government’s commitment to developing a sustainable sports ecosystem, which includes hosting major sports events and fostering a vibrant sports industry. Singapore Sports Hub is a state-of-the-art sports complex that serves as a centerpiece for sports activities in the country. It includes a national stadium, an aquatic center, and facilities for various sports. The hub attracts international events, such as the HSBC Singapore Rugby Sevens and the WTA Finals, bolstering Singapore’s status as a global sports destination. Another signature event besides the HSBC SVNS is Formula 1 Singapore Grand Prix, which resulted from the strategies under the Singapore Tourism Board and Economic Development Board Sport Strategy. Opportunities for the fifth smartest city in the world and the smartest in Asia continue. The Singapore Green Plan 2030 and the commitment to be part of the UN Sports for Climate Action Framework position Singapore as a destination for businesses that wish to emerge as climate leaders through sports. 

Way Forward: Start small. Start soon. 

As evidenced, multinational corporations have aimed to contribute to sports development while reiterating their dedication to sustainability and ESG principles, particularly in Singapore. In the region, other nations and their respective national sports associations can collaborate by employing a few strategies.

• Adopt and Localize Successful Programs: NSAs can replicate community outreach and development programs, such as the NBA Cares Initiative, on a national scale. By organizing local events and community projects, NSAs can foster social cohesion and stimulate local economies. The German Football Association (DFB) implemented grassroots football initiatives inspired by FIFA’s community engagement strategies, focusing on youth development and community building.
• Develop Long-term Sustainability Plans: NSAs can create their strategic plans aligning with the ESG frameworks of IFs like UCI’s Agenda 2030. This includes the development of local sustainability policies and resilience strategies to manage ESG risks. NSAs can partner with local companies to promote environmental sustainability in sports. 
• Implement Environmental Initiatives: National sports associations can collaborate with local businesses to promote environmental sustainability in sports. Examples include reducing carbon emissions, promoting recycling, and utilizing eco-friendly materials. For example, Teloon Tennis Singapore has partnered with the Singapore Tennis Association to recycle tennis balls, which are then repurposed for sports surfaces.
• Adopt Best Governance Practices: NSAs can enhance their governance structures by adopting best practices from IFs, such as transparent reporting and integrity programs. This can include regular audits, ethical guidelines, and stakeholder engagement. Leading by the governments, NSAs may establish governance standards in line with international best practices, focusing on transparency and accountability in the management of sports organizations. In Malaysia, the Sport Commissioner has put forward a Sport Governance Rating for NSAs, which can be an indicator for corporations in sponsorship and collaboration.