offer the potential for rewards to all stakeholders from the workforce to shareholders via increasing the value of the enterprise and reducing cost of capital , among other benefits .
Gaming companies have to work hard to retain staff and provide the best possible environment . A strong sustainability performance is certainly of further appeal when added to other employee incentives .
A BET ON THE FUTURE
While the Northeastern research shows how a small change in sustainability performance can have significant impact on value , currently a relatively small percentage of investors profess to be concerned about sustainability scores in the US . Indeed , there ’ s still an element of choice in reporting against some of the key metrics .
But it ’ s increasingly becoming a regulatory requirement . The introduction of the Corporate Sustainability Reporting Directive ( CSRD ) in Europe , mandating in-depth disclosures , is already having a significant impact . The first batch of eligible companies are required to submit their reports for FY2024 , and
“ Companies such as igaming operators can be less exposed to environmental issues – it is always the social or governance aspects that provide the pain point ”
those that are not prepared will be less attractive to investors .
Similarly , smaller companies need to prepare now for the reporting requirement as they too will be required to report in due course . For these entities hoping for a liquidity event via M & A or IPO , a stitch in time could save nine .
ESG AND GAMBLING PERFORMANCE
For regulated gambling specifically , we have not seen evidence of current ESG performance having a positive impact on company valuations .
We undertook to rate and rank 30 of the top publicly listed gambling companies and the results were all over the map . However , one constant was that many companies were either underperforming from a Sustainability
Plus perspective or else were not given appropriate credit for the positive things they were doing because they omitted or performed poorly on other measures .
As a group , regulated gaming companies lacked a consistency and uniformity of approach that would benefit their mutual cause – staggering for an industry that is so compliance focused . Many companies focus on what is important to them in sustainability terms rather than conform to measures that will enhance their respective standing and unlock the benefits . Some even ignore the matter altogether . This presents a huge opportunity .
Our contention is that if the industry were to speak with a more unified voice and demonstrate consistency in terms of focus investors would take notice .
This , in turn , could be significantly beneficial in terms of valuation , capital allocation , cost of capital and also in matters such as M & A passing muster . The alcohol industry , for instance , has a much more stratified and consistent approach to sustainability reporting and benefits significantly from this in terms of higher valuations and lower cost of capital .
For example , we have had discussions
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