Slotegrator analysis: ESG - What is it for the gambling industry?

In 2015, the UN General Assembly developed a set of 17 interconnected goals they called a "blueprint to achieve a better and more sustainable future for all.” These goals were named the "2030 Agenda," and they all relate to ESG — a growing topic in the iGaming industry. In a new analysis, Yana Khaidukova, Managing Director, reflects on the matter.

ESG (Environmental, Social, and Governance) is a framework of standards that considers the needs of all stakeholders — investors, executives, employees, customers, the wider community, and the environment.

Environmental standards aim to limit a company's impact on nature, such as its commitment to sustainability and actions taken regarding problems such as pollution, climate change, and resource depletion.

Social standards refer to a company's impact on people, including its internal HR policies and practices. Companies also show their attitude to important social issues worldwide and participate in policies such as standing against animal testing, drug abuse, human rights violations, and privacy violations.

Governance standards are the framework for organizing an internal structure, including board members, decision-making, and executives. It will also include data protection, communication, employee training, corporate values, transparency, tax strategy, reducing corruption, and everything that makes investors more confident in the company’s health and stability.

These frameworks are increasingly viewed as best practices for companies concerned with the present and future of both the company and society at large. Like other industries that prioritize responsibility, the iGaming industry is quickly embracing ESG standards. Gambling companies can grow to reach the scale of a large international corporation and, just like other businesses, make an impact on environmental and social problems.

ESG measures can bring in investors interested in making positive change, encouraging them to enter an industry they might otherwise skip over.

Andrew Millington, the head of UK equities at Aberdeen Standard Investments, pointed out that "If investment managers who care about ESG shun companies within that sector, we have no influence or oversight to affect positive change." There are many investment options in today’s market, but it’s always best to invest with an eye on the future, even before considering regulations, compliance, and reputation among players and partners. The fact that prioritizing ESG boosts a company’s reputation is the first reason iGaming brands should take ESG seriously.

The second is licensing. One of the world’s most renowned licensing bodies, the Malta Gaming Authority, recently announced a project to support the ESG trend and encourage licensees to report on their performance. A new platform for voluntary ESG reports and an Environmental, Social, and Governance (ESG) Code of Good Practice will be created in 2023, painting the licensor in a good light and giving iGaming companies a chance to demonstrate their commitment to society and the environment.

The third is responsible gambling. This includes a responsibility on both sides: self-exclusion on the part of the players and a transparency policy on the part of the online casino. Anti-money laundering policy is also a must for all companies in the gambling industry.

There are some examples of ESG practices among both B2B gambling providers and B2C operators.

• Kindred Group shares the percentage of its revenue gained from harmful gambling, demonstrating the company’s transparency.
• Greentube promotes a healthy work environment with equality and education, responsible gaming, reducing carbon emissions in daily operations, supporting non-profit social initiatives, and compliance with regulations on its website.
• 888 Holdings established a dedicated ESG committee to focus on issues like promoting safer gambling, combating climate change, and increasing community engagement.

One of the most anticipated updates in Slotegrator’s online platform is integrating AI solutions that will help players to have a responsible approach to the game. Online casinos use AI to identify players exhibiting problem gambling behavior, identify customer habits and preferences, improve security, and provide better service. Despite the fact that online casinos are, first and foremost, a big business, reliable operators should always strive to protect their customers. This is ethical and allows gambling portals to increase their reputation.

"Slotegrator recommends including Environmental, Social, and Governance standards in the strategic planning of a company, as we believe transparent and socially conscious business practices are not only potentially more profitable, they create a better future. It’s better for your reputation to be an asset than a liability," says Yana Khaidukova, Managing Director at Slotegrator.

You can read more about ESG in iGaming at the Slotegrator Academy here.