Concern about sport’s environmental and economic viability are two sides of the same coin

Concern about sport’s environmental and economic viability are two sides of the same coin

Whether you’re optimistic or pessimistic about sport’s future, the winners are likely to be those who focus on core opportunities and risks

Since the turn of the year, I’ve been doing a lot of reading (and listening and watching) about the future of the sports industry, and it’s easy to get caught up in both optimism and pessimism with every piece of content you come across.

On one hand, Two Circles is telling us that sport has a “long and sustained period of growth over the next decade”, and will be worth $260bn (compared to $159bn now), while sports industry experts, like Roger Mitchell and his new book ‘Sports Perfect Storm’, are tempering that with a warning of choppy waters ahead.

To be fair to both sides, it’s not blind optimism or pessimism. The Two Circles report acknowledges that while sport will grow as a whole, there will be “winners and losers”. In ‘Sport’s Perfect Storm’, the final chapter has been reserved to chart a successful onward voyage.

While publicising his book, Mitchell has appeared on a number of podcasts. Many of which I’ve listened to, and a number of his assertions and insights resonate with me and my sustainability hat.

The sports that will win, he says, will not try to be “all things to all people” and chase growth for the sake of growth. They’ll focus on their core audience, and serve them as best they can.

That’s a potential route to financial sustainability – but also, in principle, appears to be an approach that satisfies a more holistic view of sustainability as well.

The trouble, Mitchell says, is that the general way that sport is governed is not geared towards making savvy business decisions – it’s about getting elected, and remaining so. That’s why, in his opinion, disruptive capital that we’re seeing from Saudi Arabia and venture capital firms can be perceived as the “lesser of two evils”.

If your focus is on the narrow aspect of environmental and social sustainability, that might be a difficult suggestion to swallow, and neither the status quo or disruptive capital in its current guise appear to be the optimal solutions for accelerating sport’s sustainability agenda.

But the broad point remains: Mitchell is right to be concerned about the long-term economic viability of a number of sports in the same way that I and many others are concerned about its viability from an environmental standpoint.

In many ways, they are two sides of the same coin. There’s a reason the EU is pushing organisations to undertake double materiality assessments as part of its Corporate Sustainability Reporting Directive (CSRD) – all organisations have their own unique impact on climate change, and climate change is increasingly forcing organisations and industries to adapt (and, in some instances, totally change) their business models.

It’s why SailGP, McLaren Racing and the UCI have all undertaken climate transition plans to make contingencies for their sports and businesses under differing climate scenarios. Although these rights holders are currently in the minority, the rate of change around climate is moving so quickly that it’s unthinkable that in two or three years there will be sports organisations without these plans.

But sport isn’t in that good a place. A report published this week by FrontRunners and the Environmental Defenders Office about ‘Sport, Climate Change and Legal Liability’ suggests that sports organisations in Australia (which is experiencing acute climate impacts) are woefully unprepared to address an issue that is wholly material to their very survival.

Despite the fact that, for a sustained period of time, climate change has been responsible for a number of incidents of personal injury in sport, the cancellation of events and matches and infrastructure damage, only three of Australia’s 314 sports organisations have mentioned climate change in their annual reports.

Only 6% referred to climate change or sustainability in their strategic plans, while only 3% have issued guidance or publications on their website about climate change and sustainability. 

Crucially, this is (or should be) moving the topic of sustainability away from its current silo and towards a wider organisational approach alongside financial viability. The report rightly states that if sports organisations continue to ignore climate risks that have an intrinsic impact on their business and the people that take part, they could be facing significant legal issues.

This is, in my view, a significant thundercloud that inhabits sport’s perfect storm, and should be approached with the same strategic finesse as some of the more commercial issues it faces.

That’s ultimately what it comes down to: being strategic. Richard Rumelt, one of the godfathers of corporate strategy, said that being strategic was about making choices; and making choices isn’t easy. Choosing is about setting aside some goals in favour of others and focusing energy and resources on one, or very few, pivotal objectives.

The sport’s that are going to win are the ones who will make the best strategic choices and go all in. And, as the evidence is heavily demonstrating, one of the best strategic decisions they can make is getting on top of the climate and sustainability issue as best they can so that they are still around to take advantage of the industry’s predicted rise – or stay resilient as it navigates rough seas.

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