Embracing ESG reporting in the Gaming Industry
The global growing change of consciousness towards sustainability and the need for companies to integrate Environmental, Social and Governance (ESG) considerations into their business practices, presents a golden opportunity for gaming operators to transform the industry into one that is more transparent and sustainable.
The forward-looking and proactive approach of the gaming sector shows a clear mandate for gaming operators to be at the forefront of unlocking the potential of ESG and becoming catalysts for change. Indeed, being highly regulated entities, gaming operators are, perhaps unknowingly, already adopting ESG practices, and accordingly, are well-equipped to commence or elevate their ESG reporting journey and demonstrate to stakeholders their long-term commitment to a strategy that embraces ESG.
The launch of the ESG Code of Good Practice
The absence of a standardised ESG reporting regime specific to the gaming industry has, to date, resulted in a lack of consistency in reporting. This is expected to change with the introduction of the Corporate Sustainability Reporting Directive (Directive (EU) 2022/2464) (“CSRD”), to which a significant portion of the industry will become subject to (for further information on the CSRD, please see our previous article). In the interim, the Malta Gaming Authority (“MGA”) has taken the initiative to launch a voluntary ESG code.
On 8th November 2023 the MGA announced the introduction of the Voluntary ESG Code of Good Practice for the Remote Gaming Sector in Malta (the “ESG Code”). The ESG code will prepare gaming companies for the upcoming CSRD reporting requirements, whilst also serving as a voluntary ESG framework for all those entities falling outside the scope of the EU reporting regime. Moreover, it will complement and build on existing efforts by the industry, and act as a reference point for MGA licensed entities to regularly assess, report on, and improve their ESG practices.
MGA ESG Code Approval Seal
The MGA will be awarding formal recognition, by way of the ‘MGA ESG Code Approval Seal’, to those MGA licensees who report satisfactorily under the ESG Code. Reporting entities will be able to showcase their ongoing commitment to sustainability by displaying the MGA ESG Code Approval Seal on their websites, social media, and publications. The MGA ESG Code Approval Seal will be valid for a period of one year, subject to renewal at the next reporting period.
Materiality Assessment & ESG Disclosures
With the aim of ensuring that the ESG Code focuses on ESG topics that are important to both the remote gaming industry and the MGA, in developing the ESG Code, the MGA carried out a materiality assessment, wherein it identified key ESG topics for disclosure under the ESG Code.
Acknowledging that licensees are at different stages of their ESG journey, the ESG Code groups the disclosures into 2 categories: Tier 1 and Tier 2 disclosures. The former category outlines a basic ESG reporting standard for those entities that find themselves in the initial stages of their journey, whereas Tier 2 disclosures are more complex, and ambitious. Both tiers are made up of core disclosures, and optional disclosures. MGA licensees, as a minimum, should report on the core disclosures in order to obtain an MGA ESG Code Approval Seal.
ESG reporting in practice
Reporting under the ESG Code will constitute a standalone voluntary submission to the MGA. The inaugural reporting year will commence in 2023 and MGA licensees seeking to report under the ESG Code will be expected to submit their first report to the MGA by the third quarter of 2024. With a view to streamlining reporting processes, the ESG Code will align the ESG reporting period and deadline with the respective financial year and financial reporting deadline of MGA licensees.
Although the submission does not require an assurance opinion at the outset, reporting entities are still required to perform due diligence on the data submitted, and the MGA may also request further information that substantiates such data. It is pertinent for MGA licensees reporting under the ESG Code to note that the MGA reserves the right to withdraw the MGA ESG Code Approval Seal if false or misleading information is found to have been submitted. In this light, MGA licensees reporting under the ESG Code are strongly encouraged to seek verification of the data being submitted.
The Gaming team and ESG team at Camilleri Preziosi will continue monitoring further guidance and developments in this space. Contact us at firstname.lastname@example.org or email@example.com should you wish to discuss ESG reporting, the ESG standards of the ESG Code, or any other applicable reporting requirements.