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Sustainability Challenges: Sport Governance, integrity and transparency

February 23 2023

In 2023, the world is embroiled in economic, geopolitical, social and environmental crises against the backdrop of ongoing physical and mental health challenges among the general population. In the first of a series of articles in which we talk to experts about the critical issues facing the sports industry this year and beyond, we look at the sustainable challenge of governance, integrity and transparency.

Sustainability Challenges: Sport Governance, integrity and transparency

In recent days, more than 400 winter sports athletes have signed an open letter demanding transparent, concrete steps from the International Ski and Snowboard Federation (FIS) after accusing the governing body of “insufficient” sustainability efforts and a lack of transparency.

With the number of signatories having more than doubled since the letter’s publication on 12 February, the governing body’s initial reaction to the news – insisting that sustainability is “a priority in everything FIS does” – has clearly left many unconvinced.

It remains to be seen whether the letter’s four-point plan, including a target of net-zero carbon emissions for all FIS operations and events by 2035, will ultimately be adopted by the governing body.

FIS has claimed it is the world’s first “climate-positive” federation through a reforestation programme in Peru. However, there is a lack of clear information about this programme or indeed any information about the federation’s carbon emissions. Furthermore, the fact that the company appointed to manage the programme was co-founded by the current FIS president – who remains its chairman – has left athletes calling for greater transparency, as well as a clear sustainability strategy.

Athletes, though, are not the only stakeholders across the global sporting landscape who are demanding more than mere words when it comes to good governance and progressive sustainable

Stakeholder scrutiny

Over the years, commercial affiliates of international federations, national associations, competitions, and teams of all levels have become increasingly aware that their brands can be tarnished by associating with an organisation that has governance issues.

Recent examples include major grocery brand Rewe cancelling its association with the German Football Association (DFB) over FIFA’s crackdown on players wearing ‘OneLove’ armbands in support of diversity at the World Cup in Qatar, and Diageo and Mastercard pulling out of the 2021 Copa America after players spoke out against moving the football tournament to Brazil.

Meanwhile, media rights-holders have been openly critical of those who govern events they are covering with, for example, the BBC in the UK ignoring the FIFA World Cup 2022 Opening Ceremony to focus instead on criticising FIFA and hosts Qatar.

Furthermore, whilst international federations have long applied pressure on national associations to sharpen up their governance practices – as demonstrated by Zimbabwe’s recent suspension by FIFA – pressure can also be applied in the opposite direction through effective mobilisation. This has been shown by the power struggle currently engulfing boxing’s beleaguered administrator, the International Boxing Association (IBA).

Against International Olympic Committee (IOC) recommendations, the IBA lifted a ban on Russian and Belarusian athletes competing under their national flags in late 2022. As a result, Switzerland, the Netherlands, USA, Ireland, Czech Republic, Sweden and Canada are among the countries to have chosen to boycott the upcoming IBA Women’s World Championships in New Delhi.

The IOC has cited ongoing governance issues for refusing to recognise the IBA under its current administration. This has led to the IOC, rather than the IBA, taking charge of the boxing competition at the Olympic Games, although the IBA has controversially announced its own qualification system for Paris 2024.

However, the IOC has its own governance issues over Paris 2024 after announcing that it would ‘explore a pathway’ for Russian and Belarussian athletes to compete as neutrals at the Games. Following a meeting organised by the UK government, a statement was released by 30 nations, including the host nation for Paris 2024 France, that called for the IOC to clarify their definition of ‘neutrality’ given that most athletes concerned were ‘state’ sponsored.

However, it is the relatively recent emergence of the collective fan voice as a powerful lobbying tool that arguably holds the most consequential implications for sports governance.

Collective voice

Fans have become more organised in their lobbying efforts, forcing administrators into countless U-turns over the past decade, ranging from reversing unsustainable ticket-price increases at clubs like Liverpool FC to halting plans to join breakaway competitions such as football’s proposed European Super League.

If they were not before, sports clubs and franchises are now acutely aware of the importance of keeping fans onside to sustain their businesses, after having been starved of game-day income and, in some cases, media-rights revenues during the Covid-19 lockdowns of 2020 and 2021.

Sports administrators have therefore been forced to listen to their ultimate customers and attempt to satisfy their evolving demands, which increasingly include proactive steps in areas like sustainability.

Sustainable efforts

According to a report published last year by YouGov, more than a quarter of fans in the US, Germany and Australia believe sports rights-holders are not doing enough in the area of environmental sustainability. In the UK, more than a third of fans have such an opinion.

Over half (53%) of global sports fans consider themselves as environmentalists, while 68% agree that ‘green energy is the future’. Almost half would be ‘willing to pay more for sustainable energy’.

In short, sustainability is already a crucial issue for fans and is likely to grow in prominence, and to protect their bottom lines, sport’s custodians will be forced to take action.

Collaboration

Sporadic, reactive steps are unlikely to be deemed sufficient in the long term though.

From a governance perspective, transparency and engagement will be essential in ensuring the expectations of stakeholders are met, whether they are fans, affiliates, associations or athletes.

The success of this month’s Green Football Weekend, which garnered support from leagues, national associations, broadcasters, sponsors, clubs, players and thousands of fans showed that stakeholders want to support and participate in progressive action, and not just hear about it.

A collaborative approach will therefore be vital, and whilst the likes of FIS says, for example, that it “welcomes athlete engagement on sustainability”, it is telling that the governing body and many of its athletes are entrenched in such contrasting opinions on the approach.

Progress

Of course, such challenges are not unique to sport, and whether it is a political party, a heavyweight institution or a high-street brand, the media is always keen to shine a spotlight on dubious governance.

However, sport is arguably held to higher standards than most, due to its profile and unique ecosystem of stakeholders, and it is beyond doubt that progress has been made.

“The sports industry has undergone significant changes in its governance, integrity and transparency practices over the past few decades,” says Jonny Gray, Senior Managing Director, Sport at Ankura, a global consultancy.

“The old system of former athletes running the sports industry has been replaced by modern corporate governance practices that emphasise compliance, oversight and transparency.”

Gray added: “That said, governance in sports still lags behind the commercial world and more needs to be done to remove grey practices, abuse and corruption. The industry must prioritise the implementation of robust integrity measures to protect athletes and their sport. This includes establishing independent integrity organisations, ensuring compliance with best practices in senior appointments, procurement and rights allocation, and working collaboratively with athletes to promote a culture of safe, fair and healthy sport.”

360-degree scrutiny

Increasingly, it is clear that sport’s administrators are coming under 360-degree scrutiny from stakeholders, who are increasingly vociferous about making issues like sustainability and integrity key developmental pillars.

Sports governance of the future will therefore rely on transparent internal reforms, as well as external oversight. Furthermore, this needs to happen in lockstep with those who provide foundational support, from organisations that have invested in the sport to those who watch and play it.

As the famous saying goes, ‘power tends to corrupt’. However, future good governance in sport should begin with acknowledging that the power is shifting away from the administrators.

Ankura is a global consulting company. Its sports practice is a cross-functional team of experts and advisors that brings to the sports sector an extensive level of expertise in risk, compliance, investigations, forensic accounting, construction, infrastructure, and geopolitical advisory – all underpinned by cutting edge technology. See https://ankura.com/services/sports-advisory for more detail.

 

What do you think are the greatest risks facing the sports industry in 2023 and beyond?

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    Add your own comments and join in the discussion by clicking on this link.Author: Mike Laflin