Kpmg Malta: 'Gaming, systemic change in doing business is urgently needed'

Sustainability is an increasingly embraced and all-inclusive concept for industry and commerce. 
But what are the specific meanings it takes for the gaming sector? The analysis by the business consultancy firm Kpmg Malta, represented by Russell Mifsud, director gaming lead, and Rachel Decelis, associate director Esg lead, starts precisely from this definition.

“Sustainability is a rapidly growing priority for the gaming sector, especially in the context of Environmental, Social, and Governance (Esg) principles. 
While gaming companies may initially appear to have a limited environmental impact, deeper examination shows a carbon impact, particularly from value chain activities. For instance, data centres, essential for online gaming platforms and cloud gaming services, consume vast amounts of electricity, which may result in considerable carbon emissions. Business travel also contributes to the industry’s carbon footprint.  
The social component is critical for the industry, particularly in terms of responsible gaming. Mitigation includes implementing safeguards to reduce the risk of gambling addiction, providing tools for players to self-regulate, and promoting awareness of the risks associated with gaming. Inclusion, Diversity, and Equity (Ide) is another essential topic. Gaming companies are expected to foster inclusive environments not only within their organisations but also through the products they create. Support for local communities through outreach, donations, or partnerships with Ngos is another important aspect. It is worth noting that Esg goes beyond traditional Csr by pushing for systemic changes in how companies operate, making social initiatives a core part of business strategies rather than add-ons.
Governance is another crucial aspect in gaming. Companies must implement policies to prevent issues like corruption, money laundering, and fraud, especially when operating in multiple jurisdictions with varying regulations. Effective governance ensures compliance with laws designed to protect players and maintain a trustworthy gaming ecosystem. Transparent governance practices help build trust with consumers and regulators, which essential for long-term sustainability.
Sustainability in gaming isn’t just about minimising harm — it also opens the door to value-adding and brand-building opportunities.”

What are its future developments? 
“The number of companies integrating sustainability into their business models is steadily increasing, driven by factors such as climate change, stakeholder expectations, and evolving regulations. 
Regulation plays a key role. For instance, in the Eu, the Corporate Sustainability Reporting Directive (Csrd) mandates Esg reporting for large companies, ensuring transparency for investors and stakeholders. The Corporate Sustainability Due Diligence Directive (Csddd) further requires large businesses to address environmental and human rights risks in their supply chains. 
Outside the Eu, regulations like the UK’s Taskforce on Climate-related Financial Disclosures (Tcfd) and the Us’s emerging Sec climate disclosure rules are also raising awareness and prompting companies, including those in gaming, to enhance their Esg strategies and compliance.”

How can gaming companies develop a sustainable approach? Who are the actors that can and must support them in this process?
“To develop a sustainable approach, gaming companies must embed Esg principles into their core strategy and operations. A good starting point would be to assign responsibility for Esg to an individual with sufficient expertise and seniority to coordinate efforts across the firm, and to conduct a materiality assessment to understand the most critical Esg factors on which to focus initially. 
Good Esg governance requires that Esg is a collective effort, not just the remit of one individual. The Board needs to set the tone at the top, and various actors within the organisation play an important role in developing and executing the Esg strategy. Sustainability leaders would also do well to seek the support of individuals with similar roles from different organisations, as demonstrated by the Esg in Gaming Roundtable, an initiative set up by Kpmg Malta and Esg leads from various gaming companies that provides a safe space for transparent industry collaboration and co-creation on Esg matters.”

In several European states there is a strong debate on the reorganization of the gaming offer.  Is “sustainable” gaming necessarily gaming with a reduced offer compared to the current one?
“Sustainable gaming does not imply a reduced offering. Sustainability in gaming should focus on responsible and sustainable practices rather than downscaling the product offering (at the expense of the customer). The key is to create a balanced and responsible environment that ensures player protection, good governance, and transparent procedures, while maintaining a vibrant and diverse gaming offering. Reducing the offering could weaken the regulated industry’s appeal and drive players toward the black market, where activity is increasing. Sustainability involves providing services that minimise harm to consumers while increasing the Lifetime Value (Ltv) of players, hence achieving profitable sustainability.
Engaging stakeholders through Esg improves relationships with players, talent, capital markets, regulators, suppliers, and communities. Addressing problem gambling, strengthening governance, and contributing to local communities can enhance public perception and stakeholder relations, benefiting both companies and the industry’s perception.”

How do you judge the state of health of the European gaming industry, in terms of its regulation and the development, also by its operators, of an approach aimed at sustainability?
“The European gaming industry is in a complex state of evolution, with varying degrees of regulatory maturity across different countries. Some jurisdictions are leading the way in terms of strong regulatory frameworks and a focus on player protection. They have set benchmarks for responsible gaming measures and have shown that sustainability can coexist with a thriving gaming market. However, wider pressures have sparked concerns about over-regulation in some markets, which may hinder channelisation efforts, driving players to unregulated operators.
As Esg principles gain prominence, companies embracing them can better manage regulatory risks, build trust with stakeholders, and anticipate/manage regulatory developments. Despite positive progress, there’s an ongoing need for harmonisation of best practices across Europe to ensure long-term sustainability and responsible growth in the industry.”