Sponsorship, impact and ESG

we race as one

Sponsorship, impact and ESG used to be very remote companions – but now there’s a large role for sponsorship in both communicating and delivering impact.

Humans are creatures of habit. As a rule, we avoid change, anything which destabilises our existence – until the need becomes overwhelming. Burning platforms can be financial, existential, psychological but only become platforms for change when they’re irresistible.

And of course it’s the same with business. Business is predicated on minimising disruption as far as possible, especially to revenue. The value of nearly every activity is assessed against impact on profit, usually short-term profit. Initiatives which don’t obviously deliver commercial value have to work especially hard to secure budgetary approval.

Or to express it bluntly as a simple truth that I’ve never seen written down : businesses rarely do the right thing just because it’s the right thing; only when it’s believed to drive commercial advantage. Which is the starting point to discuss sponsorship, impact and ESG (Environment, Social and Governance). And impact. And sustainability.

As corporate philanthropy evolved (via CR and in turn CSR) into corporate sustainability, the direction was to leave behind unpredictable whimful and mere damage mitigation practices. Instead, the new focus – quite sensibly – was anything relating to long-term business health : the sustainable use of resources, capital and relationships – and wherever possible, creating shared value for business and society. ESG is the formulation of sustainability practices through the lens of corporate governance: measurable, accountable and strictly aligned to business sustainability. Great primer on ESG reporting by scientific safety practice UL here and on the evolution from CSR to ESG here.

Where is this all going?

The immediate point to make is that, while large sections of our industry are trumpeting sponsorship’s value to communicate and indeed deliver CSR activity – the term CSR or Corporate Social Responsibility isn’t really used any longer by forward-thinking businesses. So the industry’s embrace of the term CSR is in itself a little awkward.

Although the initiatives and causes supported by sponsorship are usually worthy, the inevitable question is : how genuinely are these linked to existing sustainability and ESG priorities? Were these initiatives already on the table, which sponsorship provided a vehicle to address? Or were they simply good PR? I’m the last person to knock good PR but of course there’s only a thin line between PR and sportwashing.

Purpose is – wonderfully – a rising tide. The continuing corporatisation of rightsholders – from Club ownership through franchise models to the acquisition of commercial rights on the scale of The Davis Cup and F1, imposes an absolute requirement for the sport and sponsorship industry to take ESG seriously.

What does this mean for sponsorship and sport in particular?

It means that major rightsholders need to recognise and formalise their commitments to the environment and social good practice, with particular emphasis these days on Diversity, Equity and Inclusion, in order to meet the due diligence criteria of corporate partners. Women’s football is of course absolutely in the sweet spot. The right thing and the largest ‘minority’ audience you could wish for – powerful stuff.

But rightsholders’ ability to produce CSR initiatives to embellish their sponsorships will also increasingly be limited, as their own ESG policies inevitably provide a clearer focus for their activity. It also means that the major (to start with) rightsholders will have to become more selective about the kind of CSR initiatives they can support.

We’ve experienced this recently with F1.

F1’s ambitions relating to environmental sustainability are inspiring. It has a strong ESG platform, WeRaceasOne, which addresses issues relating to the environment, D&I and community as they affect F1. Our client, on the other hand, had a clear Impact Strategy relating to the environment, personal well-being and financial inclusion – and was certainly not interested in a CSR add on.

So despite its major global fanbase and its willingness to engage this fanbase, there was – to date at least – no meeting place for the respective priorities of their two ESG programs, of F1 and the client.

Sticking with F1, the Mercedes AMG Petronas, McLaren and Ferrari teams are all developing a clear focus on sustainability. A strong and credible rightsholder positioning in sustainability is not only the right thing to do, it currently delivers competitive advantage – although will ultimately become another hygiene factor.

Both rightsholders and sponsors are riding a short term wave of CSR messaging, just as marketing departments five years ago were looking to drive promotional advantage from sustainability messaging (remember Stella Artois and ‘recycling de luxe’ – which has to be the most ironic sustainability messaging ever). 

When we interviewed 50 global heads of sustainability, back in 2015, to understand the deepening relationship between sustainability and marketing, the message was clear: there is no end destination – sustainability is a journey. Consumer communication is positive, providing it’s humble, respectful and honest.

There’s no doubt, as Drew Barrand’s great recent piece for SBJ on behalf of Laureus makes clear, that sponsorship and in particular athletes have a major role to play in connecting consumers to brand ESG and impact programmes. The longer term pressure is for both parties – rightsholders and sponsors – to get serious about ESG. As the very existence of 17Sport attests, it’s possible to connect sport, purpose and impact sustainably – but it’s not a bolt on.