The Unique ESG Approach in the Gaming Industry
Hello, I'm Sung-hoo Moon
Today, I'll talk about the unique ESG approach in the gaming industry
Defining ESG and Sustainable Development
Before ESG
let's start by looking at what sustainable development is
Sustainable Development
We often talk about this
but what really is sustainable development?
Sustainable development
first appeared in a UN report
called Our Common Future
that was published in 1987
According to it, sustainable development
meets the needs of the present
without compromising the ability of future generations
Here, the act of compromising
is done by the present generation
Meanwhile, the current generation meets their own needs
That's how they define sustainable development
Let me repeat
The development that meets the needs of the present
without compromising the ability of future generations
to meet their own needs
That is sustainable development
When we talk about sustainable development
we often talk about the future generation
This is because, only when the current generation
sustains the present, not compromising the environment or resource
of the future generation, they can also continue the cycle
and be sustainable
So sustainable development
has been a major focus for the future generation
At the UN, our proud BTS
talked about sustainable development and the future
The Sustainable Development Goals (SDGs)
are the goals announced by UN in 2015
These goals are divided into 17 categories
Let's take a look at them
First is No Poverty
Two, Zero Hunger
Three, Good Health and Well-being
Four, Quality Education
Five, Gender Equality
Six, Clean Water and Sanitation
Seven, Affordable and Clean Energy
Eight, Decent Work and Economic Growth
Nine, Industry, Innovation, and Infrastructure
Ten, Reduced Inequality
Eleven, Sustainable Cities and Communities
Twelve, Responsible Consumption and Production
Thirteen, Climate Action
Fourteen, Life Below Water
Fifteen, Life on Land
Sixteen, Peace, Justice, and Strong Institutions
Seventeen, Partnerships
for the Goals
When these 17 goals a re fulfilled
it achieves the SDGs
The result of which
is the sustainable humanity
The official advocate of the SDGs
is BLACKPINK from South Korea
BLACKPINK and BTS
talk about the sustainable development at the UN
And they're doing a great job promoting the UN's sustainable development goals
Because they are the future generation
they promote the sustainable development goals
that the UN is urging for globally
They're also encouraging people to take action
17 years later, in 2004
UN publishes another report
The title of the report
was Who Cares Wins
This report is where they talk about ESG for the first time
ESG stands for
Environmental, Social, and Governance
Let's pause and think about it
We know that ESG stands for environmental
social, and governance
But why the adjective?
Why environmental, social and governance?
All three concepts can be interpreted
as relating to governance
So why the adjectives?
Here's the original phrase
In the original report
after these three words
the word issue follows
So while we talk about ESG a lot
but they are followed by issue
meaning a problem to solve
Therefore, ESG is not some simple
even ethical virtue
ESG is an issue for the industry and the community
It is a problem to solve
Even now, ESG yields a lot of issues
and many problems to solve
If you ever study ESG or apply it to your business
please remember that the word ESG
started as an issue to be resolved
When one runs a business
there are people called stakeholders
Stakeholders are further categorized to five groups
Society, partners, investors, customers, and employees
Who are the stakeholders?
They are either impacted by, or influences
the management performance of a company
organization, or enterprise
Does the society influence the performance of the company? Of course
The society includes the government, for example
The government does influence the company's business
Simultaneously, companies influence governments, society, and municipalities
How do they achieve this?
By paying taxes
Partners influence the company's quality by a lot
Similarly, the company impacts their growth
Investors, the company influences the profits
earned by the investors
They also influence the company
based on their investment amount
Customer, of course
The more customers, the more profit the company earns
The less, the less profit for the company
Inversely, the customers can experience a high-quality service
and product produced by the company
And that could improve the quality of their lives
Next, employee
The employees are surely impacted by the performance of the company
Also, based on their performances
the company's performance may vary
In this sense, the employee and the employer exchange performance
and influence
These are the representative five groups of stakeholders
Society, partner, investor, customer, and employee
ESG is a management value and strategy
that emphasizes the importance of stakeholders
and seeks to grow together with them
Importance of ESG and Its Relation to Games
Is ESG actually important?
Global consulting firm McKinsey
released a report
Let's start with the word externality
What is externality?
It is where the actions of one economic entity
have a positive or negative impact on another economic entity
yet no monetary transaction
compensation, or payment is made for it
In other words, if the company
generate profits when it negatively impacts
other stakeholders or economic entities without offering compensation
externalities arise
If a company creates externalities
without proper accountability
it risks losing its social license
meaning it can't sustain itself anymore
ESG is important
because it eliminates these externalities
and fosters mutual growth with various economic entities
that affect and are affected by the company's performance
It also aligns with the core value
of growing together with stakeholders
This McKinsey report claims
that ESG will never disappear
In other words, ESG
tells companies, organizations, and business owners
to act as both top achievers and model citizens
In the past, companies avoided criticism
as long as they made money
But today, ESG demands
that companies not only generate revenue and profits
but also fulfill social and environmental responsibilities
as the model students
ESG is closely linked to innovation
Why is that?
The logic of ESG challenges
traditional management strategies and practices
In the past, companies simply needed to earn money
despite minor issues arising in the process
As long as they achieve something
and investors are compensated
there was no problem for them
However, ESG goes beyond financial performances
ESG requires that companies
address social and environmental responsibilities
while ensuring transparency in decision-making
ESG monitors and requires all of this
Therefore
the business owners who are accustomed
to old business models are confused by it
Up until now, they just needed to make money and be a good student
Nothing much else mattered
However, ESG has introduced new requirements
where companies must balance revenue generation with accountability
The principles of management has changed
The business strategy has changed
What should businesses do now?
For the new era of ESG
they are now responsible for both performance and accountability
To achieve these ESG goals
companies have only one option
It is innovation
As I already mentioned
the UN's SDGs emphasize innovation
It claims that without innovative management and progress
humanity cannot achieve sustainable development
ESG has transformed the principles of management
In this new principle
businesses must adopt ESG-aligned innovations
These innovations impact various industries
including the gaming industry
In the gaming industry, ESG values
and performances are making great contributions
Due to climate change, industries worldwide
are required to reduce greenhouse gas emissions
and energy consumption
This has led all businesses to directly respond
to their influence on climate and environment
In particular, video game, media, and entertainment companies
require a lot of energy
for their powerful computers, fast internet
and cloud-based technologies
Therefore, to secure this much energy
video game, media, and entertainment companies
now need to explore alternative solutions
A study has estimated that gaming worldwide
consumes as much energy as 50 million cars
According to the UN Environment Programme, gaming consoles and computers
contribute to 50 million tons of electronic waste annually
with only 20% being recycled
Case Studies: ESG Practices in Gaming Companies
Let's not talk about
how major gaming companies
are already implementing responsible ESG practices
First is Activision Blizzard
In its ESG report
is highlights several initiatives
First is talent development
In this category
they set a target to increase the percentage
of female and non-binary employees by 50% over five years from 2021
To achieve this, they have invested $250 million
in providing opportunities to diverse talent
It also appointed executives responsible
for diversity, equity, and inclusion for the first time
They also appointed an inclusive game design director
so that games reflect characters and stories
from various backgrounds
Second is the actions on the environmental front
Activision Blizzard set an ambitious goal
of achieving carbon neutrality by 2050
They transitioned 61% of its energy consumption in data center and offices
to renewable energy in 2022
Next, let's look at Take-Two
Take-Two focuses on diversity and inclusion
for its employee welfare and industry
For sustainable game development, they optimize resource usage
They're also actively improving their data center efficiency
to protect the environment
In addition, they are investing in various programs
promoting equity and diversity among employees and communities
Finally, let's look at the ESG strategies by Sony
Sony is very active
in its ESG activities in the gaming industry
First, its environmental goal by 2050
is to reduce greenhouse gas emissions to zero
called Road to Zero
In 2022, they expanded the use of renewable energy
As for social responsibility
they've undertaken projects to enhance
the accessibility and inclusiveness of the gaming content
This enables players from diverse backgrounds
to enjoy the products
produced by the company
Three, they also focus on sustainable product development
They promote eco-friendly designs
They're also reducing plastic usage
in product packaging
The case of Forbidden West by Sony is interesting
This game is set in the 31st-century western region of Earth
where humanity and ecosystems are recovering
after a collapse caused by conflicts with mechanical creatures
By addressing ESG-related themes
this game narrates the journey
of environmental restoration
In conclusion, these gaming companies
demonstrate their commitment to addressing environmental
and social challenges through their ESG efforts
fostering a more inclusive and sustainable corporate culture
These actions show hoe the gaming industry
can contribute to building a better world
As digital content creators
I invite you to consider
how you can contribute to ESG initiatives
Thank you
Defining ESG and Sustainable Development
Sustainable Development Progress that does not compromise the ability
of future generations to meet their own needs
ESG ESG started as an issue to be resolved
It's now a management value and strategy for growth alongside stakeholders
Importance of ESG and Its Relation to Games
Why ESG Matters Eliminates corporate externalities Enables mutual coexistence among stakeholders
ESG and the Gaming Industry
The gaming and entertainment industries
require significant energy for computers, internet and cloud-based technologies
They contribute to 50 million tons of e-waste annually, with only 20% recycled
Case Studies of ESG Practices in Gaming Companies
Activision Blizzard
Talent Development More women and non-binary employees, executives responsible for diversity, equity, and inclusion
Inclusive game design director
Environmental Protection Transition 61% of energy used in data centers and offices to renewable energy sources
Take-Two (T2) Optimized resource usage for sustainable game development
Improved data center efficiency
Invested in programs promoting equity and diversity among employees and communities
Sony Road to Zero, to achieve carbon neutrality by 2050
Launched projects to enhance accessibility and inclusivity in gaming content
Promoted eco-friendly designs and reduced plastic use in packaging