Adaptation in the new landscape of sustainability: A model for Villarreal.

The change regarding away goals in the Champions League caused Spain's Villarreal to adapt their tactics brilliantly to their rivals last season. Likewise, a change in EU policy toward sustainability reporting means that sports organizations must evolve and adapt off the field as well.

Villarreal fans were satisfied. A group of fans dressed in yellow and blue in a sea of red shirts waved scarves and sang songs as players came forward to thank them for their support. A 2-0 defeat to Liverpool at Anfield in the Champions League semi-final could not dampen their spirits.

If the match had taken place a year earlier, things might have turned out a little differently. In the run-up to the 2021/22 season, UEFA has decided to abolish the away goal rule in all its competitions. Until then, in the qualifying rounds, goals scored at the opponent’s stadium counted double.

So instead of lamenting a missed opportunity by not scoring against Liverpool, the Spanish club were happy to limit the number of goals they conceded against one of Europe’s most devastating attacks at their stadium. This tactic almost paid off: Villarreal were 2-0 up with 20 minutes left in the second leg, but Liverpool then turned up the pace with three quick goals to take them into the final.

The media criticized their stubborn 90-minute defensive efforts in the first leg, but if there is no desire to attack – especially against a team that is much better on paper – how can you blame them?

A change in circumstances, of course, means a change in strategy. After the change in regulations, the best organizations will be those that will be able to adapt to the new conditions.

Even off the pitch, things are changing in ways that could affect the top ten clubs in Europe and a range of other organizations involved in or related to professional sport.

While UEFA has decided to make every match more competitive by abolishing double away goals, EU policy makers at the European Commission have decided to change their approach to sustainability reporting to encourage companies to comply with key climate and environmental goals.

Starting from 2024, according to the EU Sustainability Reporting Directive (CSRD), all listed companies and large enterprises that meet two of the following three criteria – balance sheet total exceeding EUR 20 million, net turnover exceeding EUR 40 million or more than 250 employees – will be required to publicly disclose information.

While only a handful of sports teams in the EU are listed on a stock exchange (e.g. Juventus, AS Roma, Borussia Dortmund, Lazio, Ajax, Benfica, Sporting CP and FC Porto), many sports organizations across Europe meet two of these three criteria. What does it mean?

Firstly, this means that all organizations in this category (around 49,000 companies across Europe) must disclose environmental information in line with the six objectives of the EU taxonomy framework:

– Counteracting climate change,

– Adaptation to climate change,

– Sustainable use and protection of water and water reservoirs,

– Moving to a circular economy,

– Prevention and protection of pollution,

– Restoring biodiversity and ecosystems.

Secondly, according to the European Commission, non-financial reports will be as important as financial reporting. The CSRD extends the scope of the existing Non-Financial Reporting Directive, meaning that organizations required to report on sustainability need to understand stakeholder expectations and look at the entire value chain.

The first one is quite simple, because all the current data shows that the most important players in sport – from fans to partners – want to be more environmentally sustainable. It’s just about getting stakeholders more involved and defining shared values (another concept we’ll be exploring shortly).

The situation is more complicated with the second aspect. The supply chain is an area of high environmental impact in sport, and while third party practices such as food and beverage, catering, cleaning and waste, and commodities are beyond the organization’s total control, there is still scope for influence through thoughtful purchasing decisions, lobbying and support fair trade. The IOC’s Guide to Sustainable Sources in Sport provides good starting points.

Where does the value chain in sport end? English footballer Ben Mee offset the CO2 emissions associated with his move from FC Burnley to FC Brentford. Should we start thinking about the impact of transfers on the environment?

It is because of questions like these and the increasingly stringent aspects of corporate sustainability in Europe that large sports organizations need to act strategically. They have to be like Villarreal – maybe not perfect the first time around, but with a strategic approach that responds better to the changing landscape. This strategic approach basically consists of four stages:

– Collecting data and starting to build an “environmental” database.

– Assessing and prioritizing the main factors affecting the environment.

– Incorporating sustainable development into management.

– Creating a mind map of key activities.

Let’s think about it this way: if UEFA’s financial regulations (Financial Fair Play, for example) are the parameters of a European football club from a financial point of view, then the EU’s taxonomic framework and CSRD should be the parameters for everything else, including the environment.

While clubs plan player transfers and wages to optimize their chances on the pitch, within the limits of financial regulation, they must adopt a similar data-driven, strategic and long-term approach to their sustainability efforts.

As transfer and wage budgets are subject to UEFA’s financial rules, carbon budgets must be consistent with EU policy, scientifically guided and in line with the Paris Climate Agreement.

By the time the CSRD regulations go into effect, sports organizations that prepare well and address non-financial issues from a strategic, organizational perspective will be the ones to comply with the regulations and will ultimately play a key role in addressing the major environmental issues affecting their clubs, their sport and the surrounding their world.

Text based on the article “With the sustainability landscape changing it’s time to be adaptable, like Villarreal” by Matthew Campelli

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