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Lindsey Hall: Hi. I'm Lindsey Hall, Head of Thought Leadership at S&P Global Sustainable1.

Esther Whieldon: And I'm Esther Whieldon, a Senior Writer on the Sustainable1 Thought Leadership team.

Lindsey Hall: Welcome to ESG Insider, an S&P Global podcast, where Esther and I take you inside the environmental, social and governance issues that are shaping the rapidly evolving sustainability landscape.

If you're a sports lover, this summer offers endless opportunities to enjoy sporting events. Tennis fans watch the Wimbledon finals over the weekend, football fans could watch the Copa América final, or you may have watched Spain to defeat England in the Euro 2024 finals. And later in July, the Summer Olympic Games kick off in Paris, France.

So at the ESG Insider podcast, we thought what better time to dive into the topic of sustainability and sports?

Esther Whieldon: If you listened to the first episode in this miniseries last week, you heard how sustainability in sports is getting more attention. And this is thanks to pressure from many sources, including spectators, investors, sponsors and even regulation. And as we heard in that episode, the focus on sustainability is different depending on where you are in the world.

Lindsey Hall: We wanted to understand more about how different professional sporting organizations are getting to grips with sustainability. So today, we're back with another interview.

This time, we're talking with Rocío Torres who leads sustainability efforts at a Spanish football club with a long history. Here's Rocío to explain more about her role.

Rocío Torres: I am Head of Sustainability and Responsible Business at Atlético de Madrid, a Spanish football club with more than 120 years of history. And to really explain you what's my role in the club, I'm going to tell you about my background a bit because I think it is going to help to understand what we are trying to achieve at the club in terms of sustainability.

Well, I have a financial background, more than 10 years' experience in different multinational corporations and countries. And the first time I was in touch with sustainability was in Switzerland, that I was in charge of putting together all the information for the entire department of a big pharma company for their sustainability report.

And ever since, I had that in my mind, like really to manage a business, we need to have a broader picture. I realized how important is sustainability and the integration of ESG factors in the decision-making process of a company. That's why I reoriented my career towards sustainability, to help organizations to integrate sustainability.

And this is exactly my role at the club, just to help build this new business culture and model where sustainability becomes a natural part of the activities performed by all the different departments on a daily basis. And all this has to be based on a strong corporate, social, and environmental commitments, with the aim to maximize our positive impact.

So this is really my role. Not an easy one.

Lindsey Hall: Can you talk to me about, since you started working with Atlético de Madrid and in your role, how have you seen the clubs focus on sustainability change over time?

Rocío Torres: Well, there's no doubt that, over the past years, the importance of sustainability has been increasing externally. Now we can see that on society and on the social media every day. But really, in Atlético de Madrid in our case, there were two factors that made sustainability gain relevant internally.

On one hand was the transposition of the Non-Financial Reporting Directive that in Spain was quite restrictive compared to other countries in Europe. Reporting these non-financial matters as part of the financial statements became mandatory to us in 2018. And really, that changed everything.

We have been the only football club reporting in Spain and in the entire Europe for years. And ever since we have moved from compensatory to opportunity mindset, not regarding regulation, reporting and sustainability itself. Sustainability reporting is a great exercise that allows companies to get a much wider picture of the organization and how is it performing in terms of sustainability. And it goes beyond financial performance. It's a very, very useful exercise to identify non-financial risks, avoid negative impact, and maximize opportunities in this field.

During the process, we have realized that sustainability in many aspects has been part of our DNA ever since as well, but actions in the club were not identified as such. It was really when I came in, when they now started to notice, "Oh, have been doing this for years, and we didn't know that should be considered sustainability."

And as an example, it was all this building of our new stadium that included many efficient and water-recovery measures. And they were designed, they were part of the original design of the project. They were -- the club was considering all that measures, not only thinking of the environment, but also in the business.

Lindsey Hall: You said the club was the only one in Spain reporting. Can you tell me more about that?

Rocío Torres: Yes. I mean, reporting in sustainability because, in fact, this Non-Financial Reporting Directive in Europe was mandatory for all the countries where the companies, only listed companies. But in Spain, it was mandatory for all companies with more than 500 employees, and that was our case.

So there was no other football clad considered company because it's not the case of Real Madrid [de Fútbol] or Futbol Club Barcelona because they are associations, they are not companies. And so we were the only one, really. And I think that it's this year, this requirement is for companies with more than 250 employees. So there will be many other football clubs having to report on that.

Lindsey Hall: Okay. Great. And then you also -- you talked about a shift in mindset around regulation at the club. Can you tell me more about that?

Rocío Torres: Yes. In fact, our first report was only 12 pages and now it's around 80. I think this is a clear example of what this mindset change means. It's not only reporting and being compliant with what is required by law. It's going beyond that. We see the opportunity.

Okay, we have to measure maybe our carbon footprint. Let's see what we can do to improve it. Now it's just not only given the number, but being ambitious on the goal, also in the social part. We are continually reviewing if we have all the policies in place that we need to try to avoid or minimize the risks that may be raised in terms of, I don't know, maybe the supply chain. That's something that we are working very hard on at the moment. So that's what I really meant with this change of mindset.

Lindsey Hall: So we just heard Rocío talk about how regulation in Europe is driving a rising focus on sustainability. She talked about the Non-Financial Reporting Directive, or NFRD. This is a role that required large businesses to report how they take sustainability into account annually. And it has now been replaced by the EU's Corporate Sustainability Reporting Directive, or CSRD, which essentially broadens the reach of NFRD.

In the last episode in this mini series, our guests talked about how CSRD is impacting sustainability in sports. So regulation is one big factor bringing an increasing focus to sustainability in the sporting world.

Rocío also talked about another catalyst for change.

Rocío Torres: It's really the support of the top management. My last interview before joining the club was with the CEO, and he gave me that mandate. We want really to embrace sustainability and we want to make it part of our business.

And now at the moment, I'm part of the business committee as well so I can be aware of everything that is going on in terms of how is the business going and I can also give my input in terms of sustainability. So we are trying to combine these two things together. And thanks to that, the rest of the people in the club is understanding that this is important for the business. I think this sends, maybe this is important management. And this is helping us to work all in the same direction.

Lindsey Hall: So some of the shift in sustainability is coming from the leadership team, clearly. Some of it's coming from regulation. Are there other factors that are driving this enhanced focus on sustainability, like from fans or employees, or other sources?

Rocío Torres: Yes, sure. I would say it's a mixture of everything. But definitely, regulation is still being the most important factor. And as I said, this can become an opportunity.

For example, at what we are currently doing is that we are started to get ready for the new Corporate Sustainability Reporting Directive. In fact, there's a training, we have conducted an internal exercise, part of the double materiality analysis, to trying to identify what are the material issues and impacts and assess them.

With this, together with identification and prioritization of our main stakeholders, that has given us a path, where to focus our efforts and define our action plan for the next season. So this, again, the regulation telling us or helping us to improve. We are also defining our own ESG risk assessment methodology. The results of that analysis will be integrated in the global risk map of the club.

And at the same time, we are aware that our fans are increasingly worried about our impact and what we have to say in terms of fighting climate change. We are starting to open special dialogue channels so we can hear firsthand what are their demands, and we need to give a proper answer to that. So we need to be ready internally first. That's what we have been working on so much, on that internal part.

We are also working to measure our Scope 3 emissions, that it's an exercise, that it's not easy for any company in any industry. But despite the difficulties, we see great benefits on doing so. Starting to open this dialogue with our fans to understand, how do they travel to come to our stadium, how can we improve our waste management and all these type of things, and start really working with our entire value chain. And this is going to be very, very positive.

Lindsey Hall: Okay. So that's interesting. For a sporting club like Atlético, it's the Scope 3 emissions, those indirect emissions. It's how your fans travel to and from your games. What other kinds of things would be captured in your particular Scope 3 emissions?

Rocío Torres: We are also giving a deep analysis into waste management. We have to start looking for a more efficient way of separating the waste, change sometimes the products that we use to give service to our fans. Also, the way we travel to promote, maybe remote meetings, instead of traveling whenever it's possible, these type of things, that it's also a cultural change.

And of course, as well, how do we treat or work with our supply chain? It's what we buy, to who we buy it, and what's the environmental impact of what we are buying? And after that, what's the second life we are going to be giving to the product?

It's going to be a long process, but we are setting when our first starting point is to get the picture, where are we today? What are the emissions related to all these categories that are part of the Scope 3? And then start to set in place a process, yes, to decarbonize our activities.

In fact, we are signatories of the Sports for Climate Actions of the United Nations. It's one special action line of the United Nations in terms of climate change. So where sports organizations can come together and share practices. We have specific working groups. We have just joined, so we are still deciding in which role we are going to collaborate. And to learn from each other. 

We are, at the end of the day, shared the same goal, that it's to become net zero at some point. And we can learn from what others are doing, and maybe hopefully that we can add some value as well to the group. But the shared common goal is to become net zero by 2040.

Lindsey Hall: Okay. Great. So you've talked Rocío, about the fan component of your drive towards sustainability. And I think a lot of us, when we think about sports, we think about the fans or we identify as fans.

Talk to me a little bit more about the role of investors and what you're hearing from the investment community.

Rocío Torres: Well, in fact, the business component is a crucial one to access to various financial conditions and private financing. Sustainability aspects are undoubtedly gaining relevance. And in order to win these requirements from the financial sector and to be able to access this financing under better conditions, we are implementing sustainability certifications in our buildings, both in the stadium and in the academy. And we will also publicly report this year the results of the application of the European environmental taxonomy to our activities.

We see here, again, a great opportunity. It's not that we did only because we strongly believe in that, that it's true, but it's also because we see a benefit for the business. A football club is a company at the end of the day with the same pressure on financial performance as other industries. But with the uncertainty of the results we achieved on the pitch. If we have been able to make it to the semifinals, for example, in the Champions League, or if we lead the competition on the first round, it gives a completely different budget for the next season.

That's why the club is focusing on increasing the weight of non-sports revenues in our P&L, those generated from other business lines like special events. During the year, in fact, apart from celebrating football matches in the stadium, we host more than 200 events annually, mainly concerts during the months of June and July, but many corporate events as well.

And this is really from these customers, I would say the pressure -- or I would say it like this. Coming from them, they are requiring and asking for sustainability information every day. Every time they want to celebrate an event, they are giving us like I think, "What are you doing in terms of sustainability? How do you manage your waste? What type of energy do you use?" These kind of things.

And there's a third player. I would say, in the financial sector, it's our customers. But there is a third player that it's also demanding an answer from our side in terms of sustainability, and our partners. Most big corporations have been working on sustainability for many years already and want to be associated to brands that share their values and goals.

Lindsey Hall: So we've talked a little bit about some of the data points you look at when it comes to Scope 3 emissions, for example. Talk to me about some of those other things that you're looking at when you measure sustainability in sports because data is such an important piece of the puzzle.

Rocío Torres: Well, as you said, data is fundamental to manage any activity. You cannot manage what you don't know. And in order to know it, you need data. In terms of sustainability, we report data that is required by the regulation and everything that is relevant information in terms of sustainability as a result of the materiality analysis. It's data related to sustainability as a whole, from our environmental performance and footprint, to how do we promote diversity, how do we protect human rights and manage our value chains, or the policies we have in place to fight corruption and bribery.

All this information comes from many different sources and involves, most of the times, manual processes that in addition to creating -- increasing the workload of many people, entail a certain margin of error. And the volume of data to be reported will substantially increase with the application of the new CSRD, which involves additional electronic reporting of material data points, as well as those derived from the implementation of the different certifications. So we are going to be managing a huge amount of data.

Lindsey Hall: And when it comes to that data, I mean, are there certain pain points that you encounter? Or what are the challenges?

Rocío Torres: The volume of data is really a huge challenge. And in fact, what we are going to face in the future, it's impossible to handle it manually. Definitely, there is clear room from improvement from our side to automate processes and improve the workload of many people.

So we are looking for a, yes, software solution that help us on that, that it has to be flexible, can be adapted to our reality, because not all the solutions are valid for the different sectors of our industry. So it has to be somehow adapted to what we need to report in terms of sports.

Lindsey Hall: In the last episode of this mini series about sustainability and sports, I interviewed the CEO of an organization called the Global Sustainability Benchmark in Sports, or GSBS. This is a non-profit that aims to tackle the challenges of the 21st century by analyzing and rating the sustainability performance of professional sports organizations. Atlético de Madrid works with GSBS. So I asked Rocío to explain her experience with the organization.

Rocío Torres: We collaborated the GSBS because compared to other benchmarks that are only based on public information that is sometimes really difficult to find or to assess, the assessment is not complete. GSBS assessment is based on real evidence and internal documents that really comes from the organization, information that most of the times is not public.

GSBS ensures that all entities are assessed under the same objective parameters. And we see a great value on the GSBS validation process beyond the completion of their reporting template. It gives validity and reliability to their results. And to me, it's a key differentiating factor.

This report is also aligned with the current EU regulation amongst the standard reporting standards. And that makes it relatively easy for us to complete as we already had most of the requested information. And in the cases we didn't, it has helped us to better identify our areas of improvement in terms of performance and sustainability, and assess the need to set in place processes to start measuring and integrate them in the road map and next steps in terms of sustainability.

Lindsey Hall: So we've talked about some of the challenges and some of the opportunities. One question I did want to ask is, how do you ensure that the efforts that your club is taking or that sustainability efforts in general are authentic and meaningful? And how do you avoid greenwashing in sports?

Rocío Torres: Well, for us, it's very important to communicate both internally and externally, the actions we carry out in terms of sustainability. One of the main roles and duties of a football club regarding sustainability really is to create social awareness. This can only be done with a solid strategy based on clear action lines, concrete objectives, and leading by example, exactly as you said, to avoid greenwashing.

In our case, we prefer to be very careful on the communications we make related to sustainability and make sure everything is based in real actions with tangible impact. A fundamental communication tool for us in these terms is our sustainability report which we carry out annually. It's our 5th edition and we are starting to work on the next one. And it's based on the main sustainability reporting standards.

And what is more important is that it's verified by the external third party. So there is no possibility of greenwashing in there. In addition, we publish on our website and social media, initiatives related to sustainability, such as when we became signatories of the Global Compact or Sports for Climate Action, but those are facts.

Lindsey Hall: Thank you, Rocío. I know we've covered a lot of ground, but I'd love to ask you sort of a last question. What's ahead? What's on the horizon for you and your organization?

Rocío Torres: I would say the club is living in a historical moment with the construction of the new city of leisure and sports. It's one of the biggest challenges our club has ever faced. This city of sports is a new urbanistic development in the areas surrounding the Metropolitano Stadium of more than 1 million square meters, of which 1/3 will be green areas.

And that will combine sports and leisure. And their aim is to recover the Olympic spirit of the City of Madrid while improving the local infrastructure and revitalizing the area. We all know that sports improve social and cultural life as it brings people and communities close together, can help to overcome differences and foster dialogue, and helps to break down stereotypes, cultural differences and discrimination. And there is no doubt, of course, about all the benefits on health and well-being. And those are the values we want to leave as a legacy with this project.

And the entire project has innovation and sustainability in its DNA. That's why we have chosen partners in this journey who share these principles. They all will bring unique, innovative technologies and sustainability certifications for the infrastructures as well.

The projects will materialize in five plots. And apart from public sports facilities and our high-performance training center for the main team, including a media stadium with 5,000 seats. There will be other sport facilities that will offer unique and innovative experiences.

There will be, for example, an outdoor surf wave with a patented system that minimizes the energy consumption and is the most efficient on the market. In terms of water usage, we are working together with the Madrid Town Hall to use regenerated water in the pools so we don't use drinkable water. There will be a climbing wall that is the biggest in Europe, and it's built in a material that absorbs CO2.

As well, one of the facilities will host our core golf training center, and the turf is entirely artificial so it won't require irrigation. There will be as well a part of the center, to give you another example, that it's built with special textile covers that generate an air chamber that optimizes energy usage to a minimum and uses solar panels and aerothermal energy for self-production and so we do with the other facilities.

In the case of our own performance training center, we have designed green water harvesting systems and the usage of reclaimed water for irrigation as well.

For those of you who don't know the area, there is an unfinished structure from the times Madrid proposed as an Olympic venue 20 years ago. And we are currently working with the city council and proposed a project that combines culture and sports, and that we're allowed to reuse that infrastructure that is now abandoned completely.

And this project has many challenges from the environmental point of view, and the integration of innovative solutions through the process will be key to develop this project in a sustainable way. We are so proud of being part of it, and we really think it's going to change the life in the city of Madrid and of course in the community surrounding.

Lindsey Hall: Okay. Great. Well, thank you for outlining that for me and for our listeners. Rocío, anything that we haven't touched on today that you think is important for our listeners to understand about this topic?

Rocío Torres: Well, just only to say that this is, sustainability is a very long process. But we know that we have loved to solve or tried to solve the global problems we are facing now, like climate change or human rights protection, and that definitely our aim is to become part of the solution of these problems.

Lindsey Hall: So today, we heard how Spanish Football Club, Atlético de Madrid is approaching sustainability. Rocío said there's an increasing focus thanks to buy-in from management and also this changing mindset about sustainability as an opportunity. She also said regulation is the most important factor driving this rising focus on sustainability. And she said the volume of sustainability data is a huge challenge the club is facing.

Esther Whieldon: She also said that this is not a short-term strategy. Addressing big issues like climate change will take a very long time, and many sporting organizations are only just getting to grips with how to measure and manage sustainability.

Lindsey Hall: We'll be back talking to more sporting organizations for this series in the coming weeks, so please stay tuned.

Thanks so much for listening to this episode of ESG Insider. If you like what you heard today, please subscribe, share and leave us a review wherever you get your podcast.

Esther Whieldon: And a special thanks to our agency partner, The 199. See you next time.

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