The Summer of Sustainability, and my new Scope 3 briefing paper

For the past 6 weeks, we at the Sustainable Games Alliance have been running fortnightly seminars and workshops on the sustainability challenges and opportunities facing the games industry in Europe and the rest of the world. In this newsletter, I want to give you a little précis of each one, and why you might want to check out the recordings if you weren’t there yourself. Then I talk about what's next for us, and how you can get involved.

New EU sustainability disclosures: the CSRD, the ESRS, and the CSDDD

In this session, we did a whirlwind tour of the major pieces of EU sustainability legislation – not the only ones but the ones that stand to make the most impact on games in the years to come. We covered the thresholds for reporting under the Corporate Sustainability Reporting Directive (CSRD) which phases in new requirements for European and international businesses with large interests in Europe. The effect of it is likely to be transformative. We should expect the reporting environment in 2028 to be far more stringent and enable much more truthful comparisons across the climate and sustainability impacts of all public companies (and any private companies with a view to an eventual acquisition or IPO).

We also looked at the European Sustainability Reporting Standards (ESRS) and the extraordinarily detailed requirements for companies to measure and disclose a plethora of new metrics and assess a range of easy-to-overlook impacts. The ESRS document itself is over two hundred pages and I think the first year of reporting (reporting on this year for the biggest companies) is going to be quite a scramble in many cases. The biggest change, to my mind, is that it specifies any material impacts within the entire value chain of a games business will now need to be disclosed. In the past, for reasons both good and not-so-good, disclosure of different parts of the value chain (or Scope 3 emissions) has been left largely to the discretion of individual organisations. The result has been… inconsistent, to say the least.

The Corporate Sustainability Due-Diligence Directive is the final shingle of the EU’s corporate sustainability house. It obliges the very largest of companies to uphold stringent human rights and sustainability standards, across its entire supply chain. The conclusion, to me, is those game developers who publish on a platform owned by a company conforming to the CSDDD will be required to also uphold those same standards. It’s a kind of “trickle down” regulation, or you can think of it like a series of daisy chains – the big company has to uphold standards, the small businesses in their value chain then have to uphold them too, and then companies that supply those businesses end up needing to as well. It’s all about using business relationships to encourage good sustainability practices, and there are provisions for extra support for SMEs that may need to lift their game to meet the new standards. (In fact, there’s support for SMEs in just about every piece of EU sustainability legislation, though the nature and extent varies – without compromising their integrity)

The Double Materiality workshop – climate risk for the games biz

Next, we ran a workshop putting into practice some of the ideas I wrote about here last month – looking at the tools available to examine an organisation’s exposure to long- medium– and short-term climate risks. This is what the EU wants companies to do as part of their climate preparedness. It's in our benefit to know these things so we can plan ahead of time, rather than get caught out and react in an emergency.

It’s shorter video than the other two, because we stopped the recording to enable full and frank discussions from developers in small breakout rooms. In the discussion, we identified some very challenging climate hazard exposures. We looked at impacts from increasing heat waves, water scarcity, and often when we started to move towards identifying the sorts of solutions or responses we might make, we quickly ran into the messy, complex nature of the real world itself. Cities denuded of green space exacerbate heat island effects, for example, data centre locations that are outside out our control, and simple "fixes" for any one of these might well be outside the remit of small, medium and even many large companies.

I really enjoyed this one, because I think it brings a level of tangibility to those fears about climate change that often lurk in the back of our minds.

The Green Claims Directive & how to do good (and legal) green comms

Last, we looked at the new rules about what companies are allowed to claim in terms of the sustainability of either their products or their organisations.

There’s a ton of crunchy details in this one – from the criteria for proof that will be required for verification of green claims, to the Green Claims Directive (GCD) amending the Unfair Commercial Practices directive to consider certain green claims “unfair”. The result of this is that every single trader, big or small will no longer be permitted to make unverified green claims – no one is getting away with selling games under a green label or fuzzy eco associations once the GCD becomes law.

I also went through three types of common green claims – “carbon neutral” claims, the “eco mode” type claims that Microsoft/Epic/Ubisoft and others have been implementing to reduce energy waste in idle menu states, and raising awareness or funds for sustainability topics in games. I looked at the hurdles that each will face to get “approved” for use by the third-party validation process. Eco modes, by virtue of a nicely constrained scope and very specific targeting of claims, I suspect, will have the easiest time of any of them, and I'm keen to see what other efficiencies we can identify for nice, simple third-party approvals and real impact.

Also – I managed to rope in Rovio’s Tommi Lappalainen to share some of the lessons he’s learned from ten years of working as a games & sustainability professional. He raised three key points: keeping your comms truthful and honest, keeping the scale of what counts as meaningful action in mind, and knowing your audience – you’ll have to watch the video for his explanation about what is entailed in each, and why they are so important.

The New Importance of Value Chain Emissions

One of the key lessons from all the reading and analysis I’ve done for these three webinars is that the entire value chain – from upstream producers and suppliers, to downstream business partners like publishers and distributors and even gamers – can no longer be left out of the picture of an organisation’s disclosures.

I’ve said it before, but I think one of the major barriers in this area is the idea of “carbon footprints” as a thing that has (or should have) a single organisation or entity responsible for them. That’s not the way the world works, it’s not how emissions work, and it’s not how decarbonisation is going to happen. It’s a relic, a hangover of an era of finite, zero-sum thinking that says emissions are like a balance sheet, and that they need to be matched-up with offsets or credits. We now know that the total stock of genuine "credits" is going to be much smaller than is necessary for everyone to continue on as usual. The emerging concensus is that they must only be used for the very last mile – those hard or even impossible to abate areas that resist all available effort.

Because of this hangover from credits, we think that greenhouse gas inventories are generative of financial risk – as an inventory of liabilities. But that approach just leads to attempts to downplay or shift things “off the books”. Instead, we should choose to look at inventories as a measure of an organisation’s opportunity for action or the scale for potential impact, change and influence. Yes, that does entail a certain kind of responsibility, but it’s a differnet sort of responsibility than just throwing money at a problem. It's a responsibility, paired with an opportunity.

The next phase of our work at the Sustainable Games Alliance is to identify and magnify these areas of opportunity – we’ve already drafted methods of measuring Scope 1 & 2 emissions, and we’re getting ready to start doing the same across Scope 3 – the entire games value chain. To help inform and direct that work, I’ve drafted a Scope 3 Issues Briefing Paper which outlines the types of challenges I expect we will face in measuring emissions across different aspects of the videogame industry’s value chain, as well as the potential benefits if we succeed. The paper has already benefited from the insights of members of the SGA Discord, and brought up some great points for discussion.

I would really love it if readers of the newsletter could take the time to give it a look, and also to leave comments and suggestions on the paper itself. It builds upon some of the great work that’s been done by other sustainability orgs like the Science-Based Targets Initiative, the Oxford Net Zero Institute, and the Playing for the Planet alliance. I want the paper to begin a discussion about the best ways to approach this imposing task of establishing a sector-specific standard for games and their sustainability impacts, and the crunchy problems of measurement, data, and transparency. This task is too big for anyone to do it alone, so I’m counting on you!

Gamescom

Finally – if you’re going to be at Gamescom, and would like to meet the SGA Team (minus myself 🥲) even just to say hi and have a chat, please reach out! Jiri and Maria will be there spreading the good word.

Phew, thanks for sticking it out to the end! Please take a look at the Scope 3 briefing paper and tell me what you think. What have I missed? I'm sure there's plenty.