Many of the ads remind us to gamble responsibly – when the fun stops, they tell us, stop. I’m not very sure that problem gambling works that way. But it seems that it’s enough to make gambling companies tick a few ESG boxes. Flutter Entertainment has a 1.6 per cent weighting in the FTSE4Good 50 index. Entain was admitted to the broader FTSE4Good index based on ESG criteria that would appear to be a baseline for any normal business – human rights, health and safety and anti-corruption among them. As one fund management group justifies it: “There is a strong argument for not avoiding problematic industries, like tobacco or gambling… [by engaging] we can encourage gambling companies to go above and beyond their legal obligations in addressing problem gambling and to use responsible marketing.”
But are they? According to a YouGov survey, there are 1.4m problem gamblers in the UK and a further 3.6m people negatively affected by them. Gambling companies are increasingly offering tools to help would-be gamblers control their habit, but I wonder how many customers actually use them. Looking at the collective profits of the gambling industry – read that another way as the losses to the public – not many. The salary of Britain’s highest-paid woman, Bet365’s Denise Coates, is said to be more than the entire amount spent by the industry on dealing with gambling’s damage.
And if we can find an ethical standard that means gambling can be ESG then what about oil? Common sense tells me drillers won’t be very environmentally friendly for a while yet – however many wind turbines or electric charging points they have, they’re still spewing out billions of barrels of crude a year. Unlike gambling, though, we actually need that. The same is arguably true of the defence industry – an unpleasant but necessary business. Booze and fags come with plenty of problems – but much enjoyment too. You could even argue that’s also the case with gambling – for lots of people it’s harmless fun, raises tax revenue and if it wasn’t there you’d be dealing with the Peaky Blinders instead.
The point is, the only place you can draw a line is your own conscience – do you care? There is no box-ticking exercise that can possibly satisfy the fingerprint-like ethics and morals of millions of investors, and if ever there was a case for DIY investing it is with ESG. If you think the gambling industry is doing enough to tackle its unpleasant side effects, then the expansive strategy of the UK gambling sector may be a good bet. But that’s up to you.
If you have a slightly more straightforward view of ESG and want to invest for good through funds, then it still makes sense to look under the bonnet of what you’re buying. Have a look at the fund’s holdings, and if there’s something in there you don’t like, don’t pay a premium on the basis that it’s an ESG fund. And while you’re at it, you might as well look at the rest of the holdings and see if you like them as businesses. These kinds of well-run companies will often tick many ESG boxes too, but sometimes not all of them – but if you are thinking for yourself, a seemingly rare and dangerous quality these days, then that may not matter.
