The monetary backers of the world’s greatest promoting company teams ought to rethink their funding methods to encourage the likes of WPP, Dentsu and Omnicom to cease working for extremely polluting manufacturers, a brand new report by United Kingdom-based non-profit Planet Tracker recommends.
By way of their adverts, companies generate air pollution and waste by driving the consumption of products and providers produced by a number of the world’s largest company greenhouse fuel emitters, together with fossil gasoline shoppers, the report mentioned.
The newest examine by Planet Tracker has for the primary time gone past carbon emissions to trace advertisers which have a excessive waste and water footprint, akin to meat producer Tyson Meals and fizzy drinks model Coca-Cola. Activist stress on the advert business to scale back its environmental influence has traditionally targeted on companies that work for fossil fuels shoppers.
The report, titled From ADversity to ADvantage, referred to as on the most important buyers within the huge six advert holding teams to stress their investees to vary their stance on how they work for environmentally dangerous shoppers.
Planet Tracker estimates that these corporations wield the mixed emissions footprint of 530 million tonnes of carbon dioxide equal per 12 months from simply 39 shoppers – bigger than the carbon footprint of the UK, which accounts for 1.1 per cent of worldwide emissions.
The six promoting holding firms – WPP, Interpublic Group, Omnicom, Dentsu, Havas and Publicis Groupe – account for about 10 per cent of the worldwide promoting market mixed.
At present, the holding teams largely declare that they’ll nudge polluting shoppers to pivot to cleaner methods of doing enterprise via their strategic counsel. However Planet Tracker argues that companies ought to extra actively work to transition their shoppers to sustainable enterprise fashions or refuse to work for polluting manufacturers.
“By not urgent the holding firms to refuse to work for shoppers with excessive environmental footprints, buyers are complicit in permitting business-as-usual to proceed,” the report mentioned.
The massive advert teams must also recognise the fabric monetary implications of shopper and worker dissatisfaction that outcomes from working for polluting shoppers – which is a threat to their backside line, the report asserted.
A model that has invested closely in constructing its sustainability credentials, akin to Unilever, one of many world’s greatest advertisers, would possibly transfer their account if their company labored for a serious polluter.
And if younger company workers change into disillusioned by working for main polluters, an company dangers dropping its core asset; some 60 per cent of an company’s value base is its workers, instructed the report.
“We warning towards buyers and lenders viewing environmental footprints as a non-financial challenge,” mentioned Planet Tracker within the report.
The non-governmental organisation mentioned it’s attainable that buyers that need to keep away from industries with hyperlinks to environmental deterioration may very well be drawn to advert firms due to a reliance on environmental, social and governance (ESG) scores, which is able to worth solely the environmental metrics of the company itself – not its shopper publicity.
The world’s greatest advert corporations have strongly made their case for environmental consciousness lately, as sustainability has shot up the company agenda amongst their shoppers.
Many companies depend on the business’s personal initiatives, akin to Advert Internet Zero, which commits to decarbonise the manufacturing, distribution and publication of promoting, however this pledge solely applies to the comparatively small environmental footprint of the companies themselves – not the polluting merchandise they promote.
In its annual report, WPP, the world’s greatest advert agency, mentioned that its coverage is to not “undertake work which is meant or designed to mislead the least bit, together with social, environmental and human rights points”.
The British promoting big works for firms together with oil majors Shell, BP, Chevron, ExxonMobil and Saudi Aramco – all firms which have, sooner or later, been referred to as out for greenwashing.
New York-headquarterted Interpublic Group, the world’s fourth largest advert holding firm, has acknowledged that: “If giant shareholders have been to scale back their possession stakes in our firm on account of dissatisfaction with our insurance policies or efforts on this space, there may very well be damaging influence on our inventory worth, and we may additionally undergo reputational hurt”.
In the meantime, in line with Planet Tracker’s report, solely two of the 5 publicly listed holding firms have a transparent hyperlink between sustainability and government pay. “In neither case is the quantity materials. None hyperlink to the environmental efficiency of their shoppers,” the report mentioned.
Planet Tracker director of analysis John Willis advised Eco-Enterprise that company holding teams have largely ignored externalities akin to their local weather influence, due to the character of how senior promoting executives are remunerated.
“If the intention [of advertising holding companies] is just to extend earnings – which is how advert executives are primarily paid – then they’ll ignore externalities akin to local weather change, till they’re materially impacted. Nevertheless, if/when these externalities change into financially related, then they’ll concentrate as their earnings and are impacted, and in flip, the valuation of those firms,” he mentioned.
Advert majors’ footprint scrutinised
The report discovered that Interpublic Group, the promoting holding firm that owns company manufacturers McCann, Weber Shandwick and UM, and works for the likes of Saudi Aramco, Common Motors, Unilever and ExxonMobil, is the business’s greatest carbon-emitting advert group.
The greenhouse fuel emissions footprints (in tonnes of carbon dioxide equal) of promoting holding firms primarily based on attribution evaluation of 39 carbon-intensive shoppers. Supply: Planet Tracker, Trucost
British agency WPP, which owns companies together with inventive community Ogilvy and public relations agency Hill+Knowlton and works for firms together with packaged items corporations Colgate Palmolive, Kraft Heinz and Unilever, has the most important waste footprint, in line with Planet Tracker’s calculations.
The waste footprint (in tonnes) of the world’s greatest promoting holding firms primarily based on attribution evaluation of 39 promoting shoppers. Supply: Planet Tracker, Trucost
French agency Publicis Groupe, which personal company manufacturers Saatchi & Saatchi and Leo Burnett and works for the likes of French oil and fuel big TotalEnergies, packaged items agency Procter & Gamble and luxurious model LVMH, has the most important water footprint.
Promoting holding teams with the most important water footprint. Supply: Planet Tracker, Trucost
BlackRock and Vanguard have the most important investments in advert holding firms but additionally the best attributable environmental footprint for emissions, waste and water when it comes to the companies’ shoppers, the examine discovered.
Clearer measurement and reporting by the companies of their shoppers’ environmental footprint scores would assist buyers to make higher selections, the report learn.
It added that the most important six holding firms have a “development downside” that may may very well be helped by avoiding working for environmentally damaging shoppers.
Between 2015 to 2022, the six greatest advert companies grew extra slowly than world promoting revenues, as competitors from impartial companies – greater than 900 of which have dedicated to cease working for fossil fuels shoppers – and market share devoured up by digital promoting giants Meta and Google has eaten into their steadiness sheets.
Richard Bleasdale, who has labored for shoppers together with ExxonMobil, Shell and McDonald’s throughout his time working Omnicom advert agency DDB and different companies in Singapore, advised Eco-Enterprise that Planet Tracker’s report makes for “depressing studying”, probably extra so in Asia, the place commitments to sustainable beliefs and practices are “nonetheless within the early levels.”
He summed up the issue by quoting DDB founder Invoice Bernbach: “A precept isn’t a precept till it prices you cash”.
Bleasdale mentioned: “The first precept of company holding firms, and particularly their senior administration, is cash. In Asia, which provides the chance for larger relative development, the precept is much more acute.”
Any rejection of environmentally-damaging shoppers will “extra seemingly be pushed by the bravery of the youthful workers of the holding firms, voting with their dissatisfaction and their ft, than by the highest brass,” he mentioned.
