The ESG Audit: Interpublic Group

The UK's reliance on fossil fuels has been laid bare this week as the petrol pumps ran dry due to a shortage of delivery drivers.

While scenes were perhaps not as chaotic as the media made out (maybe we are used to enduring shortages due to disruption of the 'just in time' supply chains), it shows that the switch to greener fuels for domestic use is still going to take some time.

With the party political conference season upon us - last week it was the Labour Party displaying its infighting, whilst this week the Tories are trying to put on a united front despite a lack of consensus around tax hikes (the LibDems' one passed without much notice) - you'd hope that ESG issues will be in the headlines again.

After all, how to mobilise private finance is high on the agenda at the COP26 meeting in Glasgow, taking place in November, where world leaders will be hammering out new commitments and strategies for reducing carbon emissions.

In the fourth of our ESG audits, we spoke to Philippe Krakowsky, the chief executive of IPG, on the measures that it is taking.

Environmental, social, and governance (ESG) criteria are becoming an increasingly popular way for brands and businesses to be evaluated. How much of a competitive advantage is it for a business like yours? Also how important is ESG when it comes to attracting both clients and talent?

"At Interpublic, ESG initiatives are a business imperative. This is why we have been working on them for many years. Beginning in 2014, we started formally measuring our energy use and greenhouse gas emissions, initially with a small boundary of buildings – the top 11 in our portfolio. Since then, we have grown that boundary every year, until last year, for the first time, measuring our total greenhouse gas emissions around the world, in all of our locations.

"This year, we made three major climate commitments to advance our work in the environmental arena. We committed to setting a science-based target, joined The Climate Pledge, a commitment to reaching net-zero carbon across our business by 2040, 10 years ahead of the Paris Agreement, and agreed to source 100% renewable electricity by 2030 for our entire portfolio.

"In addition to our work in the environmental space, we are continuing to advance our programming in the governance and social arenas as well. We recently launched our first human rights policy, as well as a board diversity policy. And our work with clients around social issues includes campaigns focused on LGBTQ+ rights, mental health awareness, ways we can use data to increase the health of our planet, and sustainable consumption models. And, our increasingly inclusive agencies, with a strong industry record in DEI initiatives, are integral to furthering the highest quality and most representative creative voices.

"These positions and actions certainly help us attract talent and clients, and shareholders, as well, who are very much aligned with our ESG goals. We are proud of having earned a place in several important indices such as the Dow Jones Sustainability Index, and the FTSE4Good, which measure our performance against ESG goals. In addition, it’s the reason we worked hard to complete and publish our first SASB Report this year, becoming the first company globally to publish in alignment with SASB’s Advertising & Marketing Sustainability Accounting Standard."

As you’ve seen, IPG has consistently outperformed our peers in recent years, creating opportunity for people across our agencies, and our ESG commitments are a key part of our story."

WPP was recently quoted as saying that “Demand is off the scale” for ESG-related work - how significant is it when seen as a potential revenue growth in advising clients in areas such as climate change, racial equity, privacy and responsible marketing?

"We regularly work with clients on campaigns around ESG issues. Examples of these include our work with GM on the mass adoption of electric vehicles, our partnership with Nestlé focused on packaging and its environmental impact, and an initiative that aims to help save the Páramo, an alpine ecosystem in Colombia that provides 70% of the country’s freshwater. Many of our clients are working on the same types of issues we are in all of the ESG areas you mention, and it’s best-case when we can lend our expertise to these types of efforts. An interesting recent example was R/GA London’s 'Preservation Play', which tapped into the growing trend of consumers watching nature videos to relax. Now those views can translate into donations to resources for environmental groups. We also regularly work on inclusion campaigns that foster equity both in our companies and our communities."

As a holding group what is your stance on ESG for your agencies, your clients and your shareholders? And does that preclude you from working with certain businesses?

"The policies that we set – such as our sustainability and environmental impact policy, and our human rights policy and goals we are working toward – are enterprise-wide. We are all working to mitigate our impacts when it comes to the environment, and to be more responsible citizens of our communities. That remains a work in progress, but something we are committed to for the long-term.

"We are committed to working with clients who share our vision of a more enlightened future, partnering with many of them to further this agenda. If there is not a shared vision – across any aspect of our ESG commitments – our agencies have either resigned clients when it has become clear our values do not align or declined to pitch.

"Shareholders see a focus on ESG programs as key to any company’s long-term success and its ability to deliver value – they are making sustainability a new standard for investing. We believe IPG’s integrated ESG programs can help investors achieve better long-term, risk-adjusted returns with us."