The ESG Audit: WPP
Environmental, social, and governance (ESG) criteria are becoming an increasingly popular way for brands and investors to evaluate agencies
15 September 2021
With the 2021 United Nations Climate Change Conference, also known as COP26, starting at the end of next month against a backdrop of extreme weather events across the world (the BBC this week published research that the number of extremely hot days every year when the temperature reaches 50C has doubled since the 1980s, it’s heartening to see so many sections of the ad industry come together to play their part.
Ad Net Zero, the UK advertising initiative to help the industry respond to the climate crisis caused by CO2 emissions, is marking its first anniversary with its own global summit taking place at the same time as COP26 in a venue directly opposite.
Ad Net Zero is made up of 70 leading companies from across the UK advertising industry, committing to achieving net zero carbon emissions from their operations by end 2030 as part of wider industry drive. Its summit aims to discuss the needed in the world’s advertising industry to reflect the changes necessary across business and society to tackle the climate emergency as well as provide guidance for advertising professionals to understand how to track, measure and reduce the carbon emissions of their work, as well as support the shift to more sustainable products and services across all areas of people’s lives.
Promoting a more sustainable future isn’t just an environmental imperative – it’s also increasingly a way in which financial institutions monitor and index companies. Already Morgan Stanley, Blackrock and Vanguard create personalised indices for companies on factors including environmental, social and governance (ESG) parameters so that they can invest accordingly. In short, ESG is becoming crucial for business success.
Mark Read, the chief executive of WPP, has said that demand for ESG-related work for clients is booming too. In the first of a series of interviews with holding company chiefs, we asked him about the impact that ESG is having on his business and that of his clients.
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?
"People want to work for and brands want to work with companies that have a sense of vision and purpose beyond the purely commercial. To give just one example, we recently set industry-leading net zero targets which have generated an extraordinarily positive response both from clients and our own people. With ESG at the top of the corporate agenda for every large company, it’s important to be able to show that we have thought through these issues and can advise them from a position of strength."
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?
"If you look at the work that did well at Cannes this year, from Dove’s Courage is Beautiful to H&M’s Looop, you can see the demand from brands for powerful, innovative, purpose-driven work.
It’s hard to say there’s a revenue stream called “ESG-related” work but that’s because ESG needs to be integral to everything we do as a company – we need every campaign to be responsible, make sure all of our teams are diverse, and consider our carbon impact on every media plan or on every shoot. So, there’s no doubt that experience in ESG is driving demand for work across the board."
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?
"Our position as WPP reflects the interests and concerns of our clients and shareholders, which increasingly are simply those of society as a whole. While we set the policy from WPP, our decisions are often inspired by the amazing, progressive work of our agencies – such as the Sustainably Made initiative from Hogarth, which uses virtual production techniques to reduce emissions. We want to work with clients who share our values. There’s no doubt that many of our clients are on their own sustainability journeys, and we’re very proud to work with them to communicate the actions they’re taking and to do so in a way that fairly and accurately reflects those actions."