First published in Campaign
The debate about climate change and advertising’s role – positive and negative – continues but more than two years on from launch, it is important to revisit the purpose of the Ad Net Zero action plan and remind all constituent parts of our industry to fully engage in efforts to decarbonise the advertising process and supply chain end to end.
Ad Net Zero set the challenge to the whole industry to get its own house in order, reducing the many millions of tonnes of CO2 the advertising industry supply chain emits, and enabling it to be properly accountable for its own interwoven mix of scope 1,2 and 3 carbon emissions. The delivery of this plan – to reduce the carbon emissions from ad operations, ad production and ad distribution and support the adoption of sustainable products, services, and lifestyles through positive behaviour change – is essential to help drive the transition to a net zero economy.
One of the challenges levelled at advertising is how to evaluate the impact it has on people’s choices and on the emissions associated with those choices – both positive and negative. To consider this, we asked the Saïd Business School at Oxford University to examine this challenge, and to apply their best academic thinking to marketing attribution and carbon accounting.
The Saïd analysis shows that trying to analyse advertising’s impact on real-world consumption emissions is complex – a management summary and presentation of their paper is available here. Their report does not support the Advertised Emissions methodology put forward by Purpose Disruptors. It describes how applying their use of the principles of the ‘Financed Emissions’ framework from the finance industry to the advertising industry is a ‘significant accounting error’ that ‘creates a… false equivalence’. This makes sense, and we agree with the academic’s analysis. Unlike investors or lenders, advertising businesses have no direct stake in, or say over, their clients’ business performance and profits. They can, of course, choose who they do and don’t work with, and they can certainly seek to influence their clients, but ultimately their role is not like that of banks or investors. The Oxford team recommended instead, the ‘Facilitated Emissions’ model designed for advisory businesses and services, like advertising agencies, management consultants and accountants. As yet, no agreed methodology has been found for this.
The reasons for not recommending the Purpose Disruptors’ methodology go beyond this major methodological issue, however. For example, it leads to a significant overstating of the emissions attributable to an advertising campaign by ignoring advertising‘s displacement effects. The sale of one product or service means the lost sale of another in most markets. As a result, the consumption emissions of the product or service are replaced. Better still, as we promote more sustainable products and services, lower emissions will result.
In addition, another challenge with the Advertised Emissions model is the way 'advertising spend' is used as a key driver. For example, increases in ‘advertising spend’ in recent years for some brands and sectors have occurred during periods of significant media price inflation. Under the Advertised Emissions model this results in a higher final ‘Advertised Emissions’ calculation but does not necessarily relate to emissions and climate impact.
Putting the challenge for advertising in context is vital. For many advertisers, their advertising supply chain is perhaps 1-3% of their total emissions footprint, important to reduce, along with the rest of their supply chains. Fortunately for most advertising agencies, media owners and production companies, they do not need to go far to understand the decarbonisation objectives of their clients, as many of these are published and audited along with their financial accounts. Let’s look at, for example, the decarbonisation strategies of the world’s biggest advertisers. Of the top 30 global advertisers in 2021, 29 are committed to Science Based Target (SBTi) plans, the international ‘gold standard’. The vast majority are driving towards the 1.5 degree target of the Paris agreement, or well below 2.0. These advertisers include the likes of General Motors, McDonalds, P&G, Unilever, GSK, Coca-Cola, Reckitt, and Apple. These commitments are similar amongst the UK’s biggest advertisers too, with the likes of Tesco, Sky, NatWest, Sainsbury’s, BT Group and many more all actively committed to this same global standard.
Looking further than advertisers, Google and Meta and Amazon - the world’s three largest tech companies that offer advertising services and the six advertising agency holding companies, have all committed to science based targets.
Advertisers of all sizes, along with their advertising agencies, media owners and platforms, need to decarbonise their operations rapidly and help promote the adoption of more sustainable products and services. This is as simple but as seismic as helping to normalise the behaviour that will see millions of people move from filling their car with a nozzle at a pump, to charging their vehicle through a plug.
Already advertising is at the forefront of these changes. For example, nearly 70% of adspend for the UK auto sector last year promoted hybrid and EVs, up from just 7% five years ago. Advertising is doing its job here, helping automotive businesses bring their innovative, more sustainable products to market, making them desirable and normalising them so they become mainstream and help tackle the climate emergency.
We must assess all of this accurately because advertising plays a vital part in a healthy, competitive economy, which in turn is an important engine for growth, social mobility, better living standards and health outcomes for families and communities. For some in our industry, growth is a problematic word, but in the UK and other developed markets economic growth has decoupled from emissions growth. However, emissions need to fall much further and faster, so every business needs to accelerate change.
Right now, we must reduce the emissions from the advertising supply chain in order, end to end, and we need everyone’s support to do so. This will complement the work of the advertisers, who are doing this across their entire businesses. Collectively, we need to change the way we think about the whole process of advertising, its operations and processes, and how we can help our customers change, too. Advertisers, agencies, and every company in our industry share the responsibility to make this happen – it must be our number one priority.