Podcast transcript: How the media industry can prepare for a decarbonized future

Bruno Sarda

Hello, I'm Bruno Sarda, and welcome to the EY Sustainability Matters podcast, our regular look at ESG and Sustainability topics, and how they impact businesses around the globe. In today's episode, we'll be looking at the media and advertising industry: a sector that is often associated with creative and innovative thinking, and which plays a key role in shaping perceptions and behaviour in society. So, how is this sector responding to the climate crisis, and what steps is it taking to decarbonize and foster a collaboration on the journey to net zero? Joining me to discuss this topic is my colleague in the EY Climate Change and Sustainability Services Practice, Charlotte Pugh, and we are delighted to welcome two distinguished guests for today's episode: Ollie Joyce, who is the Global Chief Transformation Officer at Mindshare, part of the WPP Network, and Alexandra McGee, WPP's Sustainability Strategy and Innovation Manager. We're grateful to have them both join us to tell us about WPP's initiatives to decarbonize this sector. In July 2022, they proposed a global framework for measuring the carbon footprint of advertising across media, and in November 2022, also launched a media decarbonization coalition with members committing to the establishment of a common approach to measure ad-based carbon emissions, and I look forward to hearing more. So, thank you both for joining us, and Charlotte, over to you.

Charlotte Pugh

Okay, thanks Bruno. I'm very much looking forward to today's discussion. This is, I think, impactful for the media industry and also, decarbonization in general. So, with that, Alexandra and Ollie, my first question is to understand what factors are driving the growing demand for decarbonized media in particular? And also, how has the industry changed in the past year as carbon reduction has become more of a business imperative for both the media industry itself and the media industry clients? Alexandra, I would be interested in your perspective first.

Alexandra McGee

Yeah, thank you both for having us. And so, tackling the climate crisis and reducing emissions is a priority for WPP and its agencies, and our CEO Mark Read has previously talked about how this is a critically important area for the business in its own right. But, we're also seeing growing client and investor pressure, and a growing internal demand from our people who want to work for a company that is actively decarbonizing. And you can see this in the stats. So 78% of our top 50 clients have now set, or are committed to setting, science-based carbon reduction targets, with the Science Based Targets Initiative, and that's up from 62% in 2021. So, we're seeing rapid jumps in these stats year-on-year, so it's a no-brainer that clients are starting to ask us questions as well. And I think it's such an interesting time to be alive. People talk a lot about tipping points, but I feel that across the business landscape, there's so much coming together with people who want to innovate for better and do things with integrity that will have lasting impact. So, it's inevitable that as a particular area of emission is brought to the limelight, we'll start to see interest, hopefully intrigue, and change for the better.

Pugh

I like the idea of intrigue. Ollie, what's your perspective on this?

Ollie Joyce

Yeah, building on that, and just talking specifically about media, I think your question is really interesting in that you said, you know, how has the industry changed over the last year. And in some ways, it hasn't changed yet. But what I would say is, what has changed is, everyone is asking these questions. A year ago, people weren't even discussing media decarbonization. They weren't even aware that media activity, media planning and buying generates a significant carbon footprint. So, while we're not seeing that issue addressed yet, what we are are seeing is, we're seeing a huge increase in demand. A lot of client briefs will ask the questions. Most client briefs will ask for information about your business, and what your approach to doing it is. So the big changes — from close to zero awareness to close to everyone talking about it — which is a fantastic start. You’re then seeing, in terms of that awareness, you’re seeing a lot of confusion about how to go about it. It is incredibly complex it takes, I think, there is confusion, there's concern about the complexity, there's concern about how to go about it. But equally, matching that, there's a kind of huge appetite to find a solution in this space and to start applying that. So, as I said, a long way to go, but huge progress in terms of this being an item of significant increase and interest across the market.

Pugh

That's great and I love hearing about how much interest there is now. One thing I'd be very curious to understand is, you talked about the complexity. And certainly, when we think about traditional decarbonization and in greenhouse gas (GHG) emissions in general, we think more about the manufacturing, where you can really understand where the emissions are coming from in the whole lifecycle. How has the media industry calculated emissions up to now, and what's the approach there? Alexandra, I'd love for you to start on this.

McGee

Yeah, you raise a good point, I think that is. What is similar to many other industries, particularly in the service sector, that until recently have really only focused on Scope 1 and 2 operational owned emissions, and Scope 3 business travel, but as a service sector, the big emissions sit within our Scope 3, more broadly in our supply chain. And the challenge — one of the big challenges I think — has been that the greenhouse gas protocol is really difficult to interpret for the service sector, because, like you say, Charlotte, it was designed for heavy industry. So, I think that's been a bit of a blocker to action. But there have been some attempts to calculate media emissions, including through our own carbon calculators that we've made in the past. And these have been largely high-level estimates of carbon that has been used for buying offsets, but really don't provide decision useful data to reduce emissions. So, what we're trying to do here is delve into a level deeper, where GroupM finds exactly where emissions sit at each stage of the value chain, and what those emissions are. And then, by doing that, what we're hoping to do is create targeted action to reduce those emissions across our value chain, and only then offset what we can't reduce or we can't work with suppliers to reduce. So, key aim of the program that we launched through GroupM was really to show that you can figure out what your emissions are, even in a really complex service sector, and with omnichannel media value chains.

Pugh

It certainly is complex, there's a lot there. And Ollie, your perspective on this challenge, obviously, and then what are some of the other challenges the media industry faces as it tries to decarbonize?

Joyce

I, kind of, back up the point on complexity. There was a panel that was held in France last year, and two different calculators produced an emissions estimate that was different by a factor of five. So, you've got huge differences in the estimates. The reasons for that are different interpretations of value chain, measuring different parts of the value chain and using different data sets. The problem with that is people lose faith in the data. People start saying, well it's not possible to measure it, therefore we can't do anything about it. So that complexity and the impact it has on people losing trust on it is the first factor we're trying to address. The second factor comes down to data access. So a lot of the calculators in the past have been based on what's available and what can you publicly get your hands on, which might be, again, very different parts of the value chain. So, I think, simplifying it and being clear about what you need to measure, and then saying okay, if this is what we need to measure, these are the data sets we need to understand. I think those are the two big challenges, because  if you can simplify it, if you can get that data, then you can start just focusing and getting to a robust measurement, which says, quite simply, we need to reduce the emission per ad impression by a minimum of 50% by 2030. So, if you kind of simplify it down to that, and then you work back to that about the data you need and the framework you’re using to simplify a complex structure, you can really start to make progress.

Pugh

Makes sense, absolutely. And in particular, how's GroupM trying to address this, to create these global standards in current measurement in the media industry? What's the approach there that's being taken?

McGee

So, I think, just to sort of take a step back. So, in 2021, WPP carried out a full emissions inventory in baseline. And we set stretching reduction targets that were validated by the Science Based Targets Initiative to reduce our own Scope 1 and 2 emissions by 84% by 2025, and to halve Scope 3 supply chain emissions by 2030.

These targets are aligned with what the United Nations Framework Convention on Climate Change (UNFCCC) states we need to do to have any chance of maintaining global average temperature rise below 1.5 degrees from pre-industrial levels. And what, perhaps, we were a little surprised about is that the media that we place on behalf of clients makes up around half of our total emissions in our supply chain. And since then, GroupM have really taken up the mantle to understand where these emissions come from, figuring out how to calculate them at a more granular level, and then how to actively reduce, or even potentially eliminate, these emissions over time. And we've seen this huge shift of interest and attention to a previously undiscovered area as a result, which is very exciting.

Pugh

That's incredible news, half. Yes, that's a very large number there. Ollie, what's your perspective?

Joyce

Yeah, I mean just again, sort of specifically about the steps we've taken, it's started with a very public statement of intent made by our CEO, that said we believe we will move media investment to publishers and platforms that decarbonize fastest over the next three to five years. So that's a realistic time frame. What we're basically saying is that clients are coming to us and saying "we want to move our media investment to publishers and platforms that are behaving in the right way”. And, I think, that's a really important vision statement to make because it makes it very clear to the market that this is important, this matters, and this will be a factor in terms of where investment goes. So that was, kind of, the start point. You then need to start looking at how you enable that because as we've said, it's kind of complex, and you need the robust data which will inform those investment decisions. So, the first thing we've done is, we've worked to establish that standardized framework, which is aligned with the five-greenhouse gas protocol stages. So, we're very clear on what the value chain is. We've tried to understand the data inputs that inform each of those stages and developed a calculator, which enables you to do those calculations, working, in some instances, with partners like Scope 3 to get quite granular programmatic data. And then, the last step is, we've kind of open sourced and we've published that methodology, because, I think, what we realized during the process of doing this is, you can do it by yourself, but actually industry adoption and standardization is really important and will enable us and the whole market to drive progress and drive reductions much quicker than if you’re functioning by yourself. So, those are the key steps we went through.

Pugh

Yeah, and I'd love to hear how the coalition that you've created back in November plays into exactly what you’re saying there, around trying to get everybody into the same process and procedures and frameworks.

Joyce

Yeah I mean that came out at two things. Firstly, the big increase in demand in this space that we're seeing. So, four out of five clients will be asking us about it and wanting to speak about it. And then, secondly, is a willingness., you know, our realization that collaboration is important, but a willingness of those clients to share and learn from each other, to really understand how you can drive reductions. So, there's a few work streams in it. There's a work stream around finalizing that framework, which we firmly believe will dovetail with the efforts of people that had net zero to get industry alignment there in terms of what it is. We're also looking at product innovation that will help us deliver the reductions. So there's obviously a lot of tech solutions that are out there and available. So, how can we start applying those? Because anyone who has looked at decarbonization will understand that doing it manually, and doing the calculations and doing the work without technology to do a lot of the heavy lifting is going to be hard work, so we're looking at a product innovation timeline. And then there's a lot around, kind of, thought leadership and the broader sustainability space, and actually how can we start to influence consumers. It's widely spoken about. Our research has shown there's a 44% gap between sustainable intention — people who intend to buy and behave sustainably and eco actives — people who actually follow that through into their actions. So, it sits outside of media decarbonization, but I think we're increasingly seeing interest in how we take that thinking and apply it to changing consumer behavior.

Pugh

That's a large gap. I was not aware of that number, but it's very interesting there. And I like the juxtaposition of that with WPP's commitment to reduce emissions because you do have a very leading goal, and you have included media placement in your emissions reduction target and that's not something that's seen in the industry. So, how do you see this framework — everything you’re doing, kind of changing the approaches others are taking and encouraging them to incorporate the emissions from media placement in their reduction targets?

Joyce

Yeah, the response has been really very positive, I would say that. There's lot of questions, as there should be, but I think the overall feeling is that this is a significant first step and a real catalyst for action. Because, I think, it's moved it from a, you know, I gave you the 5x difference example, but a place of real confusion and no standards with a big step forward that says, actually this is a good start point for us to work from. What we're saying to people and what we're saying to publishers and platforms is, don't just say no, say to us, “no, but here's what could be done” or “here's what an improvement on that will be”. There are some fantastic sustainability resources and brains across the global platforms and we're really encouraged by the extent to which they've been happy to dig into the framework and to dig into the methodology to point out potential issues and potential improvements, so, that's been a really collaborative process. But the important thing is that we've really got something that we can start to work on, and something which is a start point, which everyone can incrementally make improvements to. So, that's been really important. I think the second thing is WPP is the only company that's made a commitment, but what we're hearing from elsewhere is the reason the commitment hasn't been made is because they didn't understand how a solution was possible. And it's fair enough. A commitment on this scale is quite significant, it potentially has financial implications. So, I think, then being able to see a solution that makes sense and that is clear about what it's going to deliver, that feels not easy, but certainly tangible within the time scales we're talking about. So, we're hoping, and we're seeing that this is encouraging people to think about adopting it and thinking about making similar commitments. So, I hope all of that will contribute toward positive momentum.

Pugh

I like positive momentum. And with that, you know, if we think about not just your peers in the industry, but then the clients and the media investments they're making, how do we think that everything you’re doing — the framework and the coalition — are going to really impact them as well?

Joyce

Yeah, look, our Scope 3 emissions in a lot of cases are our clients’ Scope 3 emissions, so we have a kind of joint responsibility in solving this. Simplistically, all of this means that media investment, which is billions and billions of dollars globally, will move to publishers and platforms that decarbonize furthest and fastest. You know, that's the kind of simple message that we want to reinforce here. This is why everyone should be taking action. Everyone should be pushing this as far as possible. And, it's never going to be the only factor, and I want to be clear on that. One of the phrases that we hear is, it's not “sustainability or performance,” it's “sustainability and performance.” Cost, reach, quality of impacts, etc., are going to be really important, but we want to be clear that lower-emitting impressions will have a value. And, if you’re comparing like with like across those other three elements, then emissions could be, or lower emissions could be, a decisive factor. The other thing we're talking about is, when you look at cutting emissions and cutting waste in the media supply chain, a lot of things, you know, start to come together. So, actually, higher attention, higher-quality environments require you to buy fewer impressions. And if you buy fewer impressions, you’re lowering emissions from that campaign. So, actually, quality of environment and lower emissions kind of correlate with each other. So, that's encouraging. You’re seeing, kind of, wasteful behaviors in the programmatic supply chain and made-for advertising websites. You’re seeing that they are not only wasteful in terms of overall client investment, but actually they are very wasteful in terms of the level of emissions. So, I think the issues with the media supply chain is they do start to relate to each other, and you do start to get to a position, where actually taking waste out of the supply chain improves the media environment and lowers emissions at the same time. So, I think there are a lot of positive factors coming together here, which will drive progress really quickly.

Pugh

That's interesting, and I do think that to your point, you need to have that win-win. It's not an either/or environment or business. It has to be both.

Pugh

Alexandra, I'd love to hear from you. You know, with all of this backdrop and particularly some of the win-wins that Ollie just articulated. What do you think the prospects are for getting an industry-wide framework that can track and report against carbon emissions?

McGee

Yeah, I think, as Ollie says, this is a pretty competitive area that really will succeed if we're able to collaborate with our peers and with our competitors, and to start to drive systemic change across the industry and just to deal with it and take it off the table. I think what's been really great is that the industry trade bodies, particularly Ad Net Zero, have understood that this a really major area of development for the media industry and are leading a conversation across our peers, as well as brands and vendors, to dig deeper into and align on that overarching framework. And I'm really hopeful and optimistic that we will create an industry standard for tracking and reporting emissions. And what we've seen in other industries that have standardized set to specific methodologies is that it is a pretty competitive issue with the ultimate aim of driving transparency and accountability across those sectors. So, as they say, essentially just taking the methodology piece off the table, so that we can get on with the job of decarbonizing to the benefit of everybody and the planet.

Pugh

Yeah, that definitely makes sense that you’re trying to create a level playing field for the ultimate goal of saving the planet in a business-friendly way, right? And we've been talking about Scope 3 for the most part. That's a huge part of the value chain here in the emissions profile, particularly, I know you mentioned earlier, it was over 50%. But there is still Scope 1 and 2 to think about. What steps can the industry take in those areas to decarbonize and thinking about that part of the emissions value chain?

McGee

Yeah, so for us, our Scope 1 and 2 emissions relate to the natural gas that we use in our offices, any company cars that we have, normally as a benefit around the business, and the electricity that we use to power our offices. We've got a commitment to purchase 100% renewable electricity by 2025 in all markets that we can, and it's a pretty simple thing to do. So, all companies should be purchasing renewable electricity either directly if they can or though things called Energy Attribute Certificates, and that will really help drive up demand and development across the world in markets. We've also got a campus program, where we're moving the majority of our people into campus buildings over the next few years. And we're looking at alternatives in those buildings that are going to come online. So, alternatives to natural gas use and how we can continuously improve things like energy efficiencies. So, what are the measures that we can put in place now and how can we learn from those things? And we're moving our company cars to hybrid and electric vehicles wherever we can as well. And what I'd say to others, especially in the service sector, is that there are opportunities everywhere. Some are obviously easier than others and you always have low-hanging fruits, but nothing is insurmountable. Most of the actions that we're taking as a business would actually simplify or improve working conditions for our people over time and have a raft of softer benefits that are often quite hard to quantify, such as workforce productivity.

Pugh

That's really fantastic to hear, and I feel like I've heard that theme from both you and Ollie, that there's side benefits to this. It's not just decarbonization — it's you’re getting business and workforce benefits with this. With that backdrop, what other lessons would you really impart to other industries, you know, outside of the media value chain? And particularly, I'm thinking about industries that don't have standardized approaches to decarbonization that might be in a similar place to where you were when you started your journey around this framework and coalition, and say “Wow, this is really complex!” What advice would you give them to start?

Joyce

I think these will sound remarkably simple, but I, kind of, think about four steps. One is set targets now, and make them ambitious and aggressive. Human nature is, we respond better when we've got a goal to aim for. So, actually setting that target, even without knowing exactly how you'll get there, is very motivating in terms of getting everyone going. So, making that commitment is really important. Once you have that commitment, there's probably a period of panic, but then you sit down and say okay, how are we going to do this, and you do work it out, and you do start to really understand where the waste is. Some of it is going to be difficult to address. Some of it exists because of force of habit and how we've already done stuff. You know, some of it can be really stripped out quite easily. So, I think, against those targets, develop your framework, develop your plan — you can work out how it can be done. Thirdly, everyone will come to this, but think and work at an industry level. It's really helpful to put a starter for ten on the table. But, when we all act together, you drive reduction further and faster. There's no doubt about this. This is complex and this is difficult, but if everyone's pushing in the same direction and working in the same way, making the same data requests, using the same calculators, it's going to be far more productive. And I think, we're lucky enough to work with a lot of clients who have been fantastically collaborative in their sectors. And, I think, across the board, you’re seeing things work better. And then I think fourthly, is just start doing things. We’ve still got so much work to do, but we've made so much progress in a year just by starting. That’s not only the framework, but we're starting to test a lot of work in the programmatic media space, and we're seeing, you know, a 10%-20% reductions in emissions per impression on campaigns with absolutely no loss of performance. So, and like I said, this wastage exists because no one’s thought about it, no one’s realized it's an issue, no one realizes what the damage that's been done. So, you can start to make really quite rapid progress if you set yourself, in spaces, a 10% annual reduction target and you do that incrementally year on year and work things out. Then actually, that 2030, 50% reduction, starts to feel really achievable. So, I think those are the four steps we work through and we think are broadly applicable.

McGee

Yeah, I definitely work best to a deadline. So, I think that setting ambitious targets is a good place to start. And I would just add to that and say don't be afraid to start. It's big and it's scary, but it is achievable. So, partner with industry peers. Learn from each other, as Ollie says, to move faster, and be excited. I think humans have probably created the biggest challenge yet in terms of creating human-induced climate change, but where there's a challenge, there is a massive opportunity. There's a massive opportunity for innovation, there's a massive opportunity for business. So, just grasp the nettle and go all in.

Pugh

I love that! I love the innovation piece, I love the waste reduction piece. I think that those are themes that will resonate with your clients across industry and, particularly, other industries as well. So, this has been a fantastic discussion. I've really enjoyed hearing all of it — WPP and GroupM — and the tackling and bringing, and the way that you've addressed these are very tangible lessons for all of us as we tackle the decarbonization journey. So, thank you so much for your time today. I really appreciate having you here. And with that Bruno, I'm going to pass it back to you.

Sarda

Well thanks, Charlotte and thanks Alexandra, thanks Ollie for this fascinating discussion that's been giving us greater insights into both the complexity and the potential of this wide-reaching sector, and actually also for offering a practical roadmap to a sustainable future for the advertising and marketing industry. And thanks also to our listeners. If you enjoyed this episode of Sustainability Matters, please check out previous episodes on ey.com or wherever you get your podcast, and we'd love for you to subscribe.  And ratings, reviews and comments are also very welcome. Please also visit ey.com, where you'll also find a wide range of related and interesting articles that will help put these bigger topics in the context of your business priorities.

I look forward to welcoming you on the next episode of Sustainability Matters. My name is Bruno Sarda — you can find me on LinkedIn, and feel free to connect with me there. Thanks so much for listening.