Advertising industry aims to go green with digital emissions targets

The cluttered and often dysfunctional business landscape remains one of our beacons of hope in terms of stalling global warming.

Boardrooms across varying sectors are keen to speak and act openly about ESG (environmental, social and governance) issues, while investors are unable to ignore the growing ESG portfolios.

Earlier this year, a set of shareholder resolutions called on US banks and insurers to phase out financing and underwriting of new fossil fuel projects as Wall Street felt the green pinch.

One industry making clear its goals is advertising, as underlined by Anne Coghlan, COO and co-founder at Scope3, whose mission is to decarbonise media and advertising.

“The digital advertising industry has been silently contributing to digital’s carbon footprint for years, but the sector is now firmly committed to decarbonising. We’re standing at the tipping point of momentous carbon reduction. In fact, advertising could be the first industry to completely decarbonise,” she explains.

“Research by Ebiquity and Scope3 shows that 15.3% of advertising spend is wasted on high-carbon, zero-value inventory — that spend will shift.

“With pressure coming from investors, consumers and employees to ramp up ESG efforts, sustainability is now both a threat and an opportunity for businesses.”

A new study by Dr Jeroen Veldman, professor of corporate governance at Nyenrode Business University in Holland, suggests this shift in ESG thinking needs to be both joined up and more exacting.

“Corporations must also be aware of new legislation from national governments and international organisations demanding more detailed ESG reporting. Proactive engagement with this emerging landscape offers significant advantages,” claims the study.

“The EU estimates a ‘business as usual’ approach will lead to a 3–4°C increase in global average temperature, with disastrous knock-on effects for markets and the private sector. As global environmental and social crises worsen, higher ESG standards will be demanded. Companies that do not jump on board early risk being pushed by legislation and supply chain bottlenecks.”

Although ESG has its roots in investment and central banks, the term is now synonymous with any big company hopeful of espousing a combination of green credentials and transparency.

Scope3 believes itself to be both the creator and fixer of the carbon emissions inherent in digital advertising and boasts Brian O’Kelley as the CEO – often dubbed the inventor of programmatic advertising, which suffers from a wasteful supply chain.

“We’re working towards developing a measurement framework and other best practices that can be used industry-wide to accurately measure digital ad emissions. More importantly, we’ve building the tools that offer a pathway to reduce carbon emissions where possible and compensate for any remaining emissions, which didn’t exist before.

“With the foundations now in place, we’re standing at the edge of mass reduction. The industry now needs to unite around a standard, push each other to prioritise decarbonisation, and as a result, we can have an enormous impact on a global problem,” reports Anne.

As ESG, sustainability and net zero become intermingled, it is more important than ever for governance to be detailed yet forthright in its aims.

After all, the 3–4°C increase in global average temperature referenced by the EU equates to higher malnutrition rates, unprecedented heat waves, substantially exacerbated water scarcity and the irreversible loss of biodiversity according to research by the World Bank.

Some of the issues with the acronym ESG were further explored in D. Jeroen Veldman’s study.

“ESG is a means of measuring risks, but it delivers information on three separate thematic areas that cannot be easily aggregated. So, a company might score highly in one area and have an overall low ESG score, or vice versa.

“Critics have argued that ESG reporting should be limited to a much smaller set of issues. ESG is also prone to becoming ‘alphabet soup’, where acronyms pile up to the point of being confusing. In all, ESG is a concept that is still undergoing development.”

Yet the review’s conclusion emphasised the reciprocal nature of environmental action – it benefits both business and consumers. And it seems we are all going in the right direction.

“Better ESG scores have been correlated with higher corporate performance and greater capacity for innovation. Improved risk assessment builds consumer trust and strengthens investment performance.”

The Office for National Statistics recently released their quarterly climate change insights, which underscored the gradual increase in ESG and sustainability acknowledgment within business in general.

Indeed, the proportion of UK businesses reporting taking no action to reduce their carbon emissions fell from just under a half (46%) in April 2021, to less than a third (30%) in December 2022.

Sectors such as advertising seem to be leading the way.