Your ownership structure, the size of your organisation and the clients you work with will all influence the areas you focus on first.
We outlined some of the general and existential risks and pressures facing agencies in Agents for change: The expert view report, but it’s important to understand your own operating context as this will influence which areas you focus on first and how urgently you need to make the changes to ensure business continuity.
Along with other major players, the five largest groups [Source: Ad Agencies and Holding Companies: A Guide for Marketers (emarketer.com)] – WPP, Omincom, Publicis, Dentsu and IPG – all have sustainability strategies at varying levels of development.
The approach of most of these groups is to set corporate level targets, policies and guidelines, and then roll these out throughout their group structures. This is either by mandating reporting data to be sent back to head office and/or by providing frameworks and training to support individual agencies to align with the corporate targets, often encouraging individual agencies to develop their own, aligned strategies.
Recommendation: If you sit within one of the group structures, then some of the initial work has been done for you. Ensure that you engage with the central sustainability teams to understand what the targets are, what’s expected of you as an agency, and in what time period. You also need to identify how much freedom you have to implement the changes required to meet the targets and, indeed, how much licence you have to ‘do your own thing’. This may well include the types of clients you choose to work with – we will look at this in more detail in the next stage. At this stage, it’s really important that you understand what the group level targets are, and what they mean for your agency.
For independent, privately owned agencies, you have the advantage of being able to set your own priorities and your own rules in terms of how you lean into sustainability. What you lack in central resources, you gain in the freedom to set your own approach.
The key here is to build a strong alignment between the exec leadership and the board of the company. Sustainability targets are often long term and while some changes can bring almost immediate benefits to the company – think efficiency gains and lower energy bills – others require upfront investment for longer-term payback. Patience is therefore required along with a shared vision – see Set your ambition.
As detailed in the accompanying Agents for change: The expert view report, there are a large, and growing, number of sustainability-related regulatory requirements that you need to be aware of. Some of them have punitive fines associated with them for non-compliance.
The obvious regulations that every agency, advertising and marketing professional operating in the UK and EU should know inside out are:
We shall look at both of these in more detail in the Take action phase.
Outside of the regulations that govern what you can and can’t say in marketing materials, you need to be aware of and identify what other regulations impact you and your clients. These range from reporting obligations relating to company operations like the Streamlined Energy and Carbon Report (SECR) that affects businesses with more than 250 employees, to rules being introduced by municipalities to restrict advertising by certain high-carbon sectors.
Having a clear understanding of the regulatory and legislative environment ensures that you as a business can comply (the first step on the sustainability journey), but also so you can help your clients to comply with their obligations. It may help shape what you decide to take action on first.
Make yourself familiar with procurement policy and stay engaged. There will be lots of guidance available to help ensure suppliers have minimum standards in place and understand the social value proposition they need to respond to.
The Public Services (Social Value) Act came into force in 2013 and was lightly referenced in the last marketing and campaign procurement frameworks by the Crown Commercial Services (CCS). The passing of the Procurement Act 2023, which comes into force in the autumn of 2024, places a greater emphasis on procurement as an enabler to deliver wider benefits for the public good.
The big difference for Social Value when the new Act comes in will lie with the legal requirement for public sector buyers to shift from awarding contracts based on M.E.A.T. (Most Economically Advantageous Tender) to M.A.T. (Most Advantageous Tender).
This means considering the wider benefits for the community in which the contract will be delivered, such as creating local employment opportunities, carbon emissions reduction or using a local supply chain – all of which naturally fall under the umbrella of sustainability.
The new frameworks are being developed in 2024 with rollout in 2025. What this means is that if your current go-to-market strategy involves public sector work (or if you plan to apply to the frameworks in 2025) then you will need to have strong sustainability credentials across social and environmental factors to gain access to the frameworks and bid for work. And with the CCS being in the top five media spenders in the UK – over £450m in 2023 – this is a large portion of revenue that you could be foregoing if you’re not aligned. The implementation of each procurement frameworks may also increase from four years to eight years, so you’re at risk of losing out for the foreseeable future.
We recommend signing up for updates from the CCS. Read the guidelines and ensure you engage directly with them as the frameworks are developed so you understand what priority areas you need to focus on before applying to join the frameworks next year.
As mentioned earlier in this report, many large corporates in the UK have developed, or are developing, sustainability strategies. This is driven by changing legal and regulatory requirements in the UK and EU, as much as by stakeholder pressure. What this means is they will increasingly require their suppliers to help, rather than hinder, their progress towards these targets.
In preparation, we recommend that you review the corporate sustainability targets of your top five largest corporate clients. Most will have published their strategies on their websites or reference them in their annual reports. Identify the areas they’re focused on, along with the industry commitments and pledges they have signed up to, and record which of these may get pushed down to you as a supplier. Build the same process into your business development activity.
NGOs and charities that work towards environmental and social change are involved in important and high-profile campaigns, and are seeking out agencies that share their principles, within procurement processes. Not just that – the rising interest in sustainability, and the need for innovative approaches by public and private sector clients, are creating exciting new opportunities for collaboration with the third sector.
Next: 2.2 Define the business case