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IPA ESG study urges change: ‘A moral imperative is becoming a commercial necessity’

IPA recommends agencies commit to ESG as a point of differentiation

IPA research into the potential ramifications of environmental, social and governance (ESG) metrics on advertisers has illustrated that agency leaders must consider changing with the times.

Conducted by Opinium, the research sought to define the importance of ESG to the marcomms sector by speaking directly to business leaders across the financial services, FMCG and food and drink categories to discern once and for all whether any investment in this area can pay off financially as well as emotionally.

Doing the right thing

  • Citing the potential for brands to gain a competitive edge by embracing the values associated with the standard, the IPA will present its findings at a conference later this morning.

  • Reporting a ’nuanced’ picture, the report highlights the growing weight attached to ESG metrics by brands, with agencies expected to demonstrate high standards of compliance in their values and actions.

  • Acknowledging that a committed embrace of ESG will not in itself win new business, the IPA believes that it could provide an important point of differentiation for agencies engaged in cutthroat battles for business.

  • To maximize the potential of social good, agencies are advised to get to know their brands to properly tailor value-added content and make ESG a natural extension of a flowing conversation, rather than an awkward add-on.

Vital statistics

  • The report found that 80% of marcomms leaders agree that ESG is set to gain in importance, with 51% citing Covid-19 as having poured fuel on the fire.

  • A majority of businesses have now enacted ESG practices, predominantly in the social sphere (92%), with high numbers also updating their environmental policies (73%) and governance (63%).

  • Encouragingly, 72% of companies that have enacted reforms have deemed their implementation to have been a success.

  • The weight attached to ESG by brands is demonstrated by the fact that 84% agree with the statement that a partner agency must reflect their core values, with 65% agreeing that agencies must demonstrate understanding of their ESG priorities.

  • ESG remains low down the pecking order of core hiring factors in any given project or campaign, with just 2.1% being swayed by ESG based initiatives.

  • By contrast, bread and butter qualities around demonstrating effectiveness (15.3%), offering creative solutions (15.3%) and providing relevant services (14.9%) were in far greater demand.

  • Other factors that make all the difference include strong chemistry (14.1%), sharing the same values as the brand (7.9%), an industry-wide reputation (6.7%), similar brands in portfolio (4.6%) and competitive pricing (3.2%).

  • Looking ahead, however, ESG characteristics are only likely to gain in importance as aspects such as harassment, equal opportunities and environmental policies rise to the fore.

What the IPA says

  • Marc Nohr, the IPA commercial leadership group chair and group chief executive officer of Miroma Agencies, said: ”ESG is not just an issue for agencies, it’s an issue for businesses, governments and society. A moral imperative is becoming a commercial necessity and the agencies that put this at the heart of their strategy for growth will be well positioned in the future. But we must do more than pay lip service to it. And that will mean asking ourselves some tough questions about where our responsibility to society and the planet begins and ends.”

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