2023 Will Test Advertisers' Commitment to Sustainability

As 2023 kicks off, the marketing industry is on the cusp of several major tipping points that will begin to define its role in the climate crisis. Inflationary pressures are squeezing budgets. As a result, some experts report sustainability initiatives are stalled, while other industry leaders urge peers to keep climate top of mind. And as the industry struggles to agree on measurement standards and the scope of marketers' responsibility when it comes to emissions, regulatory action will start to demand reporting on several climate measures. How the advertising industry responds to climate change this year will determine, to a large extent, whether or not it is actually serious about addressing the climate crisis. The existential question facing not just the marketing ecosystem, but also the broader economy, is if businesses can disentangle themselves from a system that rewards growth above all else. "We’ll really see in 2023 who stays committed to sustainability with the current consumer environment, inflationary pressures and supply chain issues," said John Moorhead, chief marketing officer at Seventh Generation. "Who is going to stay committed to decarbonizing and lowering the carbon footprint, and who is going to look for a fast way out?" Recession worries eclipsing climate concern A flood of flashy corporate climate commitments has made its way through the PR newswires over the last several years. But as inflation continues to rise and a potential recession looms, it's less certain that brands and agencies will meet those previously announced targets. Climate Neutral, a firm that certifies net zero claims, has already seen clients extend their timeline for certification or opt out altogether. The company guides brands through the process of measuring, reducing and offsetting greenhouse gas emissions and awards certifications as long as progress continues. Now, some brands are delaying that process due to economic uncertainty, said Austin Whitman, Climate Neutral CEO. A series of recent withdrawals and delays from brands, all precipitated by the current economic turmoil, has led to "far fewer reductions than we were hoping for," Whitman explained. He expects that to continue into 2023. "Investment in reductions and offsetting will be put through the same wringer as every other spending decision that the company makes," he said, with anything not directly related to sales finding itself on or near the chopping block. Standing up to stand out Still, some argue that abandoning climate goals now will only hurt companies down the line. After all, climate change will continue to accelerate during and after this economic slowdown—and failing to plan for it could mean serious consequences. According to an October 2022 report from agency Barkley, 94% of the business leaders who were interviewed believe their brands will be impacted by climate change. More than half (59%) said their company already has been, or will be within five years. "Businesses that don't put sustainability at the top are going to lose during this cost-of-living crisis," said Matt Bourn, director of communications for the Advertising Association. There's also a branding case for keeping sustainability goals on schedule. Consumers are already skeptical of environmental claims—in fact, 88% of teenagers and adults don't trust brands' ESG claims, according to a 2021 survey by communications firm Method Research. Doubling down on climate commitments when times are tough could help win them over. "When the economy is down, we all try to make smarter choices with every dollar," said Brad Hiranaga, chief brand officer at Cotopaxi. "Brands that stand up for people during hard times stand out, and in turn build the most loyalty and love with people." Regardless of whether their emission-reduction goals are postponed, messaging around sustainable products may shift away from climate or environmental concerns and toward how they'll benefit consumer budgets—at least within product categories where the two align, such as in consumer-packaged goods, groceries or clothing. "Instead of pushing any issue about trying to green the supply chain or reduce emissions," brands may shift to messaging that demonstrates how their products can help consumers save money, said Alison Pepper, evp of government relations at the 4A's. She pointed to Hellmann’s as an example. The brand's ongoing food waste campaign focuses on the cost savings created by repurposing leftovers in addition to the climate benefits of diverting that food from landfills—the former becoming more relevant as the economy takes a downward turn. WHAT TO WATCH FOR IN 2023 JANUARYAd Net Zero launches its U.S.-based chapter with John Osborn at the helm. FEBRUARYAfter a yearlong delay, the FTC is updating its guidance on environmental claims. It’s accepting public comment, which can be submitted through its website, on proposed changes to the “Green Guides” through Feb. 21. APRILAdweek’s annual Sustainability Summit will be held virtually on April 20. JUNERule changes to the UN-backed Race to Zero campaign take effect, including new requirements on client disclosure and advertised emissions. Award submissions for the Cannes Lions, held from June 19-23, must demonstrate progress on sustainability and include the CO2 emissions related to production, which are new requirements for 2023. SEPTEMBERClimate Week descends upon New York from Sept. 18-24. NOVEMBERThe UN’s yearly climate event, COP28, will be held in the United Arab Emirates from Nov. 28-Dec. 12. More ad spend means more emissions The problem, though, is that advertising still has a central focus on promoting growth for its clients, which means more pollution. In a report that climate-focused ad network Purpose Disruptors presented at COP27, the group showed that ad spend tends to correlate with greenhouse gas emissions. As ad spend dipped and then recovered during the early days of the Covid-19 pandemic, so did emissions. If we're headed toward a recession, that could be one positive consequence, said Jonathan Wise, co-founder of Purpose Disruptors. But rather than understanding that as an anti-advertising message, Wise framed it as an opportunity to emerge on the other side with more noble goals. "It's not about de-growth; it's about shifting your skills from unsustainable consumption to something that's positive for the world," he said. Still, the report shows that an even steeper reduction in "advertised emissions," which estimates the increase in emissions that advertising is responsible for, is necessary to curb warming to 1.5 degrees compared with before the pandemic-related dip in emissions. That will only be possible in the U.K. (the scope of the report) by focusing on the most carbon-intensive sectors, such as automotive and travel, which will likely require industry-specific regulations for advertising, such as the recent bans on fossil fuel ads in France, the Netherlands and Australia. The industry's low-hanging fruit Over this past year, the industry also saw a new focus on the emissions from digital advertising. Led in part by Brian O'Kelley, CEO and co-founder of ad-tech consultancy Scope3, the movement aims to reduce and offset emissions related to the digital advertising supply chain. Agencies like GroupM and Dentsu also advanced methodologies for calculating the emissions of digital ads this year. Footsprint, a division of French digital marketing performance agency Labelium, highlighted pollution related to advertisers' websites by ranking the top 100 U.S. advertisers based on carbon emissions per pageview, demonstrating how sustainable web design can decrease a website's footprint. Still, measuring those emissions is complex. Industry leaders including O'Kelley and Pepper highlighted the need for a standard methodology, something that GroupM is also calling for. "If I were to make a prediction for [2023]," said O'Kelley, "it would be that by mid-year, there is a standard announced by the industry."

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Kathryn Lundstrom