2023 Will Put the Ad Industry’s Relationship With Fossil Fuels on Trial

Throughout 2022, agency leaders faced activists hellbent on holding firms accountable for the work they do for major polluters. In 2023, policymakers are joining the chat. Much of this year's activity was seen at the Cannes Lions Festival of Creativity. The ad industry returned to the French Riviera for the first time since the beginning of the Covid-19 pandemic. But as brand and agency leaders sipped rosé and reunited on yachts, a different energy punctuated the festivities: protests. Greenpeace returned with flashy stunts that interrupted the opening ceremony and sent a representative to the top of the Palais. Clean Creatives, a newcomer to Cannes, descended upon the heat wave-stricken beaches to call out fossil fuel companies and their agency partners for work that has historically slowed policy action on climate. Creatives for Climate, a network of climate-concerned professionals, asked attendees to ponder ads that misrepresent the environmental impact of products and brands. It's all part of a growing movement within the ad industry to end work for fossil fuel companies because of the impact their products have on the climate, which accounts for about 73% of all greenhouse gas emissions generated by Americans. But not everyone agrees. While activists continue their fight, some agency leaders have reiterated their commitment to brand partners like BP, Chevron, Exxon and Shell. They argue that by retaining those companies as clients, they can support oil and gas giants as they transition to clean energy. As we head into 2023, agencies—already squeezed and amid an economic downturn—have tough decisions to make when it comes to who they work with. Some experts predict that the industry's disagreement over fossil fuel clients may become higher stakes, especially as clearer guidance comes down from international organizations like the UN and policymakers move to require more transparent client disclosure. Major players could tip the scales toward an industry retreating from fossil fuels, similar to the way the ad industry ditched tobacco in the 1990s. Moving away from polluters Some agencies made moves this year to distance their firms from oil and gas clients. IPG released a new set of rules in September that the holding company and its affiliates will use when considering prospective clients in the oil, gas and utilities sectors. For example, clients must have specific plans to achieve net-zero greenhouse gas emissions by 2050 or sooner with no more than 10% in offsets. Duncan Meisel, director of Clean Creatives, described it as a "great step forward." VaynerMedia also confirmed to Adweek that it cut ties with Shell in early 2022, its only client from the oil and gas sector. 239 Agencies Landed on Clean Creatives’ Second ‘F-List’ for Working With Fossil Fuel Clients Still, it can be difficult for agencies to discuss these breakups. Some oil and gas firms require non-disclosure agreements that prevent agencies from publicly commenting on the relationship status. At the same time, inflationary pressures are squeezing budgets, making agencies hesitant to talk about the work they're turning down. Following a targeted campaign by Clean Creatives last year, Edelman appears to have ended some or all of its work for ExxonMobil, according to Clean Creatives. The PR firm underwent a climate-focused review of its client roster that ended in early 2022, but wouldn't comment specifically on which relationships didn't meet its new standards. Clean Creatives added more than 200 agencies to its pledge to decline contracts with fossil fuel companies throughout 2022, hitting 470 signatories at the time of writing. Most notably, this includes its first agency owned by a major holding company: Triptk, a Havas-owned, New York-based brand transformation consultancy. "The reckoning about this issue has begun in earnest," Meisel said. "That sets the stage for 2023 to be a moment where a lot of agencies and leaders take a side." A divided industry In other parts of the industry, though, leaders doubled down on their commitment to working alongside fossil fuel clients in 2022. Mark Read, CEO of WPP, has repeatedly defended the agency's oil and gas clients. Even Sebastian Munden, chair of the Advertising Association's climate-focused industry network Ad Net Zero, told The Drum in November that agencies should keep working with fossil fuel clients in the hopes that they can help nudge their businesses toward more climate-friendly operations. "Our mission is to assess, measure and take action to lower carbon in any way, shape or form associated with the advertising process," said John Osborn, U.S. director of Ad Net Zero. "There is tremendous opportunity to capitalize on this moment … to innovate and to lurch and lunge forward for the betterment of everybody." A spokesperson for Ad Net Zero told Adweek that the group isn't focused on telling its members who to work for, aiming to use advertising to spur climate action across all industries—including energy and transportation. "Any business that has the legal right to trade and communicate should be allowed to do so, but within clear, robust rules set by advertising regulators to ensure advertising is honest, truthful and never misleading," the spokesperson said. 'The parents are coming' But regulatory pressure around client disclosure and green claims is poised to ramp up in 2023. The Race to Zero, a UN-backed campaign, is updating its membership criteria in June to include more detailed guidance for the advertising industry. That'll include client disclosure reporting that breaks down revenue by industry and advertised emissions, a metric developed by climate-focused ad network Purpose Disruptors to estimate emissions generated by the increase in sales of a product from advertising. In some ways, more granular guidance on greenwashing and climate-related disclosures makes it easier on agencies that are already trying to do the right thing, said Solitaire Townsend, co-founder of climate-focused agency Futerra. Ad of the Day: These Lovely Solar Ads Trace the Long and Winding Road of Fossil Fuels "At the moment, it feels like an argument of principle," Townsend said,"a moral decision that agencies need to make." With better guidance, it becomes more about simply aligning to regulatory standards. In addition to the Race to Zero, the U.S. Federal Trade Commission announced this month that it is seeking public comment on updates to its Green Guides, which advise marketers on how to avoid misleading environmental claims. The European Union has moved to require detailed and externally audited ESG reporting by large companies in an attempt to curb greenwashing. Those requirements will take effect in 2024. "This isn't going to be activists versus agencies and agencies versus activists," Townsend said. In 2023, the pressure will also be coming from policymakers. "The parents are coming," she said.