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Fossil fuel contracts: How can agencies balance revenue with climate integrity?

Fossil fuel contracts: How can agencies balance revenue with climate integrity?

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In recent years, the advertising industry has seen a pushback from the general public, the media and NGOs regarding fossil fuel advertising, with greenwashing at the forefront of the discourse. Oil and gas corporations such as PETRONAS and British Petroleum (BP) employ network agencies to craft their sustainability messaging in their advertising campaigns, according to the Asia F-List report by Clean Creatives. However, according to the report, these claims are not always completely accurate. 

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During a closed-door panel by Clean Creatives, Nayantara Dutta, research director for the Asia F-list, Woo Qiyun, environmental communicator at The Weird and Wild, and Wong Meilin, partner and CEO of Milk & Honey PR discussed how despite the pushback, many agencies are not readily forgoing their fossil fuel contracts. This was particularly so for agencies within the major holding networks.

In a world where fossil fuel advertising reigns supreme for its moneymaking opportunities, is it possible for agencies to balance survival with environmental accountability?

When money tips the balance

Oil and gas companies have been accused of being the largest culprits in today’s environmental crisis. According to a March 2023 report by the Intergovernmental Panel on Climate Change (IPCC), a net zero of carbon dioxide (CO2) emissions is required to limit human-caused global warming. However, the “projected CO2 emissions from existing fossil fuel infrastructure without additional abatement would exceed the remaining carbon budget for 1.5 °C.”

This points to the fossil fuel corporations that produce vast amounts of CO2 emissions yearly. According to a 2021 report by the World Economic Forum, “fossil CO2 emissions represent upwards of 90% of current global emissions”. Yet, while being responsible for a majority of global emissions, fossil fuel companies are also a major source of income for agencies.

During the panel, Woo said that she used to have a set of exclusion criteria to decide on who she would work with. For example, she would assess if a potential client had set science-based targets for its sustainability efforts. However, she said that once she started having these criteria, she realised that there were only a miniscule amount of projects that she could take on. “If I did this as my day job, I couldn’t imagine surviving,” she said.

As such, it isn't hard to imagine that many creative agencies go through the same thought process. “How can you turn down a project that would keep your studio alive?” she added.

However, as difficult as it is to reject fossil fuel contracts, it is still possible for agencies to be successful without them, the panelists argued. “We have over 800 examples who have signed our pledge,” said Dutta, referring to the Clean Creatives Pledge in an interview, post the event, with MARKETING-INTERACTIVE.

“Every agency can be transparent about their sustainability efforts through clear targets, regular reporting, third-party review and engagement with the creative community,” she said.

There is also demand for clean agencies by clients who share those values, she said. For these clients, working with polluters is a damaging business decision, according to Dutta.  She added:

Clients are very aware of conflicts of interest and are willing to walk away from agencies who have fossil fuel ties.

The Asian context

In Asia particularly, consumers tend to be quite loyal towards oil and gas companies according to the Asia F-List report. It attributes this loyalty to the fact that “fossil fuels have helped the development of many Asian countries” in recent decades. In addition, "fossil fuel companies have worked hard to develop these positive associations” in people. 

On the agency side, “many agencies and PR firms are proud to share their creative work for oil and gas clients”, according to the report. With this general positive attitude towards oil and gas contracts, it becomes more challenging to convince agencies to reject fossil fuel contracts in Asia.

“There are hundreds of global initiatives to ban fossil fuel ads and greenwashing, but very few in Asia,” Dutta told MARKETING-INTERACTIVE. However, she also pointed out that certain countries in the region are taking steps against greenwashing. “In the Asia F-List, we spotlight an increase in legislation, from South Korea becoming the first country in East Asia to draft a greenwashing law to Japan proposing mandatory ESG disclosures for public companies,” she explained, adding:

The region has a long way to go.

Regulations can demand compliance

Given that agencies still need to earn their bread and butter, something needs to be done to maintain climate integrity in the process. "Aside from education, we can hold oil and gas companies accountable through legal action,” Dutta told MARKETING-INTERACTIVE.

Regulations offer protection for parties against greenwashing. Woo highlighted during the panel that in past projects with clients, there were times where she made claims relating to sustainability that she was not completely comfortable with.

“Sometimes clients take a while to approve things. For example, launch date is in two weeks, but they only get back to me on the revised script two days before the actual launch,” she said. "As a result, it almost feels like I have no choice but to complete the project even if the messaging is slightly off,” she added.

For creatives that do not have full rhetoric control over their client projects, regulation offers protection for those who cannot push back against their clients alone. A greenwashing law could demand proper climate disclosure and “protect the creative agencies from a lot of liabilities,” Woo explained. Regulations would give them the power to speak up to their clients and insist on climate integrity.

A law like that would give agencies and creatives more free reign to create work that falls within what they know is right, without the risk of getting into trouble, she added.

The actions of individuals also have the power to effect change given advertising runs on talent.

Dutta said, “If we refuse to work on fossil fuel campaigns or raise concerns with our teams, we will make this issue impossible for agencies and clients to ignore."

A domino effect

Additionally, companies can make the first move. “We work with the same clients as the holding networks do,” Dutta said. Once clients start preferring agencies that do not hold fossil fuel contracts because they pose less reputational risk, the larger holding networks might then be compelled to follow suit.

Dutta also pointed out that the industry works by imitation, where agencies are highly conscious of what competitors are doing. “It’s a domino effect. Once a large holding company signs our pledge to go fossil-free, it will set them apart and the other dominoes will fall,” she explained.

In a time where sustainability has become a business strategy, Dutta highlighted that “agencies know that they are running on borrowed time.” With increasing pressure on agencies, it would be harder and harder to evade questions on their fossil fuel clients.

“There is a huge business opportunity for the marketing network that speaks openly about this topic and takes a stand. All it takes is one to lead by example.”

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