IPA research indicates ESG could give agencies competitive edge

While the results reveal a nuanced picture, they do show that brands are placing growing importance on ESG and hold agencies up to high standards when it comes to understanding their brands’ and their own ESG values and actions. The results also indicate that while proof of commitment to ESG may not win new business outright, with clients prioritising core hygiene factors ahead of this when choosing an agency, ESG could prove a valuable, additional differentiator in an agency offering.

For optimum success, the report advises agencies to get under the skin of the brand, to provide value-added content and to make ESG part of the conversation and demonstrate its relevance.

The IPA-commissioned research was carried out by Opinium and investigates the role and importance of ESG to the marcomms industry via quantitative and qualitative interviews with marcomms leaders across the Financial services, FMCG and Food and drink categories to deduce whether investment in this wide-ranging area could boost agencies’ growth.

Key report stats and facts:

• Marcomms leaders (80%) agree that ESG is, and will become increasingly important (84%), in day-to-day practices, with 51% saying Covid-19 has accelerated this.
• The majority of businesses have already implemented ESG practices, particularly across social and environmental areas (92% Social practices; 78% Environmental practices and 63% Governance practices) with 72% of companies largely deeming implementation a success.
• Brands hold agencies up to high standards when it comes to understanding their values and ESG priorities, with 84% agreeing that an agency must reflect their company’s values; and 65% agreeing that agencies must show an understanding of their brand’s ESG priorities.
• Despite this, brands prioritise core hygiene factors over ESG credentials. When asked about the factors they consider when hiring an agency for any given project/campaign, brands prioritised the following: demonstrating effectiveness (15.3%), offering creative solutions (15.3%), providing relevant services (14.9%) and experience (14.2%) and 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%); offers a competitive price (3.2%); shown proof of commitment to ESG values-based initiatives (2.1%); has famous/award-winning ideas (0.9%) and it is a global brand (O.8%).
• In addition, whilst proof of Governance by clients to agencies is key, evidence of softer aspects of ESG are not always required, such as harassment, equal opportunities and environmental policies. But according to the brands, this is likely to become more important in the future.

Commenting on these findings, IPA President and Vice Chair of VCCP, Julian Douglas, says: "This report highlights the need for agencies to walk the talk when it comes to demonstrating their commitment to their brands' and their own Environmental, Social and Governance credentials. Not only is it the right thing to do but it will increasingly become a business imperative.

Says Marc Nohr, IPA Commercial Leadership Group Chair and Group CEO, Miroma Agencies: "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."

Says Rania Robinson, CEO & Partner, Quiet Storm, who will be discussing these findings and more at today’s IPA Business Growth Conference: "In a market where it’s becoming increasingly difficult to show clear differentiation, having a strong and credible focus on ESG that can be applied to the benefit of your clients’ businesses feels like a good opportunity to distinguish yourself from your competitors."

The research was delivered at the IPA Business Growth Conference, which is sponsored by Moore Kingston Smith, Pearlfinders and Red Hat Recruitment.