Agencies canned crypto clients and survived, so they can be choosy when it comes to Shell

Ignoring sustainability and ethical considerations can damage the reputation of advertising agencies. The media review of Shell presents an opportunity to act with responsibility.

Shell's recent review of media has sparked discussions in the advertising industry regarding the clients that agencies should choose to serve voluntarily.

It has been a whole year since Greenpeace unexpectedly barged into Cannes Lions. Now, it's obvious where everyone stands. Some people believe that partnering with companies that produce fossil fuels and pollute contradicts the values of sustainability and ethics that agencies have pledged to follow. They think agencies are putting their reputation and legal status at risk. Those in favor, on the other hand, argue that agencies can help shift consumer demand towards eco-friendly options. They can also motivate companies in the oil industry to switch to renewable energy sources, albeit indirectly.

Due to the pressure to meet growth targets, large media agencies might stop the argument right there. Nevertheless, the industry's attempt to separate itself from the world of cryptocurrency implies that it's feasible for agencies to distance themselves from clients that are polluting, without putting the rest of their business model at risk.

In 2022, a group of people who want to bring about change forcefully entered the Palais and demanded that agencies refuse work from clients involved in fossil fuels. This year, other protestors targeted Richard Edelman on the Croisette, walking behind him with signs saying that he was working with fossil fuels. A few weeks before that, a group called AdFreeCities gathered outside big media companies' offices in London and demanded that they stop making ads for Shell. Veronica Wignall, one of the co-directors of AdFree Cities, believes that creating ads for fossil fuel companies is wrong, harmful, and can cause damage to one's reputation, legal trouble and regulatory issues.

This opinion is not unique and not just held by younger employees. While they don't want to be identified, several advertising executives at the Cannes Festival this week expressed their surprise that media agencies would compete for Shell's business.

The Advertising Association's climate organization, AdNetZero, did not give a comment for this article. However, in the past, they have avoided offering advice regarding the compatibility of advertising agencies partnering with fossil fuel businesses while also addressing the urgent issue of climate change.

In the past year, Mark Read, who is the head honcho at the widely known advertising company, WPP, stated that it is their duty to maintain a business relationship with fossil fuel corporations. He put forth the argument that if they can portray what these companies are doing in a truthful and unbiased manner, then it only makes sense to do so. If these energy firms are not differentiated based on their performance, how can consumers make an informed decision on which energy source to choose for themselves?

In just one year, many things can happen, and that includes Shell's stance on transitioning towards clean energy. Recently, the company backtracked on its goal to reduce investments in oil production over the next ten years, which goes against their commitment. The Advertising Standards Authority (ASA) has also become stricter with their regulations, cracking down on companies that engage in "greenwashing" practices. They have implemented new rules that prevent companies from promoting sustainable products if they do not have a sustainable business model overall.

ASA has declared that they are adopting a tough stance on greenwashing as the consequences can be severe.

A team named Clean Creatives, comprising of individuals employed in the agency industry, has advocated for more than 24 months to persuade agencies to terminate their association with such customers. According to the executive director, Duncan Meisel, being associated with Shell goes against any valuable dedication for promoting sustainability.

Companies that own other companies have made promises to address climate change as it helps them to attract and keep talented staff and appeal to clients who prioritize sustainability. Recently, Shell has decided to not pursue its climate goals any longer. Working with Shell now would send the message to customers that sustainability is no longer a priority to agencies. This would negatively impact the reputation of the company.

More than 600 agency businesses have agreed not to work with companies that pollute the environment. However, up to this week, only a few names from network agencies had joined the pledge. A subsidiary of Stagwell, called Gale, has now become the first media agency to support the pledge. Another agency under Stagwell, Forsman & Bodenfors, had already endorsed the pledge earlier.

According to a CEO of a media agency, when their business is doing well, agencies can be selective in choosing which clients to work with. The agency considers different factors before deciding to work with a client, like their resources and profit margins. While they listen to their employees' opinions on a client's sustainability efforts and ethical implications, they avoid taking a hard stance as it may affect the agency's reputation. The CEO warned that advocating for sustainability concerns with every client can quickly turn an agency into a controversial figure like George Monbiot.

According to some experts, the industry is restricted and unable to act due to the possibility of a complete prohibition on clients in the fossil fuel industry. This course of action could potentially lead to a more general position against consumerism, which would clearly contradict the nature of advertising.

Agencies may form unexpected partnerships due to this mindset. One instance is the collaboration between McCann London and Neom, a peculiar city being developed in the expansive Saudi Arabian desert.

The idea for the project comes from the Saudi Arabian crown prince and prime minister, Mohammed bin Salman. The funding for this development comes from the sovereign wealth fund that manages Saudi Aramco, the biggest oil producer globally and the leading contributor to carbon emissions since 1965. Building the city might cause carbon dioxide emissions that are equal to the total emission from the United Kingdom for four years.

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Despite the challenges, McCann's Enterprise division managed to develop the 'Made to Change' platform in 2021. This advertising campaign took over Twitter feeds last fall, encouraging users to invest in a new desert paradise. Publicis Sapient was responsible for media relations, while CSM, Joy Films, and Klashboombang provided production support. Additionally, Media.Monks, a digital network, also works with Neom.

In addition to the negative environmental impacts associated with Neom, there are also ethical concerns that should be taken into account. It has been reported that security forces have shot members of the communities that were displaced to make way for the construction of the city. Furthermore, the family members of these individuals have been sentenced to death. The main supporter of the project, Bin Salman, is suspected of being responsible for the ruthless killing of journalist Jamal Khashoggi back in 2018.

The architecture community is discussing the potential negative consequences of building Neom, a new city project. This has caused some controversy because many major firms are involved in the design process. One article on the website Dezeen suggests that if these firms accept payment to work on Neom, they are indirectly supporting violent actions.

Despite any obstacles, McCann's work remained unaffected and even garnered recognition through awards such as Effies and Clios for the campaign in 2022.

Assuming that environmental and ethical aspects are already resolved when starting a new business can result in attracting clients like Neom. However, business leaders often have more room for maneuver than they think.

Meisel suggests that there are many businesses and services that agencies can advertise without facing detrimental effects on their reputation or legal issues, unlike companies involved in the pollution caused by fossil fuels. It is interesting to note that in the past few months, there was a whole industry that almost all agencies in the sector unanimously decided to withdraw from, albeit with minimal discord.

In the 'crypto-bowl', advertising companies assisted in introducing trading platforms like FTX, Crypto.com, and Coinbase to the American audience. However, over the next year and a half, as the hype around cryptocurrencies died down and concerns regarding the negative environmental and financial impacts of the technology grew, these agencies started to distance themselves from these companies.

Former Dentsu Creative customer, FTX, has declared bankruptcy, while both Coinbase and Binance, who are clients of Accenture Song, are currently under investigation by the SEC for potentially committing securities fraud. Nevertheless, Saatchi & Saatchi spokesperson directly confirmed that they are still working with Binance in projects. Even some small agencies, like the US-based indie, Invisible North, were able to remove themselves after acquiring a variety of clients dominating crypto and NFT industries.

According to Geoff Renaud, one of the co-founders of Invisible North, our growth was primarily driven by Web3 clients and big tech firms. Our agency had previously collaborated with big names such as Algorand, FTX, Coinbase and Kraken, but we quickly redirected our focus towards clients that are more resistant to economic downturns (and also compliant with SEC regulations) during the winter season.

It's easy to see the similarities. Crypto businesses have a significant ecological effect and leave organizations vulnerable to harm to their reputation and legal consequences (especially since new rules are emerging to regulate the industry, like the UK Financial Conduct Authority's requirements regarding risk disclaimers in crypto advertisements).

When organizations withdrew, the roof didn't come down.