How demonstrating ESG credentials could give agencies the edge

Agencies looking to gain a marginal edge over competitors should look to promote and demonstrate their environmental, social and governance (ESG) values and actions, new research from the IPA suggests.

Although the research offers a nuanced picture, it does reveal the fact that brands are placing growing importance on ESG, and they are increasingly holding agencies up to high standards when it comes to understanding and demonstrating both their agency’s and the brand’s ESG values and actions.

Commitment to ESG values alone is unlikely to win business outright, the research suggests, but it could represent the factor that proves to be a differentiator between competing agencies. 

The conclusion of the research, which involved quantitative and qualitative interviews with marcomms leaders across the financial services, FMCG and food and drink categories, is that agencies should get under the skin of a brand, provide value-added content, and make ESG part of the conversation and demonstrate its relevance.

The details

• Marcomms leaders overwhelmingly agree (84%) that ESG is already important and will become more so in the future, with 51% agreeing that the COVID-19 pandemic has accelerated the process.
• Most businesses have already launched ESG practices, especially across social and environmental areas (92%), while 78% have policies and practices relating to the environment and 63% surrounding governance practices. Some 72% say implementation has largely been a success.
• Despite this, ESG still ranks low down the list of priorities brands consider when hiring agencies: 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%).

 Key quote

“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” – IPA President and Vice Chair of VCCP Julian Douglas.

Sourced from the IPA