The digital advertising sector has a dirty little secret: its carbon footprint is huge. How big? About the size of the airline industry.
Collectively, digital ad tech accounts for 3.5% of the global greenhouse gas (GHG) emitted each year. A single campaign that fills one million impressions has the same carbon footprint as a roundtrip flight from Boston to London.
Fortunately, there are many people within the industry who are actively working to green up advertising, and they’re gathering significant momentum. This past February, the ANA, 4A’s, and IAB joined forces to launch a U.S. chapter of Ad Net Zero, a UK-based organization that seeks to help brands, agencies, publishers and ad tech companies achieve net zero.
Fifty US-based digital advertising companies joined Ad Net Zero, and together they represent 40% of the world’s advertising spend.
Last year, Brian O’Kelley, a co-founder of AppNexus, turned his attention to the climate crises, launching Scope3, a company to help ad tech companies measure and reduce their GHG emissions.
Measurement is a critical component to reducing carbon, and to that end, in July of 2022, GroupM launched its Decarbonization framework, enabling marketers to measure the carbon footprint of their campaigns. Ultimately, marketers will be able to consider GHG emissions when setting campaign strategies.
And lest anyone think that an ad-tech company achieving net zero is a pipe dream, this past February OpenX announced it had met the SBTi’s requirement for net zero, the first digital ad tech platform to do so.
It’s only a matter of time before carbon neutrality and even net-zero become buying criteria for brands, so now is a good time to consider launching a sustainability initiative. But it can be a confusing topic, with its various scopes and terminology. This article provides a high-level overview of the steps that ad-tech companies need to get there.
Why Embark on a Path to Net Zero?
This is precisely the question I posed Brian Murphy, who was at OpenX when it began its sustainability journey and has since gone on to found The Alpine Project, a consultancy that helps ad-tech companies implement environmental sustainability strategies.
Besides being the right thing to do, Brian notes that the Chief Sustainability Officers (CSOs) at big brands are now tuning in to the carbon footprint of their organizations’ ad campaigns. They are keen to reduce their company’s Scope 3 emissions (more on that in a bit), which is why many ad tech companies are now seeing questions in RFI’s that ask such things as: what is your annual greenhouse gasses (GHG) emissions? Are you a carbon-neutral company? Have you set a net-zero target?
As a result, everyone in the advertising and media supply chain needs to address the issue, as well as address it in a way that goes beyond buying some carbon offsets and issuing a press release that says they care about the environment.
The second reason is that regulators are increasingly mandating carbon reduction. For instance, under EU Law, EU members must reduce their carbon emissions by 55% by 2030. Here in the US, the SEC is considering rules that require Scope 3 reporting disclosures. This is a growing trend across the globe.
The third reason is talent acquisition and retention. In particular, younger workers are eager to work for companies that have a legitimate, measurable, actionable sustainability strategy.
When we talk about cutting emissions, we talk about Scope 1, 2, and 3. These are defined as:
- Scope 1: These are “direct emissions” in that they result from sources that are owned or controlled by your organization. These may be any fossil fuels you may burn in your facilities, vehicles, or industrial processes.
- Scope 2: These are in-direct emissions or GHG emissions that are generated by your utility provider when you turn on the lights, air conditioners, space heaters, computers, and so on within your facilities. All GHG emissions that result from purchased electricity, steam, heat, and cooling are your Scope 2 emissions.
- Scope 3: These are all the indirect emissions not covered in Scope 2. If you are a marketer for a huge brand, your Scope 3 emissions include all of the Scope 1 and 2 emissions of your buying platforms and other tech providers. Every partner in your value chain generates GHG and therefore contributes to your Scope 3 emissions. This is why Chief Sustainability Officers are asking about carbon reduction plans of the ad-tech industry.
3 Components of a Sustainability Initiative
There are three components that are absolute table stakes to any sustainability initiative. They are:
You can’t manage what you can’t measure, so every sustainability initiative begins with measuring your GHG emissions following an international standard.
There are a number of organizations that have created standards for this exact purpose, including the World Business Council for Sustainable Development (WBCSD) and World Resource Institute (WRI) which created a Greenhouse Gas Protocol, ISO, which created the 14064 protocol for GHG emissions and verification, and GRI among others.
These protocols alleviate the burden of each company coming up with a way to measure its GHG emissions. By following one, your company will ensure that Chief Sustainability Officers of your potential companies will accept the methodology you use to measure and report on your emissions as legitimate
If this still feels a bit overwhelming, remember that companies like The Alpine Project exist to help organizations like yours measure GHG emissions following an agreed-upon standard.
Measurement essentially entails auditing your corporate GHG inventory. This is a process that analyzes data from your business operations and value chain, including your technology infrastructure, facilities, business travel, supply chain, distributor network, and so on. The outcome will be a Greenhouse Gas Emissions Inventory Report, which must be verified by an impartial and accredited third party so that you’re not grading your own homework.
Finally, you’ll want to publicly disclose your Greenhouse Gas Emissions Inventory Report so that interested parties can find it. You can post it on your website, of course, but there are also organizations, such as the Climate Registry and the Climate Disclosure Project that can share it as well. These registrations are often the first place that CSOs look.
Once you’ve measured and reported on your emissions, the next step is to look for ways to make meaningful reductions in the carbon you produce across Scope 1, 2, and 3.
This is a good step to ask such questions as: Can your company change its travel policy to reduce flights? Can it establish a certain number of meetings in order to justify travel?
This step is also an opportunity to look at your tech infrastructure. Companies like OpenX achieved significant carbon reduction by moving their servers from on-premise to the cloud. Other research shows that moving IT functionality to the cloud can reduce energy consumption by as much as 85%. “Going from an on-premise tech infrastructure to a cloud-based one can reduce GHG significantly. For instance, both Google and AWS have advanced renewable energy programs,” explained Murphy.
Other ad tech companies have added efficiency to their ad servers, reducing both the number of servers required to run their operations, as well as their GHG emissions.
Another consideration is to purchase green energy from your utility company to run your operations.
Once you’ve exhausted all avenues for reducing your GHG emissions, you can invest in a verified, high-quality carbon removal project (aka carbon offsetting) to remove some carbon. “Carbon removal projects can play a role for companies that want to reach CarbonNeutral® certification, and create a path to net zero,” Murphy explains.
Note, carbon offsets should only be taken after the measure and reduce steps. Carbon offsetting has received a fair amount of bad press, such as the John Oliver segment that described how some companies sell the exact same offsets hundreds of times. For this reason, it’s important to work with a known and trusted carbon offsetting organization such as Climate Impact Partners, Climate Partner, or Climate Direct.
A sustainability initiative is all about setting targets: how much will you reduce your organization’s Scope 1, 2, and 3 emissions in your quest to achieve net zero?
Once again, you don’t need to go it alone. The Science Based Targets Initiative (SBTi) helps organizations establish ambitious but attainable, goals. Specifically, it offers guidelines and criteria that companies can use to develop targets that are founded in climate science and meet the goals of the Paris Agreement.
Carbon Neutral v. Net Zero
When we talk about sustainability, we hear the terms “carbon neutral” and “net zero” frequently, oftentimes interchangeably. They are not the same thing.
The UN Climate Action explains the difference this way, “Put simply, net zero means cutting greenhouse gas emissions to as close to zero as possible, with any remaining emissions re-absorbed from the atmosphere, by oceans and forests for instance.”
Clearly net zero is more desirable for the earth, but carbon neutrality is an awesome first step. Note that to call yourself carbon neutral, you must follow the carbon neutral protocol, as well as achieve certification from a third party such as Climate Impact Partners.
Your Future Will be Green
There’s no doubt that carbon reduction is in every company’s future, and the digital ad-tech sector will be no exception to that trend. While embarking on a path to net zero is a huge endeavor, it is one in which you will find many resources available to help and guide you. It’s also one that will pay dividends well into the future, as brands now favor partners that are sustainable, giving your company the ability to win their budgets.
Ad Net Zero Action Items
The Ad Net Zero has outlined five action items that digital ad tech companies can take to lower their GHG emissions, both internally, and to help their clients run greener campaigns. They are:
- Get your house in order. Measure emissions from your own company. It’s what Alpine Project is working on, concentrating on companies within the digital ad-tech space.
- Reduce emissions from advertising production. For example, don’t send 50 people to Tasmania for a photo shoot when you could send three people down the street or do it virtually.
- Reduce emissions from media planning and buying. For example, enable buyers to make campaign decisions with carbon emissions impact front of mind. This is what GroupM is working on.
- Reduce emissions through awards and events. Ensure that industry awards are judged, in part, by climate considerations. Consider the carbon impact of travel to the event, and find ways to reduce it.
- Harness advertising’s power to support consumer behavior change. Find ways to insert sustainable behavior into advertising in order to normalize it.