Sustainability in marketing: the next frontier for contract compliance

As a Global Development graduate, I am often asked by my peers about the relevance of sustainability within everyday environments, especially when it may not be immediately apparent. My role as a marketing contract compliance auditor is no different. How can media contract compliance auditors have a positive impact on the governance and assurance of sustainable practices within the advertising and media industry?

Sustainability has moved from a broad corporate ambition into the detail of media planning, buying and supplier management. As sustainability commitments now appear more frequently in Master Service Agreements between advertisers and their agencies, media contract compliance audits can offer valuable governance over any such commitments, ensuring agencies are fulfilling their social and environmental obligations, as well as their financial ones.

A wider view of sustainability

Whilst a complex topic, the definition of Sustainability is “meeting the present needs of society without compromising the ability of future generations to meet their own”. In practice, this brings together three connected considerations:

• Environmental security
• Social equity
• Economic viability

For marketers, that definition matters.

The impact of advertising is not limited to the message a consumer sees. It also includes the systems used to deliver that message, the materials consumed, the suppliers selected and the governance applied across the media supply chain.

Examples of specific marketing impacts

Digital media may appear intangible (and literally automatic), but programmatic buying relies on servers in data centres to process ad requests, manage pricing and match buyers with suppliers in real time. An inefficient supply path can create duplicate or unnecessary requests, increasing both operational demand and the cost of purchasing media. Optimising biddable media can therefore offer an environmental benefit as well as a financial one.

Traditional channels create a more visible footprint through the physical materials used in print, press and out-of-home activity. Sustainability also extends beyond carbon. Advertisers may face reputational risk where media vendors or other suppliers do not meet expected ethical standards.

Commitments to contractual obligations

As advertisers pay greater attention to environmental and social impact, sustainability requirements are beginning to feature within Master Services Agreements with their agencies. Industry bodies, such as ISBA and the World Federation of Advertisers, have developed guide clauses and regulation respectively, addressing areas such as:

• Carbon emissions recording and reporting
• Decarbonisation practices
• Ethical vendor management

This development has a clear implication for contract compliance. If an agreement requires an agency to calculate, record, report or act on sustainability information, those requirements become auditable in much the same way as other contractual obligations. As the scope of the agreement expands, there is an opportunity for the scope of the audit conducted to grow with it.

A practical example: campaign carbon estimates

We have recently seen evidence of auditable sustainability metrics within the documentation of a contract compliance audit, providing an early indication of how this may work in practice. Carbon emission estimates are being included within campaign-level media plans and are calculated using the IPA’s Carbon Calculator.
The Carbon Calculator is underpinned by Ad Net Zero’s Global Media Sustainability Framework (GMSF) standard. It considers inputs relevant to different media channels, including impression volumes, device wattage, file size, electricity-grid consumption, television run cycles, digital display wattage and the physical volume of print. The output can also be expressed as emissions intensity per thousand views, using kgCO2e per CPM.

The IPA calculator is a pilot system, which draws on greenhouse-gas protocols and ISO 14067. Greater alignment between industry measurement and recognised standards will help advertisers place more confidence in the consistency of reported information.

What can we test as part of a sustainability audit?

An audit can verify that the agreed processes outlined within a MSA have been followed and that the reported result is supported by an appropriate audit trail of evidence. It can also focus on whether the required information has been recorded and reported in accordance with the contract, verifying the agency’s commitments.

Depending on the wording of the agreement and the sustainability goals in focus, testing may consider whether:

• Media plans contain the required emissions estimate
• The approved calculator or methodology has been applied
• The inputs are complete, traceable and consistent with supporting campaign data
• The calculation and reporting period are consistent with the contractual requirement
• The required sustainability commitments are evidenced and monitored.

The opportunity for media contract compliance

Advertisers who want to ensure their marketing budget is being managed sustainably can include contractual obligations that require their agencies to be environmentally and socially responsible. When appropriately scoped, any contract compliance audit conducted will provide an assessment not only of financial transparency, but also over the application of sustainable media practices.

Sustainability clauses create a new category of obligation, but the audit principles remain the same. A contract compliance audit can provide assurance over whether the agency is maintaining relevant records and meeting your financial and sustainability expectations consistently.

If you would like to have a conversation about including an assessment of your media agency’s adherence to its sustainability obligations as part of the scope of your marketing contract compliance audits, please get in touch.