Why the S&G in ESG also matter to the ad industry: Q&A with Andy Power, Founder of Legacy Media
Sustainability is a key topic of discussion in the digital advertising industry, and one which I follow keenly. So, at the recent New Video Frontiers event I was interested to hear Andy Power, founder of Legacy Media, discuss ESG and why tackling the E – environment, is not enough.
I sat down with Andy to find out more about why the ad industry needs to address ESG, where the industry is now, what still needs to be done, and how.
Kirsty: First off, can we define ESG?
Andy: In very simple terms, ESG stands for environmental, social, and governance, and ESG data is how we measure the externalities of an organisation with respect to its environment, society, and corporate governance.
Kirsty: Why did you set up Legacy Media and what does it do?
Andy: During lockdown, I decided I wanted to do something purposeful; I have young children so that helped my focus towards sustainability.
I spoke to a friend, who runs a large sustainability hedge fund, and he mentioned the importance of ESG data and how it is the bedrock of his investment decisions for his multi-billion dollar fund. I soon realised that the global financial community is fully ESG focused, whereas the $1 trillion media industry isn’t.
By 2025, a third of all the world’s assets will be under an ESG lens. Businesses are now understanding that their supply chain is a direct reflection of themselves and affects their ESG rating. So if you buy from a supplier with a poor human rights record this will impact your ESG score. Ad budgets are a significant part of a business’s investment and supply chain. A company could be spending 20% or more of its revenue on advertising, which is why boards are now demanding ESG data from their agencies regarding which media companies they’re investing in.
Andrew Winston, the author of Net Positive, stated that “Investors are flexing their ESG muscle, brands are making big commitments, and their media investments have a role to play. Companies need good data on how their media choices affect the world”. Big brands are already excluding suppliers with inadequate ESG ratings from their supply chain and stipulating ESG scores on their RFPs.
Following that conversation with a friend, I was inspired to launch Legacy. Our mission is that every global media dollar is traded through an ESG lens to create a positive impact on the world.
Using aggregated market-leading data, Legacy Media allocates ESG ratings to every global media supplier to understand the ESG efficiency of every dollar invested in the media buying industry.
Kirsty: Where is the ad industry on ESG and what still needs to be done?
Andy: The industry is still at the very start of tackling ESG. Currently, the focus is on the E, predominantly carbon emissions. However, we quickly need to also address the S and the G.
Education is needed on what ESG is. At my New Video Frontiers presentation I shared the United Nations Sustainable Development Goals wheel which illustrates its 2030 goals. I was surprised by how few people knew what they were, especially since we only have seven years left to reach them.
Understanding is crucial to bridge the gap between where we are and where we need to be.
Good ESG data is needed to show how media choices affect the world. Real change can happen by combining ESG data that informs all three components, not just the environment, with ad spend.
Kirsty: What is holding the industry back?
Andy: In practical terms, nothing. ESG tools are readily available for brands to directly utilise, or via their media agencies. Brands can plan media campaigns through Telmar’s Mediaplanner, programmatically invest through MIQ, and audit their ‘responsible’ media investment performance with MediaSense.
Because the industry needs more education and more understanding of what ESG is and what it means for their business, there’s a lack of urgency, accountability, and commitment. However, we’re already working with ESG-focused agencies, so this is already changing and improving.
Kirsty: Could you explain the ESG data you provide and how it’s used?
Andy: ESG data correlation scores, especially between the biggest ESG analyst companies, vary and use different methodologies. Legacy Media data offers a consensus score, to make it easier, consistent, and more universal to understand.
Legacy offers agencies the ability to directly incorporate ESG data into their proprietary tools to help inform their responsible investment decisions. They can also plan brand campaigns using Telmar, buy programmatically via MIQ (or their own proprietary tools), then be ESG audited by MediaSense. We’re creating partnerships with different players to address all the moving parts between planning and buying so as to evolve with what our world requires.
With visible ESG scores, it’s important to understand if the investments we’re making with a company are the right ones. Decisions can’t be made solely based on data, but it should be their bedrock. We enable real change by striking the right balance between three Rs: reach, ROI, and responsible ratings.
In advertising, we need to plan so that the client sells products or services by reaching the right audiences. But we need to be able to report back on the gross rating points, as well as the effects our investments have on the ESG score. Supporting this planning stage enables a conversation between the two aspects; they can set up certain goals or analyse their objectives against where they are and make changes to their plans that support the journey getting there.
Kirsty: According to the latest reports, we are now on our ‘final warning’ for averting climate catastrophe. What would you say to those who feel it’s already too late?
Andy: Behavioural change is key. The Intergovernmental Panel on Climate Change states that having the right policy structure and technology in place to enable changes in our lifestyles and behaviours can result in a 40-70% reduction of greenhouse gas emissions by 2050.
Behavioural change across the board is what will influence carbon emissions the most.
Kirsty: What would your message be to the advertising industry on Earth Day?
Andy: I would break it down to three things. First, learn about the United Nations Sustainable Development Goals. Second, use ESG data to inform your decisions towards responsible investments with media companies. Third, the financial community is moved by money, so they understand the importance of ESG and the need to preserve our future if we want to continue making money. So, remember that advertising sells products and services, but you can’t make money on a dead planet!