How embracing sustainability became a strategic imperative for publishers

Eric Shih, Chief Operating Officer, Cedara

From government and industry regulatory requirements to corporate decarbonization efforts, brands and media suppliers face pressure to adopt a path to achieving zero carbon emissions — ad net zero.

The growth of digital advertising and its colossal energy consumption — from data centers to servers, from transmission networks to electronic devices — contributes significantly to carbon emissions. According to Ad Net Zero, a U.K.-based organization that seeks to help brands, agencies, publishers and ad tech companies achieve that titular outcome, the digital advertising industry represents up to 4% of global greenhouse gas emissions — double that of the airline industry. 

Ad Net Zero was launched in response to this climate crisis. It sets an ambitious goal for the industry to reach net zero emissions from advertising operations, production, and distribution by 2030. Since then, several other bodies, including the World Federation of Advertisers (WFA) and the IAB, have collaborated on this mission.

Serving as the foundation of the media supply chain, publishers play a pivotal role in media sustainability. The advertising industry’s environmental impacts are substantial, but publishers embracing sustainability are better positioned to withstand the changes coming to the industry.

As major brands set net-zero targets, ripple effects are hitting publishers

Most Fortune 1000 companies have already set net-zero targets for their organizations, which means they will need to measure and reduce emissions across their operations and supply chains (the latter represents the vast majority of emissions for most companies). Since these companies are advertisers, their media supply chains are included. 

Publishers fall into the supply chain and contribute Scope 3 emissions to brands, their agencies and ad platforms. Their carbon footprint data and subsequent reduction will be critical for advertisers and others in the value chain to achieve net zero. Sustainability questions have already appeared in agency RFPs, which indicates that media investment will ultimately be tied to sustainability credentials.

Last year, the Global Alliance for Responsible Media (GARM), part of the WFA, introduced an action guide for advertisers to decarbonize media emissions. The top recommendation was for brands to ensure that their media suppliers are transparent with emissions and “sustainability-assured.” GARM has also merged its working groups with Ad Net Zero to develop cross-channel media emissions measurement standards, which will be introduced by June 2024. A global industry measurement framework for carbon will undoubtedly accelerate a push for emissions transparency across the media supply chain and publishers.

Industry watchers are already seeing momentum with the GARM’s recommended actions. For instance, companies such as Amazon and Microsoft are now mandating that all of their suppliers report emissions data, with reduction targets, back to them.

Publishers are facing scrutiny amid growing demand for emissions transparency

In light of major brands’ net zero targets, the advertising industry has already started self-regulating through several initiatives to promote greater carbon emissions transparency. 

Ad Net Zero kicked this off in 2023 with a mandate for its more than 200 supporting companies to set corporate net-zero targets. This ultimately requires measuring and reducing corporate emissions over time, and the targets will also require these companies’ supply chains, including publishers, to measure and reduce their emissions.

While most publishers will not have a direct relationship with brands or their agencies, they will feel the sustainability push through programmatic demand channels. Supply path optimization (SPO) continues to be a growing theme for programmatic buyers, and publishers’ carbon scores are now being considered as another variable in decision-making.  

However, external parties using third-party or indirect (and unreliable) data sources grade the vast majority of publishers without their knowledge. Publishers with low scores are penalized and will undoubtedly see less revenue over time. On the other hand, some publishers might see revenue uplift from sustainable actions as platforms curate green marketplaces.

Regulatory requirements are putting pressure on publishers to act

The global shift towards sustainability is also evident in the increasing stringency of environmental reporting regulations from various governments. The EU led the way with its Corporate Sustainability Reporting Directive, which requires more than 60,000 companies, including non-EU entities, to report carbon emissions. 

The U.S. also introduced its own carbon reporting requirements through the SEC and in California, which impact publicly listed companies and 5,000 companies doing business in California, respectively. Further regulations have emerged in Australia, Canada, Brazil, and other countries. Publishers, like any other company, must comply with these regulations to avoid legal repercussions and financial penalties.

Similar to the privacy waves from GDPR and CCPA, publishers need to start measuring their carbon impact using standard industry frameworks and then implement actual reduction tactics to prepare for the incoming sustainability tsunami. It’s time for publishers to control their sustainability narratives and provide actionable data to media buyers.

The perfect storm of government, industry and corporate sustainability mandates, combined with global measurement standardization, has arrived. Publishers can ignore these trends at their own peril, but embracing sustainability is a strategic imperative — the financial impact is poised to come sooner rather than later. 

Sponsored by Cedara

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