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Climate change turns up the heat on ad industry

[December 17, 2020] By Andrew R.C. Marshall, Valerie Volcovici and Sheila Dang

(Reuters) - The avuncular man in the TV ad has an urgent-sounding message from his employer, the oil giant Chevron Corp.

"I think renewable energy is vital to our planet," says the man, identified only as an environmental expert called Steve. "At Chevron we're investing millions in solar and biofuels technology to make it work." He adds that the energy can be made widely available and the work needs to begin “right now.”

What Steve doesn't mention, according to three U.S. lawsuits alleging deceptive advertising, is that Chevron is overwhelmingly focused on fossil fuel extraction and its investment in renewables remains miniscule compared to the billions it spends each year on drilling for oil and gas.

Critics have long attacked the oil industry for ad campaigns that they call "greenwashing" - telling people that policies or products are more environmentally friendly than they really are. But the ad agencies behind the campaigns have largely escaped scrutiny.

That's changing, as the issue of climate change shoots up the global agenda. Climate activists and some ad industry figures are calling on agencies to declare or dump their Big Oil clients.

Recent lawsuits by four U.S. states, the District of Columbia and a city allege “greenwashing" by oil companies, accusing them of making "misleading and deceptive" claims. The suits don’t name the ad agencies as defendants, but do single out at least 15 campaigns. As a result, the companies could face embarrassment or become embroiled in the litigation.

Sean Corey, a Chevron spokesman, said such lawsuits are "meritless" and "serve only to divert attention and resources away from the collaborative, international efforts that are critical to developing a meaningful solution to climate change."

Pressure has been building against oil and gas companies in recent years to address dangerously rising global temperatures. The companies, which rank among the world's worst polluters, have been targeted by protests outside their offices and seen sponsorship deals with museums, art galleries and others canceled in the United States and Europe.

A prominent climate protest group, Extinction Rebellion, last year unfurled a banner reading "TELL THE TRUTH" outside the advertising industry's top awards ceremony in Cannes, France. Activists in the Netherlands and other European countries are campaigning for a tobacco-style ban on fossil fuel advertising.

All these pressures will likely intensify after the January inauguration of U.S. President-elect Joe Biden, who has vowed to get tough on climate change.

Most major advertising companies with fossil fuel clients, and the U.S. ad industry's leading trade group, declined to comment for this story or did not respond to requests for comment. However, in a statement, WPP Plc, the world's largest advertising and public relations holding company, defended its practices.

"WPP recognises the importance of its role in addressing climate change by applying rigorous standards to the content we produce and helping clients to accelerate the world's transition to a lower-carbon economy," the agency said. A spokeswoman also said the company "will not undertake work which is intended or designed to mislead."

WPP did not handle the ad featuring Steve, formally known as "We Agree." That ad is part of a global campaign created in 2010 by New York-based agency Dentsu McGarryBowen LLC. Jennifer Ferguson, a spokeswoman for McGarryBowen's holding company, Dentsu Group Inc, declined to comment.

'A SEA CHANGE'

Delaware, along with Connecticut, Massachusetts, Minnesota, the District of Columbia and the city of Hoboken, New Jersey, are suing key players in the oil industry for violating consumer protection laws with the help of "greenwashing" ad campaigns.

The new scrutiny of advertising campaigns raises the prospect that ad agencies could see their names dragged into litigation along with their oil company clients, said Karen Sokol, an environmental law professor at Loyola University New Orleans.

Sokol said that similar lawsuits against the tobacco industry brought to light information on the role of advertisers and PR companies in deceiving the public about the dangers of smoking.

In 1997, R.J. Reynolds tobacco company agreed to pay $10 million to settle a lawsuit over a campaign for its Camel brand, which was accused of targeting children. The "Joe Camel" campaign was executed by large advertising firms that also were sued.

Ultimately, Sokol said, details about advertising and marketing practices that emerged during litigation against the tobacco industry contributed to the companies' decision in the late 1990s to pay billions of dollars annually in a massive settlement with the vast majority of U.S. states and territories.

"There was a sea change in how we viewed tobacco products after we learned about that industry's disinformation," she said. "We're on the cusp of that with climate."

Others predict that Big Oil’s message makers will likely avoid costly courtroom verdicts. Douglas Kysar, a professor at Yale Law School who specializes in climate change, among other things, said it was unlikely that ad firms would be held liable for misleading communications by fossil fuel companies. That’s because the primary duty of those firms is to their clients, the companies, and not to the public, he said.

However, he added, given the "existential stakes" of climate change, advertisers likely won't escape being sued in the first place. "I fully expect that advertising/PR firms, bankers, insurers, accountants, lawyers, and other professionals that support fossil fuel companies, will increasingly find themselves targeted by lawsuits and pressure campaigns."

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Solitaire Townsend, co-founder of Futerra advertising firm, poses for a portrait in London, Britain December 11, 2020. Picture taken December 11. REUTERS/Toby Melville

'CREATIVITY HAS CONSEQUENCES'

The picture is different in Europe, where regulators have taken action against a number of ad campaigns by oil companies.

In 2019, for instance, the UK advertising watchdog upheld a complaint against an ad by Norwegian energy giant Equinor ASA that suggested gas was a "low carbon" energy source. In January, Italy's competition authority slapped state-backed energy giant Eni SpA with a €5 million ($6.10 million) fine for ads claiming that its diesel was "green" and helped the environment.

In the United States, ad agencies face a more immediate worry.

Several current and former ad executives and industry experts say advertisers for fossil fuel companies face a big challenge in appealing to young people, who polls show are far more concerned about global warming than their elders. In addition, some say, agencies with oil industry clients face a struggle to recruit talented young people with climate concerns.

Ad agency staff "are forced to treat all clients as equal," said Solitaire Townsend, co-founder of Futerra, a mid-sized advertising firm based in London. "But for the best young talent that simply isn't good enough anymore. They know that creativity has consequences, so our industry cannot be neutral."

Futerra has set up an initiative in which agencies voluntarily declare what proportion of their revenue comes from so-called "high-carbon" clients, including not just Big Oil but also the aviation, automobile, concrete and plastics industries.

Futerra disclosed in 2019 that 1% of its revenue was generated by clients involved in plastics or aviation, but otherwise had no high-carbon clients.

Her firm and 244 small to mid-size agencies have signed on to the initiative, she said.

The American Petroleum Institute, the oil industry trade group, criticized the spate of recent efforts to get advertising firms to ditch the oil and gas industry, saying that they were "divisive" and "unfounded."

"We are focused on being part of the solution, and we welcome debate on the best ways to innovate for a cleaner, reliable and affordable energy future," said API spokeswoman Bethany Aronhalt.

Together with their subsidiaries, the Big Four advertising companies - WPP, Omnicom Group, Publicis Groupe and Interpublic Group of Companies (IPG) - handle the accounts of many major oil companies. The accounts provide much-needed income for an ad industry financially devastated by the coronavirus pandemic.

WPP and IPG told Reuters they would not disclose their client lists. Omnicom and Publicis didn't respond to a request for comment.

'THE CLARION CALL'

Despite financial strains exacerbated by the pandemic, the oil industry's spending on advertising and PR will continue, or perhaps rise, as it fights tougher climate-related regulations and shrinking social acceptance in many countries, ad industry experts told Reuters.

"Over the past thirty years, the major oil companies have ramped up their PR activities whenever it appears that the government is considering regulation of their activities," said Bob Brulle, Visiting Professor of Environment and Society at Brown University in Rhode Island. "It is quite predictable that this will occur as the Biden administration starts acting to control carbon emissions."

The suits by Delaware and Hoboken cite four WPP campaigns for fossil fuel companies as "misleading" or "greenwashing."

WPP, which is not named as a defendant, declined to comment on the lawsuits.

WPP's website publishes an emphatic statement in favor of addressing climate change by its subsidiary, Ogilvy Consulting. "As industry leaders, we must be the clarion call,” said the article. "We must act now."

Those actions included helping its clients from the energy sector "accelerate the world's transition to a lower-carbon economy," WPP told Reuters.

Christine Arena, CEO of Generous, an ad agency in San Francisco, said big agencies were positioning themselves as saviors of the climate while representing companies accused of wrecking it. In 2015, Arena was one of four executives who left a large U.S. public relations firm to protest its representation of oil companies.

"We're at the point where you can no longer play both sides credibly or with impunity," she said.

($1 = 0.8193 euros)

(Andrew R.C. Marshall reported from London; Valerie Volcovici from Washington, D.C.; Sheila Dang from Dallas, Texas. Editing by Julie Marquis)

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