What you need to know: 

• B Lab has stripped four Havas agencies of their B Corp status after a six-month long investigation into the group's relationship with Shell. 
• It sets a new precedent for B Corp holders and hopefuls, with similar investigations into MSQ and Tam-Tam\TBWA ongoing, and the bar will only get higher once B Lab new environmental impact standards set it. 
• Climate advocates have welcomed the decision, suggesting it will lead agencies taking money from the fossil fuels industry to reconsider. Clean Creatives executive director, Duncan Meisel, says those who don't take heed will eventually pay the price with their reputation. 
• It comes as adland ramps up global sustainability efforts with the launch of GARM framework, but client rosters haven't yet drawn the same level of scrutiny - that would have the major agency networks, and many indies, with questions to answer.
• But there's a growing movement of agencies looking to distance themselves from the fossil fuels industry, and the founder of B Corp-certified Paper Moose, Nick Hunter, reckons independents are well-placed to take a stand as holdco's "reliance on unethical industries becomes an albatross around their neck". 

The first major holdco to achieve the honour, Havas is B Corp-certified no more.

The network made headlines globally last week after B Lab, the not for profit that oversees the B Corp program, designated that four Havas agencies will be stripped of their status over group ties to oil and gas giant, Shell.

B Corp certification demonstrates that a company meets demonstrably high social and environmental impact standards – and B Lab manages compliance and certification. It's a tough, rigorous standard to maintain, and usually takes at least a year's worth of work, often more. Even then, companies often fail in initial certification attempts. But agencies that secure B Corp status can demonstrate to brand clients that they meet high ESG standards – increasingly important for brands conscious of the broader impact of their supply chains.

“Havas’ actions constitute a breach of the B Corp community’s core values as expressed in our Declaration of Interdependence,” the organisation confirmed in a statement. “Their agencies Havas London, Havas Lemz, Havas New York, and Havas Immerse are no longer Certified B Corps.”

For Havas London, an earlier agency backer of the B Corp movement, it marks the end of six years of certification. Along with its stablemates, the agency has paid the price for the group’s relationship with Shell via Havas Media, which won the company’s global media account in September. The appointment spurred a wave of backlash from climate activists who demanded that B Lab revoke the certification of all Havas agencies – a sixth-month long investigation process ensued.

The outcome serves as warning for the ad industry which must increasingly weigh up whether the business is worth the negative press and further reputational fallout. It comes as ad industry bodies attempt to create standardised pathways to sustainable ad supply chains. Last month the World Economic Forum-backed Global Alliance for Responsible Media (GARM) published its first Global Media Sustainability Framework in partnership with Ad Net Zero – with both initiatives on their way to the Australian market later this year.

Locally the ad industry is attempting to navigate a regulatory crack down on greenwashing, and starting next year businesses operating in Australia will have to report under ASIC’s new climate-related disclosure requirements. Meanwhile, the pitch for Shell’s creative account has been underway for some months in this market, with industry climate advocacy group Comms Declare issuing a stern warning to agencies that look to contest it – though the details on those in the running, perhaps understandably, are sparse.

While Havas has been made the example, B Lab’s ruling does raise a question of where the line will be drawn when it comes to agencies and fossil fuels – its own guidance currently does not preclude working with fossil fuel clients per se, though does state that such firms must not be "engaged in specific prohibited practices regarding extraction, lobbying, and financial incentives; have successfully transitioned their energy portfolio to be at least 50 per cent carbon free; and have committed to make progress towards transitioning to a fully carbon-free portfolio within specified timeframes". 

Precedent set

When Havas Media took out Shell’s global media account last year industry activist group Clean Creatives  complained to B Lab, with the support of a collective of 27 B Corp-certified agencies. The group also called out UK network MSQ and Omnicom’s Tam-Tam\TBWA for their respective relationships with Shell and Petro-Canada – those investigations are still ongoing, per B Lab.

While the group’s four B Corp-certified agencies did not have direct relationships with Shell, it was a case of guilty by association. B Lab said, “Havas’ structure and use of a common brand name across some of its agencies means that the entire group is ultimately required to earn certification”.

Havas, for its part, was credited with cooperating throughout the investigation, but ultimately resolved not to adopt the “remediation actions” that would have been required to hold onto its B Corp status. Prior to the investigation, the group maintained – as most big agencies do – that their relationship with Shell was a means of positive influence on the company. 

"As long as we are working on making things better, B Corp agrees that we can partner with those types of industries," Havas global chief Yannick Bollore told Campaign in October. 

Now B Corp does not agree, Havas has accepted the consequences of its decision but insisted that the outcome was not reflective of its commitment to sustainability. “We are proud to support our clients in their transformation for the future and remain focused on progressing towards the highest levels of social and environmental performance, with more to come in the coming months and years,” per a statement.

The ruling has been hailed as a major win for climate activists and could be the first of many if Clean Creatives has its way. The organisation last week submitted a new complaint relating to the B Corp status of another five companies that have recently worked with fossil fuels clients – Cullen Communications, Edit, SEC Newgate, Tinkle Communications (a Havas subsidiary), and Total Media.

“Creative agencies should not be working for the companies destroying the planet. I want to thank B Labs for doing the right thing and revoking certification for agencies that promote fossil fuel polluters,” said the group’s executive director, Duncan Meisel.

The investigation, per B Lab, was based on the organisation’s current standards and complaints process. B Lab has confirmed it is “evolving” its environmental impacts standards to require companies to assess the impact of each client or project and take action to mitigate negative impacts, meaning the bar could soon become higher for agencies hoping to keep up their status.

Fuelling adland

Importantly, Havas is not the only major holdco that counts fossil fuels on its client roster. Omnicom, IPG, Dentsu, Publicis Groupe and WPP all have ties to oil and gas, whether at the market or global level. Clean Creatives and Comms Declare collaborate to put together an annual roundup of agencies with fossil fuel clients called the F-List, with the 2024 report due in the coming months.

At last count, the lay of the land in this market has IPG working for Jemena and Energy Australia via Initiative, and AGL via UM; WPP connected to BP via Ogilvy and Mindshare, with VML handling Chevron. Publicis’ Saatchi & Saatchi works for Ampol; Dentsu’s Carat for Alinta Energy; and Omnicom has media for BHP and Chevron via OMD. That’s not an exhaustive list.

The broader agency sector is no less entrenched, with indie shops picking up remits with the likes of BHP (Atomic 212, Big Red), Origin Energy (M&C Saatchi), Energy Australia (Cummins&Partners), Engie (The Media Store, Hero), AGL (Big Red), Glencore (Bastion Creative) and the Minerals Council of Australia (Nunn Media).

Simply put, fossil fuels companies need agencies to sell their stories, and agencies need fossil fuels to pay their bills. So, can we really expect things to change? Clean Creative’s Meisel thinks so.

He told Mi3 that while agencies with ongoing relationships with fossil fuels companies are “naturally going to fight” against the changing tide, they’ll only assume more risk “from reputational backlash to actual legal jeopardy”.

“Fossil fuel companies are a huge liability, and smart agencies will eventually all exit work with polluters. Inevitably some agencies will take the money – but as with other reputationally toxic industries, these agencies will be smaller, less influential, and less effective than their fossil-free peers.”

Likewise, Comms Declare founder, Belinda Noble, says the economics of taking on a fossil fuels client no longer stack up.

“Taking Shell’s money has been a disaster for Havas, costing it clients, staff and its hard-won reputation,’ she tells Mi3. “It demonstrates that prioritising short-term profits from fossil fuel clients destroys long term value for agencies.”

Clean skins 

As the ad industry grapples with its relationship with fossil fuels, some have already cut ties.

Local signatories to the Clean Creative pledge – through which agencies can formally abstain from fossil fuels clientele – include Adhesive, History Will Be Kind, Icon Agency, Manifest, Paper Moose, Think HQ, We Are Different. Notably all are indies and sit on the comms/creative side of the agency spectrum.

Paper Moose has also held B Corp status since 2022. It comes down to “how you want to make money and be remembered”, per founder and CEO Nick Hunter. “Companies need to be clear about what type of businesses they will and won't work with and commit to that.”

In the case of Paper Moose, that looks like an ethical charter that outlines a list of industries the agency won’t work with – that includes fossil fuels, as well as arms manufacturing, gambling and tobacco. Hunter says that the agency's B Corp status is not a ploy for differentiation, but rather, accountability. But it naturally lands well with other B Corp-certified or purpose-minded organisations – and corporates are taking notice. Already, two of Paper Moose's ASX-listed clients have procurement policies requiring them to invest at least 25 per cent of their budgets with B Corp rated firms. 

As for Havas, Hunter channels legendary adman Bill Bernbach (the B in DDB): “A principle is not a principle until it costs you money”.

“We don't have time to make concessions and compromise, because when it comes to climate change, we are hurtling towards 2 degrees and have no hope of reining that in if we continue to help prop up fossil fuels," urges Hunter.

But he admits that it’s not as simple for holdcos to achieve and maintain B Corp Status, claiming that their models make them “solely driven by profit”.

Independents have greater autonomy. With no onus to “shift 10 to 15 per cent of their margin overseas to the mothership”, they can weigh up profits, people and planet.

He thinks exercising that choice will ultimately drive growth, and lifts Coleridge's cautionary tale of supporting the wrong decisions to serve as a warning.

“I think you will see independent agencies with a moral compass continue to steal market share from the holdcos while their reliance on unethical industries becomes an albatross around their neck.”