By Bonnie Moss, President and Founder of Moss Networks
I’ve been working with digital ad tech companies for the past 20 years and have witnessed many trends. The latest is a question I’ve been frequently asked: “Should our company embark on a path to Net-Zero?” and my answer is an emphatic yes.
Here’s why: the digital advertising ecosystem has a shockingly high carbon footprint. Online campaigns release tons of carbon dioxide (literally 5.4 of them) – that’s about half of what the average UK citizen will generate in a year. Combined, digital advertising is responsible for about 3.5% of all greenhouse gasses (GHG).
Many CPG brands are keen to lower their carbon footprint. They’re staffed with employees who have had direct experience with record heat waves, wildfires, droughts and flooding, and–like people everywhere–they want to know that our world will be sustainable for future generations.
CPG brands all over the world are responding to the demand for sustainability in meaningful ways. For instance, Unilever, P&G and many other brands joined forces to create Flue2Chem, a venture to capture and convert industrial waste gasses into sustainable materials for consumer products. Mondelēz’s debuted NoCOé, a French carbon-neutral snack brand, which is made using regenerative agriculture practices and has a negative carbon footprint. And General Mills has cut GHG emissions from its owned operations by 49% since 2020, among other innovative and sustainable practices it has implemented across its operations.
These efforts reduce the CPG brand’s Scope 1 and Scope 2 emissions. They still need to eliminate Scope 3, and that’s where greener digital campaigns come into play.
Any talk of carbon reduction invariably focuses on Scopes, of which there are three:
- Scope 1: Emissions that are generated by the company itself. If you’re an ad tech company, these are the emissions you generate by running your tech stack and data center.
- Scope 2: Indirect emissions generated by the utility providers that power your lights, cool your data centers, or keep your offices warm in the winter. In short, your Scope 2 GHG emissions are those that result from your purchases of electricity, steam, heat, and cooling.
- Scope 3: These are all the indirect emissions not covered in Scope 1 and 2. If you’re an SSP, these are the emissions that are generated when you engage a measurement company to rate the viewability of your ads, or to host a real-time auction. Importantly, all of the Scope 1 and Scope 2 emissions created by the digital ad value change become the Scope 3 emissions of the advertiser.
Across the industry, ad tech players are working to achieve Net-Zero. In February of 2023, OpenX announced it had reached net zero greenhouse gas emissions, making it the first digital ad tech platform to do so. The company met the Net-Zero Standard requirements established by the Science Based Targets initiative (SBTi). If you’re a CPG brand, running your digital campaigns through OpenX will lower your Scope 3 emissions.
CPG brands are a critical sector of the digital ad tech economy, accounting for nearly 23% of money spent. Many are hiring Chief Sustainability Officers (CSOs) to shepherd a path towards sustainability and potentially Net-Zero. At some point, those CSOs will look at their brands’ digital ad campaigns – aka their Scope 3 emissions – and ask: Can we do better? Some RFPs ask about GHG emissions. In the future, more are likely to do so.
And that’s the most important thing I want digital ad tech companies to understand. Your clients will need to lower their Scope 3 emissions, and will soon ask you about your sustainability goals. To keep their business, you will need to have an answer. You don’t necessarily need to be at Net-Zero today, but you will need a roadmap to get you there. Fortunately, those roadmaps exist, and they’re market tested. This is why I believe the digital ad tech sector can help lead our economy through the changes it needs to ensure a sustainable world for future generations.
Steps to Going Green
Getting started on a path to Net-Zero can feel like a daunting situation. It’s much more manageable if you break it down into: measure, reduce and remove. Any company can lower its carbon footprint by systematically following these steps.
The first step is measuring your Scope 1, 2 and 3 emissions. There are numerous frameworks that have been designed specifically for the digital advertising industry, including the advertising associations.
Why is this important? First, you need a solid understanding of how your tech stack and office facilities generate GHG so that you can set goals for reduction. And, you’ll need a yardstick for measuring the success of your reduction efforts. Lastly, you’ll help the U.S. meet its commitments under the UN Framework Convention on Climate Change, which requires all companies to inventory their GHG emissions. The EPA laid out a framework for companies to follow in its Greenhouse Gas Inventory Report. The day is coming when CSOs will look for those reports as they evaluate potential partners.
The next step – reduction – can be achieved in many ways, such as optimizing your ad tech stack in order to use less servers, or migrating operations to the cloud. Removal is supporting or working with organizations that are developing technology to remove carbon from the atmosphere, such as the Carbon Removal Alliance, or carbon offset partners.
Finally, it’s critical to report your carbon reduction activities. There are a few registrations, such as the Carbon Footprint Registry, which CSOs reference as they build lists of preferred partners. It’s also a good business move, especially as CPG brands focus more on their Scope 3 emissions reduction. The ability to say your company has achieved – or has embarked on a path – to Net Zero will make it easier for advertisers to say yes to your solutions.
About the Author
Bonnie Moss is the President and Founder of Moss Networks Inc., a global PR and digital marketing agency for B2B tech companies.