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Many people will view 2009 as a set-back for global efforts to tackle climate change. As the Copenhagen summit ended without agreement, leading climate scientists became embroiled in controversy and hope of organised action to protect us from the threat of climate change receded.

Yet I remain optimistic that these events do not mark an end to progress but rather a shift in leadership from government towards business. While the politicians are deadlocked, leading companies have begun to reshape themselves, the early movers in an industrial revolution that will be every bit as important as the one that began in England in the 19th century. Take a look at IBM’s ‘Smarter Planet’ website, created with the help of Ogilvy & Mather. It is clear that IBM, under its chairman and CEO Sam Palmisano, is fundamentally rethinking its business – what it does and how it does it. At the centre of the new strategy is an awareness that societies across the globe need to use resources more efficiently to achieve sustainable levels of consumption of the earth’s resources and that IBM will help to facilitate this transition.

IBM is not alone. Procter & Gamble is planning for a future in which consumer products have greatly reduced environmental impact. Each of the company’s range of Sustainable Innovation Products has an environmental footprint at least 10% lower than the previous or alternative products. P&G has a goal to sell $50-billion worth of these products by 2012. WPP is proud to assist in the research and marketing of these products through our multi-disciplinary ‘S-Team’ led by Hill & Knowlton.

Unilever is also integrating environmental goals across its brands. Its ambitious targets include a commitment to source 100% of its palm oil from sustainable sources and to buy all the tea for its Lipton and PG Tips brands from Rainforest Alliance Certified™ farms by 2015.

In UK retail, M&S’s Plan A has been so successful that the company has extended it to 180 commitments which M&S intends to achieve by 2015. RKCR/Y&R has worked on the marketing and communications of Plan A since the launch in 2007.

These are just some of the most prominent examples from the Group’s client list but the shift in the way leading business people view their relationship with the environment and society is already well-established and gathering momentum. Leadership on climate change may never come from politicians, but it is already evident in the business community. Of course there are many challenges we have yet to face, but essentially I believe that the consumer needs to be enticed by sustainability, not just pushed by regulations.

Another interesting dimension is the mindset of consumers globally. The desire for more sustainable lifestyles is not confined to Europe and North America. The latest Green Brands survey developed jointly by three WPP companies shows that consumers in Brazil, China, and India are even more inclined to seek out green products and to favour green companies, than their counterparts in France, Germany, the US and the UK. The results are encouraging from a political perspective, since much of the global climate change discussion is focused on what these new economic powerhouses are willing to do to control their emissions. It also offers hope that the economic growth in BRIC countries could potentially be achieved by a much more sustainable kind of consumption. In all regions, awareness of climate change is strong and concerned citizens are looking to business as the only sector willing and able to take the lead.

This presents huge opportunities for brands to distinguish themselves and risks to those that do not take heed of weaknesses in their products or supply chains. In the years ahead I expect to see intensifying competition for green credentials and increased efforts by brand owners to understand and reduce the life-cycle impacts of their products. Investment in eco-innovation and marketing will continue to grow.

Some of our companies are already at the forefront of these trends, helping their clients to understand the green agenda and communicate their efforts. I am keen to see a greater focus on sustainability in WPP businesses and a deepening of our understanding of the issues and how to present them in marketing without tokenism or ‘greenwash’. We have profiled some of our recent work throughout this report.

At the same time, we’re getting our own house in order, transforming WPP into a low-carbon communications services group. We agreed a new climate strategy this year with a target to reduce our emissions by 40% by 2020. As this report shows, we have already cut our emissions by 10% since 2006 and I expect our investment in energy-efficient offices, smart metering, videoconferencing and sustainable IT projects to continue to cut our footprint.

Our corporate responsibility policy embraces a wide range of subjects, not least how our companies behave as employers and the contribution we make to society through pro bono work. We are a truly global business and our clients are best served by a diverse workforce that understands the rich variety of cultures in the countries in which we have a presence. There are 43 nationalities represented among WPP Leaders and Partners, who form the senior echelon of our business. These leaders support a diverse and inclusive workplace and reflect this in recruitment and employment practices.

I welcome your thoughts and comments on this report and look forward to updating you on further progress in 2010.

Sir Martin Sorrell
Group chief executive
msorrell@wpp.com

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