Why sustainability matters
WPP’s goal is to be the world’s most successful provider of communications services, not just the largest: a Group that the best clients and the best people choose to work with.
To achieve this we need to focus not just on what we do but how we do it. That means behaving responsibly towards people and the environment, and anticipating the changing expectations of the Group’s clients, share owners, our people and other stakeholders.
Strong performance on sustainability issues enables us to take advantage of new opportunities as well as to manage social and environmental risks connected to our business strategy. To reflect this, we are now using the term sustainability rather than corporate responsibility to describe our approach.
Our commitment to responsible and sustainable business supports our business strategy (see Our strategic priorities) in the following ways:
- Client relationships and revenue support. Sustainability issues are increasingly influencing our clients’ business strategies and the way they design and market their products and services. Our ability to anticipate these changes and understand their implications is fundamental to long-term success. Our companies have developed skills and services to meet the needs of clients aiming to establish credentials for environmental, social and ethical excellence. WPP’s status as the first mover in corporate sustainability in our sector is helping our companies compete in this market with confidence and credibility. In addition to sustainability-related marketing briefs, a growing number of clients are requesting information on our own sustainability policies and performance through their tender and supplier management processes. Clients who engaged with WPP on our approach to sustainability were worth at least $1 billion to the Group in 2011, and we believe the total figure is likely to be higher.
- Attracting and retaining the best people. There is fierce competition for talent in our industry. Adopting leading employment practices helps us to attract and retain the best people. Creating a diverse company culture widens our potential talent pool, and enables people from all backgrounds to thrive within the Group. A diverse workforce also enhances our understanding of consumers in all markets.
Our investment in high-quality bespoke training helps us to develop the skills needed to grow our business in key areas such as digital marketing and managing cross-company client teams. The younger generations replenishing our talent pool view sustainability issues as central to business. Questions relating to sustainability are frequently raised – demonstrating that our commitment to social and environmental issues supports recruitment and retention.
The Group’s collective pro bono work and support for charities and community organisations reinforces our reputation for making a positive contribution to society.
- Reputation risk management. Effectively managing social, ethical and environmental risks helps to minimise the possibility of damage to our reputation. There is a potential risk that we undertake work or accept clients that could harm our reputation. We evaluate higher risk propositions with care and WPP companies undertake work in compliance with regulations and marketing standards. New commissions and work in regions with low marketing standards are given particular scrutiny. Similarly, risks associated with business acquisitions and affiliations are assessed as part of our due diligence procedure.
- Access to digital marketing business. The rapid growth of digital marketing and the convergence and connectivity of consumer electronic devices mean that the Group handles and holds increasing amounts of consumer data on behalf of our clients. Our clients require assurance that we meet best practice standards for privacy and data protection which are central to maintaining our reputation in this important sector. The Group and its companies are putting policies and procedures in place to ensure we meet best practice in this area.
- Meeting investor expectations. WPP share owners continue to show interest in how we manage sustainability risks and opportunities and we aim to respond constructively to their requests for information, (see Stakeholder engagement). Europe has the largest market for responsible investment, with approximately €5 trillion assets under management. The US has $3 trillion, and Asia is predicted to have $4 trillion by 2015.
- Improving efficiency. Our climate change strategy is tangible evidence of our environmental commitment and supports our good reputation. The strategy also reduces costs associated with business travel and energy use in offices. In 2011, energy use across the Group decreased by 1.5% which represents an approximate cost saving of $500,000. Investing in initiatives to improve the health and wellbeing of our people can also help to improve productivity and reduce costs related to time off work due to illness.
Corporate sustainability supports the Group strategic priorities, which are:
Our strategic priorities
1 Our immediate goal is to deliver annual earnings per share growth through organic revenue growth, margin improvement and use of our cash flow.
2 Our medium term goal is to build upon the successful base we have established whilst integrating our most recent acquisitions effectively.
3In the long term, or over the next five to 10 years, our goal is to:
- Increase the combined geographic share of revenues from the faster-growing markets of Asia Pacific, Latin America, Africa and the Middle East, and Central and Eastern Europe, from over 29% to 35-40%.
- Increase the share of revenues of new media from 30% to 35-40%.
- Increase the share of more measurable marketing services – such as Consumer Insight and direct, digital and interactive – to be more than 50% of revenues.