Sustainability for WPP is about maximising our long-term contribution to society, beyond just the profit we make for our share owners. This supports our relationships with our people, investors and clients, who know they are associated with an organisation actively seeking to improve its impact.
To help us do this we are starting to measure and quantify the contribution our business makes, as well as the negative impacts associated with our activities. This will enable us to assess both the value our business brings and where there are opportunities to enhance our contribution. We hope that over time this analysis can help us to monitor progress and become a useful tool in business decision-making.
For our initial analysis we have selected a limited number of indicators across economic, environmental and social areas to demonstrate the impacts of our activities. This work has been undertaken in partnership with an expert consultancy. We are just at the start of this process and the figures included here are our initial estimates. We hope to expand the indicators we use and to report more fully in future years. The findings show a significant positive economic impact, both directly through our business activities, the salaries and benefits we pay to employees and our tax payments to governments and indirectly through the benefits resulting from our spend with suppliers. We also make a significant social contribution beyond the direct value of the pro bono work and charitable donations we make. Among the measures we have used, our main negative impact relates to the cost to society and future generations of greenhouse gas emissions associated with our business activities.
Our analysis shows a significant positive contribution to the economies in which we operate, through paying salaries to our people, payments to suppliers, taxes to governments and dividends to share owners. Alongside the direct impacts of our activities, there is a significant multiplier effect from the salaries and payments we make which enable our people to buy goods and services and our suppliers to create jobs and spend in the economy, stimulating growth. The communications services we provide for clients create a further indirect economic benefit by helping our clients to increase their revenues, which stimulates growth and helps create jobs, though we have not quantified this.
Direct economic impacts
Gross value added: £10 billion economic impact
The direct contribution our activities make to the worldwide economy is measured as Gross Value Added (GVA). This is calculated as the financial value of the services we sell minus the cost of all inputs directly related to delivery of these services. We estimate that the value of services we produce stands at more than £10 billion. This income is used to cover expenses such as taxes, salaries, depreciation and dividends.
Payroll: £5.9 billion paid to our people
We are a major global employer, offering many thousands of well-remunerated positions. The almost £6 billion we spend on salaries and benefits provides a cash injection into local economies as people typically spend a large portion of their income on goods and services in their local area.
Taxes: £850 million paid to governments
Our companies make a positive contribution to the economies of the 110 countries in which we operate through payments of taxes to national and local governments, including corporation and overseas taxes (£273 million) and social security taxes (£577 million), enabling them to invest in local socioeconomic development. Our total tax contribution was £850 million in 2013.
Indirect economic impacts
Supply chain: £6 billion spend with £3 billion indirect economic benefit
Our companies provide indirect benefits to economies across the world through procurement of advertising production, research operations, facilities, human resources, IT, telecoms, travel and professional services. This spending provides many indirect benefits to the economy by supporting livelihoods and job creation. We have just begun assessing the impact of our spend with these suppliers and our initial estimate suggests that the economic benefit can be valued at in excess of £3 billion each year. These calculations exclude our media spend on behalf of clients.
Our companies support many social and charitable activities by providing direct donations and by undertaking pro bono work, marketing advice and campaigns for little or no fee. By enabling charities to achieve campaign objectives, raise funds and recruit new members, these activities contribute indirectly to improving human health, community cohesion, and protection of human rights and the environment. Our companies also provide internship and apprenticeship opportunities, which equip people with skills and experience that enhance their future life prospects.
Pro bono work: £80 million social benefit
We provide pro bono support in all our major markets and regions on campaigns that align with our values. This ranges from small one-off campaigns to major long-term partnerships. The direct value of our pro bono work was £14.7 million in 2013, based on the fees that organisations would have paid for our work. Our initial estimates suggests that the total impact of pro bono work was around £80 million through the wider social benefits created by these campaigns. These benefits include, for example, the contribution made to improving health and well-being in communities. More work is needed to further refine this initial estimate.
Charitable donations: £30 million social benefit
In 2013, WPP's charitable donations were ??4.9 million. These donations support important work in areas such as education, health, human rights, local community, environment and the arts. We estimate the value of the social benefits resulting from these donations to be around ??30 million per year.
Internships and apprenticeships: £18 million social benefit
Currently we offer around 4,000 internship positions across the Group. Our initial estimate suggests these create benefits worth £18 million annually, for example by enabling young people to get jobs more quickly. Our support for education can be particularly important in helping to build the local skills base in countries like China, where the communications services sector is less well-established.
We are working hard to reduce our environmental footprint. Climate change is the priority environmental issue for the Group and we are currently focusing our efforts on reducing greenhouse gas emissions. Our business continues to grow and this makes it more challenging to reduce our overall footprint. However, implementing our climate strategy has enabled us to reduce our impact per employee and we have an ambitious target to achieve further reductions by 2020.
Greenhouse gas emissions: £5.5 million cost to society
We measure greenhouse gas (GHG) emissions from energy, business air travel, and other estimated impacts such as leased cars, taxis and couriers. Since 2006, our absolute GHG emissions have remained roughly constant, increasing by just 4% to 279,859 tonnes of carbon dioxide equivalents (tCO2e). During the same period revenues increased by 87% and headcount by 50%. Emissions per employee are down 31% since 2006 and stand at 2.35 tCO2e per person.
Currently, businesses such as ours do not bear the environmental costs of mitigating their greenhouse gas emissions. Our initial estimate suggests that this benefit, which is currently provided for free by nature or at the cost of future generations, is worth £5.5 million per year to WPP in 2013. This takes into account the benefits resulting from our green electricity purchasing and investment in renewable energy offsets, see below. Further work is needed to account for the wider impacts of our GHG emissions.
Energy consumption: £3 million in avoided cost
Total energy consumption increased by 24% between 2006 and 2013. However, our energy use per person decreased by 17%, largely due to investments in energy efficiency. As a result the Company avoided over £2.9 million in utility costs and avoided 38,200 tCO2e of emissions.
Business travel: 86 million air miles avoided
Since 2006, our total air miles have increased by almost 30%, but air miles per person decreased by 14% and, as a result of our activities, we have avoided over 86 million air miles. We also invest in renewable energy carbon offsets to mitigate the impact of business air travel. In 2013, we offset 95,879 tCO2e and since 2007 we have offset a total of over 1 million tCO2e, with an overall investment of £5.1 million.
See the methodology used to evaluate these impacts.
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