This section explains the principles, methods and data used in quantifying the economic, social and environmental impacts associated with our operations; see the findings. This analysis was carried out with the Anthesis Consulting Group, and is based on established social and environmental accounting techniques.
This is our second attempt to assess and quantify our impacts and the findings should be viewed in light of the following considerations:
- Impacts: We have captured only a limited selection of the important sustainability impacts associated with our business and there is an opportunity to expand this further to enable more comprehensive reporting.
- Methods: To calculate our impacts we have used, wherever possible, recognised methodologies, models and academic research.
- Data: We have used proxy data, from secondary sources and extrapolations, to address any data gaps. This means that findings in some areas are based on estimated figures.
Below we explain in more detail our approach to calculating each measure.
In the economic impact category we have reported Corporate Gross Value Added, supply chain impacts, tax contribution and contribution to our employees.
Corporate Gross Value Added
Corporate Gross Value Added (GVA) represents gross profit as disclosed in the Group’s audited financial statements for 2014. The direct GVA was calculated using primary data and no assumptions were made.
In 2014, we spent an estimated £6 billion with our suppliers. This figure was derived from data from our spend analytics system which tracks direct costs (advertising production and research operations) and indirect costs (facilities, IT, telecoms, travel and professional services). Our media spend on behalf of clients is excluded from these figures.
The impact of our supply chain, our indirect economic impact, was calculated as the total value of expenditure with suppliers broken down by sector and type of spend. The spend for each sector was converted into GVA using gross value added data from relevant sectors obtained from national statistics such as the UK’s Office of National Statistics Annual Business Survey (ABS).
There are two limitations associated with this approach. Firstly, data on supplier spend was incomplete for some WPP markets. Data was extrapolated to address these gaps. In addition, GVA sector estimates are not available for all countries and in these cases we have based calculations on UK data. To reflect the impacts arising in different countries we have also used purchasing-power parity indices from IMF datasets. We are reviewing this approach to understand how we might improve the accuracy of our reporting in future, particularly outside the UK.
Contribution through taxes
Our contribution through taxes is calculated as corporation and overseas tax paid plus social security costs as disclosed in the Group’s audited financial statements for 2014.
Payroll figures include the amount spent on employee remuneration and benefits, calculated as staff costs less social security costs, as disclosed in the Group’s audited financial statements for 2013.
Our social impact category covers the impact of charitable donations, pro bono work and the value of internships and apprenticeships.
To understand the wider benefits of charitable donations we have used secondary data from independent research reports that have assessed the social return on investment (SROI) of similar projects. These provide an estimate of how much benefit is delivered for each £ of investment. For example, one study suggests that each £ invested in educational projects generates £7 of wider social benefit. We reviewed SROI case studies for all the charitable donation categories relevant to WPP. The SROI values, by category, were multiplied by donated amounts to determine the social value delivered.
We recognise that individual projects can deliver very different returns. However, in the absence of project-by-project reporting, this method provides a useful order-of-magnitude indication of SROI.
Pro bono work
The benefits of pro bono work (primarily undertaken for the benefit of charities) are difficult to quantify. Outcomes are often not measured and, if they are measured by the charity, results are not often shared with WPP. For the purposes of this assessment, we have assumed that pro bono work has an impact similar to that of charitable donations and the same assessment approach was used.
We believe this to be a conservative assumption, since pro bono work (costed on a time-sheet basis) is often worth more than the equivalent cash donation as WPP expertise is leveraged to create additional value above and beyond the time spent.
Internships and apprenticeships
The value of internships and apprenticeships is hard to estimate as there is no established method for valuing these work placements. To calculate the benefits of internship schemes we assumed that a certain proportion of interns find jobs at WPP or other companies and are therefore able to earn a monthly salary faster than they would have done without the internship. We multiplied the number of interns worldwide with the proportion of interns that are likely to find a position at the end of their internship/apprenticeship placement and with the average additional income that the person would have earned as a result of the work placement. Further work is needed to calculate these benefits more accurately and to capture regional variation.
We looked at environmental impacts related to greenhouse gas (GHG) emissions, primarily carbon dioxide, the main contributors to man-made climate change, as well as a energy use and business air travel.
Each tonne of greenhouse gas (GHG) released into the atmosphere damages society, the environment and the economy by impacting on, for example, climate, health, and the built environment. The economic costs of this damage is called the social cost of carbon (SCC). Many studies have identified a range of estimates for the social cost of carbon. The estimates span from 0 to over £400/tCO2e as they take into account uncertainties in climate and climate change impacts. In the report we have used a base value of £29.2 per tonne of CO2e and adjusted for inflation. The base value was published by Defra and derived from the Stern Review on the Economics of Climate Change. We have used a net emissions figure, which means our calculations take account of the positive impact of carbon offsets and green electricity purchased. We have been recording our emissions in line with international standards since 2006 and as part of our reporting process we capture scope 1, scope 2 and a number of scope 3 emissions.
We have been measuring our energy consumption since 2006 and this data was used to estimate potential savings.
Business Air Travel
The business travel data was taken from our corporate GHG results.