Clean Creatives highlights fossil fuel risks in Omnicom-IPG merger

Campaign group Clean Creatives has sent an open letter to shareholders of Interpublic Group and Omnicom, warning of “significant business and reputational risks” tied to the agency groups' ongoing work with fossil fuel clients. 

The letter comes ahead of the final shareholder vote on March 18, which will determine whether Omnicom’s proposed acquisition of IPG moves forward.

If approved, the deal will create the world’s largest advertising agency group, with over 100,000 employees and combined revenues of $25.6 billion in 2023. Omnicom and IPG’s respective boards have unanimously approved the all-stock transaction, stating that the merger will create the “premier marketing and sales company” in the world.

However, Clean Creatives warns that consolidating fossil fuel clients under one umbrella could create long-term risks for investors.

In its letter, the campaign group highlights the new company’s extensive ties to fossil fuel firms, stating, “Combined, Omnicom and IPG will hold at least 124 contracts with fossil fuel companies, defined as those generating over 50% revenue from fossil fuels. Key clients include ExxonMobil (nine contracts), Shell and TotalEnergies (four each), and Chevron, Repsol, Saudi Aramco, and Suncor (three each). The financial and reputational risks associated with these clients are substantial and merit closer scrutiny.”

The letter also points to industry precedents, citing WPP, Havas, and Dentsu, which have each acknowledged the risks of working with fossil fuel clients. WPP listed these clients as its top reputational risk in 2023, while Havas disclosed that its relationship with Shell put its ESG certifications in jeopardy.

Beyond reputational concerns, Clean Creatives warns that Omnicom and IPG face growing legal risks related to fossil fuel marketing. The letter references lawsuits against ExxonMobil, adding, “The Massachusetts attorney general’s lawsuit against ExxonMobil cites creative and media work produced by Omnicom and IPG subsidiaries.”

It also highlights the broader trend of legal action against fossil fuel advertising, claiming that over 80 lawsuits have been filed globally. 

Financial risks are also a concern for the campaign group. Clean Creatives argues that declining investment in fossil fuels could shrink marketing budgets.

The letter reads, “The fossil fuel sector is entering structural decline as global energy markets transition… As these trends accelerate, the financial stability of fossil fuel clients will decline, forcing them to reassess marketing budgets.”

Omnicom’s acquisition of IPG was announced last December, with the deal expected to create a company valued at over $30 billion. Omnicom was valued at $20 billion before the announcement, while IPG was valued at approximately $11 billion. The exact premium Omnicom is paying remains unclear, but it is thought to be around 21.6%, bringing IPG’s estimated valuation to over $13 billion.

The merger is expected to generate $750 million in “annual cost synergies”, but it remains unclear where job cuts will fall.