Havas warns of ‘reputational’ risk from fossil-fuel clients after backlash over Shell win

Havas has warned investors it suffered “reputational harm” by taking on Shell as a client last year and said fears about “negative publicity” in future could “restrict” its ability to take on clients in controversial sectors.

Working with clients in “fossil fuels, defence, tobacco and alcohol” carries risk because Havas “may face pressure to not do business in certain industries or sectors that are viewed as harmful to the environment or are otherwise negatively perceived”, the agency group said.

Havas made the disclosure in its stock market prospectus in which the French agency group listed a number of “risk factors”, including that it “may fall short of stakeholder expectations relating to ethical, environmental, social and governance considerations in ways that materially adversely impact the group’s business”.

Havas said it is "likely to continue to face negative publicity based on the identity of its clients and the public’s (or certain segments of the public’s) view of those clients”.

The agency group also referred directly to the controversy about Havas Media winning Shell’s global media account last year, without naming the client.

The prospectus explained: “Four of the group’s agencies lost their B Corp certification in July 2024 due to other, unrelated agencies within the group providing services to a client in the fossil fuels sector. Although the loss of such accreditation has not to date resulted in any material adverse effect on the group’s financial performance, the group experienced significant negative publicity and corresponding reputational harm.”

That was a reference to the action of some environmental campaigners, including Clean Creatives, who criticised Havas for taking on Shell and complained to B Lab, the operator of the B Corp scheme, which subsequently decided to revoke the certification for four Havas agencies.

A company must demonstrate its postive impact across a range of social and environmental issues in order to win and retain its B Corp status.

Negative publicity could affect ability to attract and retain clients and talent

Looking ahead, Havas may “face pressure to implement corporate social responsibility criteria” that “could consequently restrict the ability of the group’s agencies to work for clients operating in certain industries or sectors that are viewed by the public (or certain segments of the public) as harmful to the environment or are otherwise negatively perceived”, the prospectus outlined as part of the risk warning.

It added: “Such negative publicity and reputational harm may negatively [impact] the group’s ability to attract and retain clients, employees, suppliers and other partners.”

Havas declined to comment further when approached by Campaign, although it suggested these risks are common for companies across the marketing and communications sector.

Havas published the 369-page document as it gears up to list on the Dutch stock market in December as part of a plan by parent company Vivendi to split up its assets. 

Brian Wieser, who is founder of Madison & Wall, a research company, and a former Wall Street analyst and WPP executive, said it was important to look at any reputational risk to Havas in a broader business context.

“In securities filings, companies typically need to provide warnings that relate to risks which aren’t likely to occur alongside those which are likely to occur,” Wieser said. “I think any assessment of this issue is really about whether or not one believes that a B Corp certification matters commercially.”

The prospectus was finalised before Donald Trump won the US presidential election on 5 November. Wieser said Trump’s more favourable attitude to fossil fuels “won’t make much of a difference” in terms of the scrutiny that such brands and their agencies are likely to face.

Yannick Bolloré, the chairman and chief executive of Havas, told Campaign in October 2023 in the immediate aftermath of the Shell win that he was happy to pitch for the account, despite the controversy that can come with working with fossil-fuel clients, because “we believe the most effective change comes from within”.

Havas’ prospectus outlines a number of other risk factors, including that Havas “will be a smaller and less diversified group” than when it was part of Vivendi, and it says it plans to offer key staff up to $40 million in share awards to aid retention, following its Dutch stock market debut.