This year we have updated and extended our analysis, including quantifying for the first time the value gained
from training staff and from the free media space we negotiate on behalf of pro bono clients, and the negative
value associated with our waste disposal and water consumption.
We considered the benefits associated with our economic activities including employee salaries, payments
to suppliers, taxes to governments and dividends to share owners.
As for last year, our analysis shows a significant direct positive contribution to economies as well as 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.
Gross value added: £10.5 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. The value of services we produce stands at £10.5 billion. This income is used to cover operating costs and taxes, and dividends.
Payroll: £6 billion in salaries and employee benefits
We are a major global employer, offering many thousands of well-remunerated positions. The £6 billion we spend on salaries and benefits (excluding social security costs) provides a cash injection into local economies in the 112 countries in which we operate.
Taxes: £1.3 billion paid to governments
Payments of taxes to national and local governments, including corporation and overseas taxes (£301 million), employer and employee taxes (£981 million) and other taxes (primarily property taxes) (£49 million), enables them to invest in local socio-economic development.
Supply chain: £2.3 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.
These calculations exclude our media spend on behalf of clients.
Clients: Not quantified
The communications services we provide create a further indirect benefit by helping our clients to increase their revenues, which stimulates growth and helps create jobs. We are still considering ways of measuring this.
Our companies support social and charitable activities through cash donations and by undertaking pro bono work (marketing advice and campaigns for little or no fee). This has an impact by helping charities to achieve campaign objectives, raise funds and recruit new members, and indirectly contributes to improving human health and community cohesion, and the protection of human rights and the environment. Our companies provide internship and apprenticeship opportunities, which equip people with skills and experience that enhance their future life prospects. In addition, our companies train staff at all levels that not only improves WPP’s performance, but also enhances the human capital (e.g. skills base) within the company.
Pro bono work: £72 million social benefit
The direct value of our pro bono work was £13.5 million in 2015, based on the fees that organizations would have paid for our work. Using the same multiplier as last year, we estimate that this work may create total benefits to society worth around £72 million, for example, by helping to improve health and well-being in communities.
Free media space: £131 million of social benefit facilitated
WPP has also helped negotiate free media space for our pro bono clients worth £24.4 million in 2015. This client cost saving represents a societal benefit. In addition, assuming the same societal value multiplier (as for the pro bono work) for the positive impacts that this helps generate, the free media space gives rise to an overall societal value of £131 million.
Charitable donations: £25 million social benefit
In 2015, the Group’s charitable donations were £5.9 million. These donations support important work in areas such as education, health, human rights, local community, environment and the arts. Using the same approach and multiplier as last year, the overall value of social benefits resulting from these donations is estimated to be around £25 million per year.
Internships and apprenticeships: £5 million social benefit
In 2015, we provided 5,378 paid internship and apprenticeship positions across the Group. Based on assumptions developed last year, we estimate these create benefits worth £5 million annually, because some interns will be offered a position in a WPP company at the end of their internship and others are likely to find jobs elsewhere more quickly.
Training: £34.2 million minimum societal benefit
In 2015, WPP spent £34.2 million on training courses for staff at all levels. As well as supporting improved future financial performance for WPP, there is an additional personal human capital gain for those staff receiving training. The £34.2 million represents a lower-end estimate as it only reflects course costs rather than the value of the training. We hope to include an estimate of this additional added value in subsequent reports. Additional travel, accommodation and subsistence costs of £6.9 million were also incurred.
Climate change is our most significant environmental impact. This year we have also analysed impacts associated with waste disposal and water consumption.
Greenhouse gas emissions: £5.8 million net cost to society
Currently, businesses such as ours do not bear the environmental costs of mitigating their greenhouse gas (GHG) emissions. This service is provided for free by nature or at the cost of future generations. The hidden cost of our emissions was £9.7 million in 2015. This calculation takes into account our GHG emissions from energy, business
air travel, and other estimated impacts such as leased cars, taxis and couriers as well as the benefits resulting from
our green electricity purchasing (zero emissions assumed). With our investments in renewable energy offsets included (see below), our net cost to society is £5.8 million.
GHG emission offsets: £3.9 million benefit to society
In 2015, WPP invested in renewable energy projects to offset 98,885 tCO2e emissions associated with climate change impacts of business air travel. Based on the assumed social cost of carbon, this represents a positive societal impact of £3.6 million. In addition, WPP purchased renewable energy certificates (RECs) in the US, equivalent to saving 7,470 tCO2e, with an assumed societal value of £272,000.
Water impacts: £1.3 million cost to society
As with any other services company, our staff and office operations depend on water, which is increasingly recognized to have an unpaid-for societal cost. Based on actual water consumption data for 11 offices in
water-stressed locations, and an assumed average consumption rate for all other offices, the societal cost
of WPP’s direct water consumption is estimated to be in the order of £1.3 million.
Waste disposal: £0.05 million cost to society
Whilst 65% of WPP’s waste is recycled, the remainder is either sent to landfill or incinerated with or without energy recovery. The societal cost associated with the non-recycled waste is estimated to be around £55,000, which relates to GHG and other air emissions, leachate and other dis-amenity impacts (e.g. visual and odour).