ESG Investing

Changes in the Music Industry Aim to Improve ESG Reporting and Spur Action

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The music industry struggles with sustainability. Greenhouse gasses from recorded music in 2016 were estimated at somewhere between 200 and 350 million kg, marking a massive increase from the 140 million kg in 1977. Prior to the pandemic, top DJs might fly between three or four gigs over a weekend, while leading stars traveled with huge entourages. Music festivals remain particularly notorious for their use of plastic.

Fortunately, changes in the music industry are beginning to show progress—starting with ESG reporting.

Tracing ESG in the Music Industry

As in so many other industries, music has begun to take ESG reporting more seriously. In February 2022, Warner Music Group (WMG) announced what it describes as “the first standalone report by a major music company,” aimed at providing a baseline for measuring progress in climate change.

“The increased focus on global social and environmental challenges has prompted all stakeholders—from our people to investors—to expect businesses to more proactively address ESG risks and opportunities,” said Samantha Sims, who joined WMG as its first head of ESG in August 2021. According to the company, it has avoided using 46 tons of virgin plastic by producing 100% recycled vinyl records for artists such as Coldplay, Ed Sheeran, and Gorillaz.

Launched in July 2019, Music Declares Emergency is also looking to drive change in the music industry. “We believe in the power of music to promote the necessary cultural changes to create a greener, fairer, better future,” says the group, which is supported by more than 3,000 artists including the Pretenders and Fatboy Slim.

The music industry has long faced serious challenges when it comes to diversity and inclusion.

Embracing the Music Climate Pact

WMG was also a founding signatory of the Music Climate Pact. Launched in December 2021, this movement was initiated by the UK’s Association of Independent Music in collaboration with the British Phonographic Industry, which represents UK record labels. It has received additional support from the UN Environment Programme. Other founding signatories include major players like Sony Music Group and Universal Music Group, as well as independents including Beggars Group, BMG, and Brownswood Recordings.

Founding signatories are required to comply with one of two schemes. One is the Science Based Targets Initiative, which provides companies with a route to align their emissions with Paris Agreement goals. The other is the UN’s Race to Zero SME Climate Commitment, which provides a “one-stop-shop to make a climate commitment and access best-in-class tools and resources to mitigate their environmental impact and build business resilience.”

Promoting Diversity and Inclusion Efforts

The music industry has also long faced serious challenges when it comes to diversity and inclusion. Although there may be some progress, labels and artists need a stronger and more holistic approach to diversity, equity, and inclusion. A 2021 study of 70 major and independent music companies found that just 13.9% of top executives were from underrepresented racial and ethnic groups, with 4.2% being Black and 13.9%, women.

WMG’s announcement also includes a number of elements related to diversity, equity, and inclusion. “The past two years particularly have highlighted the global fights for social justice, anti-racism, and equitable healthcare, and the needs for ethical workplaces and creative solutions,” notes Dr. Maurice A. Stinnett, WMG’s global head of diversity, equity, and inclusion. “We’ve set out in the report our company-wide DEI commitments to help create a cultural shift.”

Stakeholders pushing for such progress hope those words turn to action, and that artists and their labels will be judged on more than whether they just sound good—but if they do good as well. Investors may find the potential for such ESG efforts across the music industry. Improved ESG reporting is a strong start.

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