Supporting companies and organizations in achieving carbon neutrality across the Dentsu Group. The path to decarbonization starting with "Dentsu Inc. carbon neutral solutions" (Part 2)

In October 2022, Dentsu Group launched "dentsu carbon neutral solutions" to support client companies and organizations in their efforts toward a carbon-neutral society. This initiative was also featured in an article on Transformation SHOWCASE.

"dentsu carbon neutral solutions" provides comprehensive support—from consulting to achieve carbon neutrality, matching with cutting-edge technologies and supporting their social implementation, to internal and external communication—while also offering customized menus tailored to each company or organization's status. Particularly drawing attention is the initiative that utilizes "Nudge," a method based on behavioral economics, to encourage behavioral change toward a decarbonized lifestyle.

In the second part of our interview with Mr . Takeshi Araki, Project Leader at "dentsu carbon neutral solutions" and Dentsu Inc., and Mr. Takashi Fuji, who has long engaged with environmental and energy issues at Dentsu Inc., we delved deeper into how nudges are used to promote decarbonization actions.

New Initiatives to Reduce CO2 Emissions in Video Production

Q. "dentsu carbon neutral solutions" offers a wide range of programs. As one example, Mr. Araki mentioned that "internal communication is crucial for achieving carbon neutrality." Could you introduce other solutions that seem likely to become important in the future?

Araki: One initiative I'm focusing on is the "Video Production Carbon Calculator." It visualizes CO2 emissions generated during video production and incorporates virtual production as a reduction measure. This approach aims to minimize CO2 emissions associated with actions like filming and business travel.

Currently, the Dentsu Group is also being asked to visualize CO2 emissions across its supply chain. In this context, it's crucial that not only media companies but also production houses collaborate to advance carbon neutrality. The Video Production Carbon Calculator serves as a catalyst for this.

Overseas, calculators measuring CO2 emissions from media productions are already in use. However, we hear that the leading tools, developed in the UK, do not align with Japan's specific circumstances. Therefore, the Dentsu Group Inc.'s joint project "Metaverse Production," involving Dentsu Creative X Inc., Dentsu Creative Cube Inc., Tohoku Shinsha Inc., and Hibino Corporation, was launched. Collaborating with this initiative, the Dentsu Group developed the "Video Production Carbon Calculator." This tool calculates greenhouse gas emission reductions in video production and promotes the shift to virtual production. Expanding this movement represents a key message from the Dentsu Group. By engaging both media and production companies, the Dentsu Group is tackling CO2 emissions reduction. This initiative is likely unprecedented even across other industries.

The "Nudge" approach: gently encouraging people to change their behavior for the better

Q. What distinctive solutions do you feel are driving this change?

Fuji: I'm focusing on initiatives that utilize the "Nudge" approach, based on behavioral economics, to encourage behavioral change. For example, municipalities aiming for carbon neutrality all say that "getting citizens to change their behavior is the biggest challenge." How can we make citizens feel personally invested? How can we change their actions? That's where I want to approach it.

The Dentsu Group has a proven track record in communication and marketing. Creating new behaviors through communication is essentially our core business. In fact, various creators have long delivered messages about behavior and values through content like video.

If we explain these creators' content using behavioral economics theory, I believe it could be conveyed in a new way, similar to BI-Tech (the fusion of behavioral insights like nudges with technologies such as AI/IoT). By combining behavioral science solutions, the Dentsu Group can offer a different communication approach to customers and various stakeholders than ever before.

Q. Nudges are being utilized across various fields and are a hot topic lately. Could you explain nudges again?

Fuji: Nudges are an approach based on behavioral science insights that gently encourage people toward desirable actions. They stem from the theory proposed in the 2008 book Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard Thaler, a behavioral economist at the University of Chicago, and Cass Sunstein, a legal scholar. This theory was recognized, leading Richard Thaler to win the Nobel Prize in Economics in 2017.

The term "nudge" originally means "to gently prod with an elbow" or "to draw attention." Its defining characteristic is "encouraging voluntary behavioral change by designing the environment in which people make decisions," rather than using large financial incentives or penalties. This gentle prompting of behavioral change is often likened to a mother elephant gently nudging her calf with her trunk. Notable examples include the "bandwagon effect" (where support for something increases as more people endorse it) and the "Veblen effect" (where acquiring expensive goods itself generates a special consumer consciousness or desire). Much of the communication Dentsu Inc.'s creators develop daily naturally aligns with the nudge framework, meaning they are unconsciously developing creative solutions based on nudge techniques.

While the effect of each individual nudge may be small, applying them widely yields high cost-effectiveness, driving their adoption in public policy. In 2010, the Cameron administration in the UK established a Nudge Unit within the government, followed by the Obama administration in the US in 2015. This movement has spread globally, with Japan establishing its own Nudge Unit in 2017. Additionally, non-governmental organizations like the World Bank and Harvard University are increasingly setting up departments that adopt behavioral insights, including nudges.

Q. Specifically, in what kinds of situations are nudges being used?

Fuji: They are widely used in public policies such as energy conservation, improving health screening participation rates, reducing food waste, preventing littering, deterring speeding, encouraging organ donation registration, combating obesity, promoting pension enrollment, and advancing smoking cessation.

For example, many people tend to stick with default options. Statistics show that countries with high organ donor registration rates often pre-check the "I consent to organ donation" box, asking people to uncheck it if they decline.

Other examples include "extreme avoidance"—where people tend to choose the middle option ("bamboo") when presented with three choices like pine, bamboo, and plum—and "loss aversion"—where people are more likely to act when told they "stand to lose $1 million" rather than being told they "stand to gain $1 million." These are also types of Nudge approaches. Similarly, limiting product choices to a certain extent often leads to higher purchase rates than displaying a vast array of items—a strategy frequently used in marketing. These approaches are characterized by being rule-based and grounded in academically proven evidence.

Promoting Carbon Neutrality Through Behavioral Change via "Nudges"

Q. How is nudging being used in the environmental field?

Fuji: In behavioral economics, the psychological phenomenon of seeking reassurance by acting like those around you is called the "herding phenomenon." In marketing, it is used to further increase sales by presenting information such as "This product has surpassed 30 million units sold."

In the environmental field, for example, if an energy report sent to households states, "Your electricity consumption is this much higher than your neighbors" or "80% of residents in this area have switched from air conditioners to fans," it leads to behavioral change, such as "I need to save more energy like everyone else." This is called social norms.

Q. What led to the adoption of nudge theory in the environmental field?

Fuji: The Dentsu Group formed a business partnership in 2015 with O'Power, an American tech company developing an energy big data platform, deepening our understanding of behavioral economics. By the time the Japanese Nudge Unit was established in 2017, opportunities to participate in study groups and seminars increased, and collaborations with various partners progressed. In a project with the Ministry of the Environment, incorporating nudges demonstrated a reduction of 47,000 tons in CO2 emissions from households (300,000 households nationwide) over four years. The Dentsu Group will continue to actively pursue initiatives that lead to the social implementation of nudges.

Achieving the Japanese government's "Carbon Neutral by 2050" goal is absolutely impossible without each of us changing our behavior. It's crucial to focus on the long term, looking ahead to 2040 and 2050, rather than taking a short-term perspective. Recently, there has been a growing demand for Education for Sustainable Development (ESD), particularly Climate Change Education. I believe linking the nudge approach to education will become even more crucial going forward. We are actively working on developing next-generation educational programs, including the SDGs and ocean issues, to help children become conscious of Japan and the world in 2050 and beyond from an early age.

Q. Are there already successful BI-Tech cases overseas? Could you share achievements from other countries?

Fuji: In Europe, including the UK, and in various US states, research, development, and demonstration projects are advancing, with numerous examples available. While Japan has lagged in this field, numerous verifications are underway to determine how successful overseas models can be socially implemented domestically. Although BI-Tech research and demonstration projects are progressing in Japan, they are not yet widely utilized. To change this status quo, demonstration projects across various communities began in FY2022, aiming to build communication models that establish decarbonized lifestyle shifts. These projects were adopted as national initiatives.

A Japanese version of a nudge unit (BEST: Behavioral Sciences Team), a public-private partnership involving relevant ministries, local governments, industry, and experts, has also been launched. Further collaboration with private companies in this field should lead to even greater behavioral change. We aim to participate in this effort and contribute, however modestly, to creating a flow that leads to a better society.

Consumer-Centric B2C Solutions for Carbon Neutrality

Q. Does "dentsu carbon neutral solutions" also propose initiatives using nudges?

Fuji: Absolutely. We've developed a menu of solutions utilizing nudges and propose them to client companies and municipalities. Within the Dentsu Group, we've also established a lab dedicated to researching and implementing behavioral change (the Lab for Changing Social Behavior), exploring how insights gained there can be developed into solution offerings. We also collaborate with Dentsu ScienceJam Inc. (DSJ), which handles neuroscience; Dentsu Macromill Insight, Inc. (DMI); and environmental/energy think tanks.

For example, how can we encourage people to switch to energy-efficient appliances? How can we advance household CO2 reduction? How can we get people to switch to EVs? How can we reduce CO2 emissions by encouraging people to use bicycles or shared bikes instead of cars? We are currently accumulating evidence on BI-Tech that leads to carbon neutrality for these themes. Together with various players, we want to build an ideal communication model as the Dentsu Group and connect it to social implementation.

Q. "dentsu carbon neutral solutions" was just launched in October 2022. What message would you like to convey to clients you wish to consult with, or what challenges do you want to help solve?

Araki: Many companies and organizations recognize the need for carbon neutrality but don't know where to start. For those beginning from scratch, we can offer a wide range of solutions.

Furthermore, "dentsu carbon neutral solutions" incorporates the consumer perspective—a core strength of Dentsu Inc.—into our carbon neutral solutions. This allows us to approach carbon neutrality from the consumer's standpoint, leveraging consumer research and behavior change through nudges. We believe consulting with companies that want to start consumer-facing initiatives but aren't sure where to begin could provide us with valuable insights as well.

Communication, the core of the Dentsu Group, changes people's behavior, much like nudges that prompt behavioral change. By combining Dentsu Inc.'s expertise in creative communication with behavioral economics approaches, we can more persuasively encourage and transform people's actions. We hope this serves as a reference for companies striving to achieve carbon neutrality, as well as businesses and local governments aiming to solve social issues by changing people's behavior.

While "nudges" are currently gaining attention in marketing, they also represent a crucial approach for achieving a decarbonized society. No matter how many messages are disseminated, a decarbonized society cannot be realized unless each individual changes their behavior. The Dentsu Group is also focusing on "nudges," implementing various initiatives and verifications. However, the effects achieved are greater when many players work together. Addressing global themes like decarbonization requires large-scale collaboration involving inter-company partnerships and local governments. While "changing our own company" is essential, we will continue to ask ourselves what we can do to "contribute to the transformation of society as a whole" through these actions, and we will keep moving forward.