Context
Along with the challenge of climate change and the need for companies to drastically reduce their environmental footprint, the question of evaluating the effectiveness of sustainability strategies has become a central concern for business leaders.
As a valuation technique, the international acronym ESG is used by the financial community to designate Environmental, Social and (Corporate) Governance criteria, which generally constitute the pillars of sustainability extra-financial analysis.
Relying on ESG standards and frameworks (GRI, SASB, PRI, etc.), various extra-financial rating agencies have built evaluation grids and metrics along with their own methodology to provide an integrated set of assessment tools to companies.
Based on the information declared by their customers, coupled with other sources such as those of NGOs, trade unions, media, or government entities, these rating agencies can assess the ESG practices of a company regarding the environment and its stakeholders (employees, partners, subcontractors, customers, investors).
Definition
Created in 2007, EcoVadis provides a collaborative web-based rating platform for assessing the sustainability performance of organizations worldwide.
The rating measures an organization’s sustainability management system through 21 criteria focused on four key performance areas:
- Environment (product impact from production processes and product use)
- Labor and human rights (HR management practices, human rights)
- Ethics (corruption, anti-competitive practices)
- Sustainable procurement (supplier environmental and social practices)
EcoVadis today
Each year EcoVadis publishes a “Business Sustainability Risk and Performance Index”, providing comprehensive snapshots of Global Supply Chain ESG performances and evolution.
The 2021 fifth edition was based on data derived from over 72,000 EcoVadis ratings conducted on more than 46,000 companies, covering the period 2016-2020.
Only 7% of rated organizations’ scores are above 64.
Moreover, EcoVadis reveals that “with an overall score of 53.9, companies with multiple EcoVadis assessments outperform the global average of 47.7” meaning that companies that have been assessed by EcoVadis and which regularly use the engagement platform display a steady increase in overall scoring.
Recent developments
In 2020 EcoVadis raised 200 million dollars (180 million euros) from CVC Capital Partners to integrate new technical developments and reinforce its presence in the United States and Asia markets.
In 2021 EcoVadis launched its new “Carbon Action Module” toolbox dedicated to global supply chains.
This module may inform purchasing managers – and more broadly all departments involved in the fight against climate change – about suppliers’ GHG emissions management practices.
Limits of EcoVadis
The EcoVadis score is not a certification but a worldwide trusted notation resulting in a ranking.
The assessment process doesn’t include an audit or an on-site verification, only a desk review of the questionnaire and documentation provided.
To learn more about EcoVadis...
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