Climate change and its multifaceted implications on the present and future of companies and organisation calls for urgent reduction and removal of their environmental footprint. It calls for re-imagining and improvising sustainable strategies.
ESG is used by the financial community to measure a company or organisation's performance across Environmental, Social and (Corporate) Governance criteria.
With the use of 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 government entities, these rating agencies can assess the ESG practices of a company regarding the environment and communicate the same to its stakeholders (employees, partners, subcontractors, customers, investors).
The rating measures an organisation’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)
Each year EcoVadis publishes a “Business Sustainability Risk and Performance Index”, providing comprehensive snapshots of Global Supply Chain ESG performances and evolution.
The 2021 edition was based on data derived from over 72,000 EcoVadis ratings examined for more than 46,000 companies, covering the period 2016-2020.
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.
In this assessment, EcoVadis notes that only 7% of rated organisations’ scored above 64.
In 2020, EcoVadis raised 200US$ million (180 million euros) from CVC Capital Partners to integrate new technical developments and reinforce its presence in the United States and Asian markets.
In 2021, EcoVadis launched its new “Carbon Action Module” toolbox dedicated to global supply chains.
This module can better inform purchasing managers – and more broadly all departments involved in the fight against climate change – about suppliers’ GHG emissions management practices and associated emissions.
Limits of EcoVadis
The EcoVadis recognition medals and certificates are intended for use by EcoVadis Rated Companies that meet specific licensing and eligibility criteria to promote their sustainability performance.
The assessment process doesn’t include an audit or an on-site verification, only a desk review of the submitted documents and questionnaire.