EcoVadis, the world’s most trusted provider of business sustainability ratings, released today the third annual edition of its Global CSR Risk and Performance Index. The report offers comprehensive insights into the supply chain sustainability performance of more than 30,000 companies worldwide, evaluated by EcoVadis across the calendar years of 2016 through 2018.
EcoVadis scores are based on 21 CSR criteria across four themes — environment, labor practices and human rights, business ethics and sustainable procurement. The scale ranges from zero to 100, where a score less than 25 represents high risk, 25-44 represents medium risk, 45 and above are considered engaged, and scores of 65 and above are considered advanced to outstanding.
Select highlights from this year’s analysis include:
- Global sustainability performance holds steady. Overall, sustainability and risk scores remained consistent over the past three years, with 50.7% of companies receiving scores of 45 or higher in 2018, compared to 49.2% in 2017 and 50.5% the year prior.
- Despite greater awareness of labor issues, many companies lack thorough measures for addressing diversity, discrimination and harassment. While 32% of companies across the globe implement at least one measure – such as effective whistleblowing procedures, awareness training and anti-discrimination recruitment tactics – 68% still have no measures in place to promote equality and inclusive working environments. Regionally, North American companies (56%) have the most measures in place.
- Globally, Europe leads the world in sustainability performance among large companies, followed by North America, Latin America and the Caribbean and then Greater China.
- Greater China improves, but still has a substantial performance gap to close. The weighted overall score for large companies in Greater China is 33.6. While this represents a 3.6-point increase in 2018, Greater China remains the lowest-scoring region assessed, with a weighted large organization score that’s more than seven points below the global average.
- Organizations increase focus on labor and human rights. Large companies scored higher in the environment theme (43.5 vs. 41.3) and labor and human rights (46.7 vs. 44.4) whereas small and medium-sized companies outperform large counterparts (40.9 vs. 39.8) in corruption, anti-competition and data privacy. The emphasis on labor and human rights is consistent with the findings of EcoVadis’ 2019 Sustainable Procurement Barometer.
“Private-sector commitment to sustainability continues to build, as evidenced by initiatives like the recent Business Roundtable statement on corporate purpose. While we’re seeing slight year-on-year improvements across most themes, and many headline-grabbing public promises, this year’s analysis shows companies remain mostly stagnant around supply chain sustainability. With most global enterprises spending 50-70% of revenue in the supply chain, it’s the most natural and effective foundation for driving the structural change these commitments are intended to create,” said Pierre-Francois Thaler, co-CEO of EcoVadis.
Sustainable procurement remains the lowest-scoring theme, highlighting the urgent need for organizations to more proactively engage with supply partners to uncover and address hidden CSR risks. When left unmanaged, the deepest tiers of the supply chain can expose organizations, people and society to serious issues, including slavery, forced labor, dangerous working conditions, environmental waste, corruption and more.
“There needs to be a conscious effort to improve supply chain visibility, transparency and collaboration – with a focus on risk identification and improvement. Stated more bluntly: Enterprises can’t mitigate the risks they don’t see,” added Thaler. “Procurement leaders have immense power to spark change, reduce exposure and move the dial on corporate purpose and responsibility. Success starts with getting assessed and properly assessing the supply base.”
Notably, more than 75% of companies that were assessed at least twice by EcoVadis maintained or improved their score in the latest assessment, proving that sustainable procurement commitments make a difference.
The EcoVadis Index examines performance of both small and medium-sized businesses (organizations with 26-999 employees) and large businesses (organizations with 1,000 or more employees) across five geographic regions and nine industry sectors: light, heavy and advanced manufacturing, food and beverage, construction, wholesale, transport, information and communication technology (ICT), and finance, legal and consulting.