Should you be afraid to ask suppliers to fund their CSR assessments or audits?

August 10, 2012 EcoVadis

As more and more companies decide to conduct large scale Sustainable Procurement programs, financing increasingly presents a bottleneck, and companies are thinking of new solutions to overcome it. Asking suppliers for co-financing of audits was hardly heard of some years ago, but now most major companies conducting CSR assessment are requesting their suppliers’ financial participation. And you know what? It is working.

Practices are evolving towards collaboration
Supply Chain management in general, and Sustainable Procurement in particular, used to be driven from a bottom-down approach: buyers set standards, asked for audits, and financed the cost. Companies now realize that suppliers’ initiative and collaboration is essential. Over the past few years companies have been shifting from a paternalistic approach toward a system whereby the supplier is a key stakeholder in driving forward sustainability initiatives.

At the same time, most companies are now integrating Sustainable Development into their global strategy. CSR is no longer an enigmatic acronym for small firms, and suppliers are more and more willing to take the lead when it comes to demonstrate to their clients the quality of their practices. Add to this, with major companies more and more eager to evaluate their entire supply chain, and you understand why co-financing is becoming standard practice. Taking EcoVadis’ client panel, we see that from more than 50 clients, 80% of them ask all or part of the suppliers they assess to fund their own assessment.

Ownership is important and enables better quality
More importantly it benefits suppliers. Ownership is important; a supplier funding its own assessment or audit is more likely to feel involved, and proactively take part in assessing and improving its CSR practices. In 2011, EcoVadis conducted a survey, looking at a large panel of suppliers in our database. We calculated statistics based on qualitative and quantitative criteria, looking at how they answered our assessment questionnaire (such as: text fields answers, % of question answered, number of documents uploaded, etc.). We found that the quality of answers of suppliers financing their own CSR assessment was greater by 40% than those of suppliers financed by their clients. Our annual satisfaction survey points in the same direction: last year, the overall satisfaction of suppliers paying for their own assessment was 100%, versus 82% for suppliers having clients paying for their assessment.

Of course, this will work only if the cost of funding its own CSR assessment is affordable for most companies. EcoVadis sets affordable prices so that cost is not an obstacle to a CSR evaluation.

This article was written by Aude Chagnon, Marketing coordinator at EcoVadis.
Photo from flickr creative commons by tableatny

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