On November 4, 2021, EcoVadis staged its B2B Sustainability Forum for the Americas, an annual event in which sustainability and procurement professionals exchange best practices to build sustainable value chains. Foregrounding sustainability experts and advocates from a variety of industries, the event provides speakers with a platform to share details regarding the sustainability issues and challenges facing their sector, the types of strategies and practices they have deployed to remedy and mitigate such challenges, as well as the successes and progress they have achieved in partnering with EcoVadis on their sustainability journeys.
The blog reflects upon five key takeaways from the 2021 Forum and thus provides a critical insight into how EcoVadis is actively supporting business leaders in transforming ambition into action with regard to addressing adverse social and environmental impacts.
Sustainability and Risk Management: Two Sides of the Same Coin
“'Risk Management' was at the beginning of 2020 a far more popular Google search term than 'ESG'”, Nick Heinzmann, Analyst Team Lead at Spend Matters, told EcoVadis CMO, Emily Rakowski in a fireside chat exploring the intersection of procurement and sustainability. “But all of a sudden in 2021 the search term 'ESG' shot up in popularity, first eclipsing 'Risk Management' between January 10-16”, and maintaining competitiveness thereafter.
This shift in Google search interest, Heinzmann suggested, can be understood productively to reflect the manner in which the procurement challenges posed by the COVID-19 pandemic crystallized for many business leaders the intimate interrelation between sustainability and risk management, a perspective that is increasingly reflected in the kinds of questions clients are posing to Spend Matters analysts.
This newfound perception of supply chain risk as inseparable from a broader array of sustainability challenges and opportunities is, in Heinzmann’s analysis, one of the most significant legacies of the pandemic, and it is a dynamic that he expects to continue shaping procurement and sustainability programs in the long-term. “I don’t see this going away”, Heinzmann concluded; “I think these two factors [sustainability and risk management] are, for the better, completely intertwined now and that is increasingly why we are looking at this, not just as an initial or ‘one shot study’, but as a permanent area we need to understand.”
JoAnn Strickon, Global Sustainability Manager at ManpowerGroup, echoed this perspective in another fireside discussion with Maria Hadzis, Strategic Account Manager - Americas at EcoVadis. “One of the things that I heard fairly early on [in the pandemic] was that companies need to build resilience and that sustainable companies are resilient companies”, Strickon recalled, concluding that: “Understanding longer-term risks and impacts is really what ESG is all about.”
Reporting Transparently With Robust Evidence is Now an Expectation
As sustainability has shifted from being a component of the corporate mission to being a driving force behind the overall business strategy of many organizations, purchasing companies, like investors, are understandably placing an increasingly heavy emphasis upon the reliability of any sustainability data disclosed by prospective trading partners.
This subject formed a central focus of the Client-to-Client Transparency and Collaboration panel discussion. As Matt Kinnaird, Life Sciences Managing Director - Procurement at CBRE, observed:
Sustainability is something that we have been talking about for many years, but I think in the last couple of years it has really started to become much more specific as many of our clients, particularly within the life sciences sector, have been making commitments around net-zero and also they have really progressed from trying to understand their own footprint, in terms of Scope 1 and Scope 2, and are really trying to understand the full supply chain impact and Scope 3.
Kinnaird’s observation regarding increased market expectation on matters connected with sustainability transparency was shared by Donna Laviolette, Senior Manager - Global Sustainability at Xylem, Inc. Noting how Xylem, Inc. has, since 2019, increasingly focused on tackling Scope 3 emissions in their supply chain, Laviolette outlined rapidly increasing stakeholder engagement with the precision of the sustainability data the company is disclosing.
“When we’re reporting out on this [sustainability] information, our stakeholders, whether that be our investors, our customers or suppliers, they are really looking for transparency in terms of: how do we calculate those methodologies?; where do we come up with these numbers?”, Laviolette observed. “For our relationships with our suppliers, we love using EcoVadis to help us with that need for transparency.”
View the full Client-to-Client Transparency and Collaboration panel discussion here.
Procurement Professionals Key to Scaling Positive Impact
The importance of supply chain emissions in formulating carbon reduction commitments can scarcely be overstated. Recent research by McKinsey found that, for most products, 80-90% of GHG emissions can be categorized as Scope 3; of those emissions, two-thirds typically emerge in the upstream supply chain. CDP calculates similarly that supply chain emissions are, on average, 11.4 times higher than those generated by a business’ internal operations.
It is unsurprising, therefore, that those companies most committed to tackling adverse social and environmental impacts are increasingly seeking to integrate sustainability considerations into the procurement function in order to cascade sustainable practices and amplify positive impact through the value chain. VMware is one such industry-leading company that has taken the call to action and committed to address Scope 3 carbon emissions by partnering with EcoVadis and implementing the Carbon Action Module.
“Procurement organizations have always been cost focused”, Matt Eaton, Senior Manager - Responsible Sourcing at VMware, told Julia Salant, Head of Sustainability Innovation & Carbon Solution at EcoVadis in a fireside chat. “But we need to pivot, and we are pivoting, from just that cost focus to being purpose-driven as well.”
In terms of driving such positive purpose, Eaton explained, procurement is key: “The impact potential is significant. When we prioritize ESG, and I think of DE&I as part of that, in our internal operations, the impact is great and our companies control that directly. But when we think of the supply chain and the spend leverage...we can really drive impact in the supply base by ensuring that we’re partnering with suppliers who align with our values. I don’t think we can truly say we value ESG and DE&I if we don’t also address it in our supply chain.”
View the conversation in full here.
Supply Chain Sustainability Must be a Continuous Process
The effective implementation and monitoring of a sustainable procurement program is not a “one and done” activity. It is imperative that companies conceptualize and organize such measures as part of an on-going, proactive and reactive process aimed at achieving continuous improvements over time. This is a dynamic crystallized in the trajectory of those organizations – such as Qosina/Qosmedix, Greif, and W.R. Grace – who began their sustainable procurement journey as an assessed supplier and evolved into a requesting organization themselves.
Aysu Katun, Director of Sustainability at Greif Inc., for instance, outlined how the company’s sustainability journey has evolved from the point of reluctantly undertaking its first EcoVadis assessment at the behest of a purchasing partner in 2013. “At the time, we got a score of 41, which gave us a Bronze medal, which to be honest we were very disappointed with”, Katun recalled. “But it was a very valuable learning experience for us because it helped us figure out what steps we needed to take and where we needed to make improvements to improve our program and learn about our customers' priorities.” Since then, Greif Inc., has committed to undergo yearly EcoVadis assessments, achieving continual improvements, and, in 2018, the company was awarded a Gold medal in recognition of its scoring, a status it has since retained. The company is now expanding the ratings process through its own supply chain to mitigate risk and amplify positive impact at scale.
Joe Monfort, Responsible Sourcing Leader at W. R. Grace & Co. recounted an analogous assessment trajectory with EcoVadis. “Grace started off [with EcoVadis] as a responding entity; they started receiving requests from customers [to undergo assessment] in 2011 and 2012. EcoVadis was taken up pretty early on by the chemical industry and is today pretty well penetrated within the industry”, Montfort said. “But here in the last two or three years, as has been the case for many companies of Grace’s approximate size that maybe weren’t on the vanguard of getting sustainability pressure, they’ve noticed a real seachange in customer expectations...and that’s prompted Grace to develop its own responsible sourcing program” – one that is centrally organized around the EcoVadis ratings system.
Strikingly, Paul Morris, Division President at Qosina/Qosmedix, shared a similar experience. Noting how Qosina/Qosmedix’s directors had been satisfied with the company’s achievements in acquiring a variety of ISO certifications, several “very large medical customers” requested that the firm undergo EcoVadis assessment and investigated the resultant scorecard in detail. This experience persuaded Qosina/Qosmedix to begin investing more heavily in sustainability and, from achieving a Bronze EcoVadis medal in 2020, the organization has submitted to repeated assessments and is expecting to receive a Silver medal upon receipt of their next scorecard.
View the full panel discussion here.
EcoVadis Drives Efficiency
That sustainability is fundamental to mitigating risk, building resilience and improving efficiency is beyond dispute. That said, sustainability can also be burdensome to measure, analyze, report on and implement – both for both buyers and suppliers. That’s where EcoVadis comes in; the ratings solution supports companies that do not have the time or resources to manage sustainability assessments on their own, and the process helps to build stronger practices and long-lasting relationships with suppliers.
Describing the origins of General Motors’ sustainability ratings program, for instance Carol Apfel, Manager - Operational Excellence Master, recounted how the clear message received from suppliers during the planning phase was “don’t go it alone”; that is to say, “don’t go out and try and come up with your own questionnaire or your own way to rate sustainability because it’s just going to be an additional burden on our suppliers”. The organization consequently elected to partner with EcoVadis to gain a detailed insight into the sustainability performance of its supply chain, persuaded by the efficiency and accessibility of the solution on both the buy and supply side.
Puneet Saxena, Director - Supply Chain at Carrier, echoed this perspective. “We always had strong Environmental, Social and Governance credentials...but tying them together and then adding a robust sustainable supply chain program was a relatively new concept for us”, Saxena recalled. “Subsequent to conducting an industrial benchmark, we partnered with EcoVadis for our sustainable supply chain practices...We made the engagement of suppliers part of the new way of doing business with Carrier. We reached out to the leadership of our top suppliers, who represented 80% of our global factory spend and Carrier was quickly able to incorporate sustainability as a required criteria into our supplier excellence program by mandating that a minimum EcoVadis score was needed for our highest-rated preferred supplier status.”
“Carrier, I think from my perspective, we have no hesitation in saying that EcoVadis has been the right partner for us”, Saxena concluded. “Both in terms of helping us craft the right vision and message for our program, and providing us with the processes that enabled the successful execution that we have today.”
Watch the full discussion here.
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