Supply Chain CSR Investments Lower Global Risk Exposure
Analysis of more than 20,000 companies reveals improvement and opportunity across environmental, labor, ethical and sustainable procurement risk
PARIS/NEW YORK – Sept. 12, 2017: EcoVadis, the leading platform for environmental, social and ethical performance ratings for global supply chains, has published the first annual edition of its Global CSR Risk and Performance Index. The report illustrates the CSR performance of more than 20,400 companies evaluated by EcoVadis, based on Scorecard Ratings that analyzed nearly 800,000 data points across the calendar years 2015 and 2016.
The Index was built using EcoVadis’ CSR Ratings, which evaluate companies on 21 CSR criteria across four themes: environment, labor practices and human rights, fair business ethics and sustainable procurement. Each company received a cumulative score, based on a scale of zero to 100, where 25 represents basic CSR coverage, 50 represents standard, 75 comprehensive and 100 exceptional. Each industry of companies was broken down into two categories – small and medium sized businesses (companies with 999 or less employees) and large organizations (1,000 or more employees). Select highlights from EcoVadis research include:
- Regional performance and risk:
- Europe had the highest percentage (61%) of low risk (scores above 45) companies, compared to the Americas (42%) and AMEA (35%)
- Large Europe based companies scored the highest average (49), compared to the Americas (40.5) and AMEA (38.2)
- Small and Medium Europe based companies scored the highest average (47.2), compared to the Americas (42.2) and AMEA (39.1)
- Top performing industry:
- Small and Medium Food & Beverage companies, and Small and Medium Construction companies, tied for the highest percentage (61%) of low risk (scores above 45) companies, The large segment is led by Manufacturing Light industry (56%), followed by Finance, Legal, Consulting and Advertising industry (51%).
- The highest overall CSR score in 2016 went to Small and Medium Construction companies, which earned an average score of 47. In the Large category, the Financial, Legal, Consulting and Advertising market finished with the highest average score (46.2).
- CSR improvements: Large companies in the Manufacturing Light industry improved performance the most (19.2%) from 2015 to 2016. Construction showed the most improvement in the Small and Medium sized business segment (18.7%).
- Environmental performance: The Large Manufacturing Advanced segment led all groups in environmental performance with a score of 51.6. The Food and Beverage industry topped the Small and Medium sized segment with a 50.2 Environment score.
- Labor practices and human rights: Small and Medium sized companies in the Construction industry had the best score (50.3). In the large segment, the Finance, Legal, Consulting and Advertising industry scored the highest at 47.3.
- Fair business ethics:
- The Finance, Legal, Consulting and Advertising industry led all groups and sizes in the Fair Business Ethics segment with scores of 47.5 points for Large companies and 46.0 for Small and Medium companies.
- Sustainable procurement: Small and Medium Food and Beverage companies earned the top sustainable procurement score (41.9). Manufacturing Light took the top spot in the Large category (41.4).
“The overall results are promising. We’re observing many companies, across all markets, making crucial year-over-year improvements to CSR performance, and many industries edging toward lower CSR risk,” said Pierre-Francois Thaler, co-founder and co-CEO of EcoVadis. “While the progress has been terrific, the criticality of supply chain CSR remains extremely high, and there’s a lot of room for all businesses to grow and improve. Our grading scale and evaluations represent this reality – we’ve seen strong progress in 2016, but there’s still a major gap between today’s scores and peak CSR performance.”
While the overall average score of both size groups (large and small/medium) was about 44, small and medium sized businesses are improving CSR scores at a faster rate than their large counterparts. Given that value chains are made up mostly of small and medium sized companies, the improvement rates represent a promising trend that will have a lasting supply chain impact.
“The research shows that recent initiatives focused on improving crucial CSR and sustainability issues – like modern slavery, conflict minerals, environmental pollution and more – are paying off,” said Thaler. “We can expect greater dividends and less risk globally if our world leaders and businesses continue to invest in these efforts.”
Geographically, EcoVadis’ research found a stark performance contrast between Europe, the Americas and AMEA. In 2016, the average score of Large companies across all segments in Europe was 49, compared to a 40.5 for Americas and 38.3 for AMEA. AMEA also had the highest percentage of companies that scored under 25 (13 percent in 2016), compared to the world average of 4 percent.
This year’s inaugural index also uncovered trends across major global industries related to, among others, the circular economy in supply chain, science-based targets to fight climate change, the relevance of cybersecurity for CSR and the nexus of corruption, human trafficking and modern slavery.
EcoVadis is the first collaborative platform providing sustainability ratings and performance improvement tools for global supply chains. Combining powerful technology and a global team of CSR experts, EcoVadis’ easy-to-use CSR ratings and scorecards are used by procurement teams to monitor environmental, social and ethical risks across 150 purchasing categories and 110 countries. Over 175 industry leaders such as Nestlé, GSK, Heineken, Michelin, Johnson & Johnson, Schneider Electric, Salesforce, L’Oréal, BASF, JLL, and Subway use EcoVadis to reduce risk, drive innovation and foster transparency and trust among over 35,000 trading partners. Learn more at ecovadis.com, Twitter or LinkedIn.