Supply chain CSR investments lower risk: EcoVadis index

Sep. 25, 2017 – EcoVadis, a 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, labour 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 fewer employees) and large organizations (1,000 or more employees).

Highlights from the research report include:

• Regional performance and risk:
  • Europe had the highest percentage (61 per cent) of low risk companies (scores above 45), compared to the Americas (42 per cent) and AMEA (35 per cent).
  • 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 industries:
  • Small and medium food & beverage companies, and small and medium construction companies, tied for the highest percentage (61 per cent) of low risk (scores above 45) companies. The large segment is led by manufacturing light industry (56 per cent).
• CSR improvements: Large companies in the manufacturing light industry improved performance the most (19.2 per cent) from 2015 to 2016.
• 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.
• 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.”

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 per cent in 2016), compared to the world average of 4 per cent.

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.

To read the full EcoVadis CSR Risk and Performance Index, download the full 2017 report.