What is EcoVadis?
EcoVadis is a leading sustainability ratings platform that assesses and rates the environmental and social performance of companies across various industries.
It provides companies with a comprehensive evaluation of their sustainability practices under four main themes: Environment, Labor & Human Rights, Ethics, and Sustainable Procurement, and offers a standardized rating system that enables benchmarking and comparison with industry peers. Under these broad themes it assesses companies progress on topics such as carbon emissions, waste management, labour conditions, diversity and inclusion, anti-corruption measures, and supply chain responsibility.
Who uses it?
While EcoVadis is applicable to a wide range of sectors, it is particularly popular for companies operating in the Construction, Retail, Pharmaceutical, IT Services, Financial Services, Transportation & Logistics and Utilities & Energy sectors. It is being used by many multi-national and large corporates to evaluate sustainability progress within their company and within their supply chain.
How does it score companies?
Ratings are provided on a scale of 1 to 100 and is categorized into different levels: Bronze, Silver, Gold, and Platinum.
Bronze: Indicates that a company has made initial efforts toward sustainability and has implemented some basic sustainability practices.
Silver: Indicates that a company has made progress in implementing sustainability practices and has achieved a moderate level of sustainability performance.
Gold: Signifies that a company has achieved a high level of sustainability performance and has implemented comprehensive sustainability practices.
Platinum: Represents the highest level of sustainability performance.
Rating scores are relative, meaning they are based on a company’s performance compared to its peers within the assessed industry.
Pros:
- EcoVadis provides an evaluation of your company’s current sustainability performance across environmental, social, and ethical dimensions.
- By assessing supplier sustainability practices and accessing supply chain data, EcoVadis helps mitigate risks associated with environmental, social, and ethical issues.
- EcoVadis offers a standardized rating system that allows companies to benchmark their sustainability performance against industry peers and understand sector average scores.
- The assessment helps identify strengths, weaknesses, and improvement areas, enabling companies to make informed decisions and drive sustainability improvements.
- It facilitates supply chain transparency by assessing and monitoring the sustainability practices of ones suppliers. This transparency helps identify and mitigate sustainability risks and can be a driver of change.
- Achieving a favourable EcoVadis score can enhance a company’s reputation and build stakeholder trust.
- EcoVadis helps streamline sustainability reporting by providing a framework for assessing and reporting on environmental, social, and governance (ESG) factors.
- Globally, it is the most widely used sustainability ratings platform with 100,000+ submissions in 2022.
Cons:
- Using EcoVadis requires an investment of financial and time based resources. There are costs associated with the assessment process, platform access, and ongoing engagement.
- While EcoVadis covers a wide range of sustainability criteria, the assessment does not capture the full complexity and context of a company’s sustainability performance. The standardized rating system used by EcoVadis simplifies the complexity of sustainability into a single score.
- EcoVadis relies on the active participation and cooperation of suppliers for accurate assessment and monitoring.
- There is a risk of companies focusing on achieving a favorable EcoVadis rating without implementing substantial and meaningful sustainability practices and strategy.
It’s essential for companies to carefully consider these pros and cons in relation to their specific needs, resources, and sustainability goals when deciding whether to use EcoVadis or any other sustainability ratings platform.
Clearstream Solutions Advisory Services – EcoVadis
Clearstream Solutions can play a role in helping clients improve their EcoVadis score by providing guidance, expertise, and support in implementing sustainability practices. Here are several ways we can assist in achieving a better EcoVadis score:
- Assessment preparation and submission
- Performance gap analysis
- Assist in development and execution of robust action plan
- Policy and procedure review and development
- Data collection and reporting
- Training and capacity building
- Supply chain engagement
- Continuous improvement support