Businesses, big and small, have come to realize that their company’s ESG performance is inextricably connected to financial returns and long-term resilience. Enter EcoVadis, one of the gold standards to assess supply chain-focused ESG risk and compliance. While several platforms and services occupy the supply chain risk market, EcoVadis has emerged as a leader, with over 1.6 million companies screened across 175+ countries and 200 industries.
What’s driving the need for sustainability assessments and performance ratings? As the world tilts toward a more sustainable future and the fragmented alphabet soup of ESG disclosures consolidates, stakeholder sentiment is clear—investors, customers, and the market demand transparency around how companies assess and manage sustainability risk within their operations and value chain. As regulations governing supplier due diligence emerge across the EU, enterprises drive ESG performance requirements through their supply chain. Unlike CDP, which focuses primarily on environmental disclosure, EcoVadis takes a broader sweep, evaluating a company’s impact across the value chain in areas like labor and human rights, ethics, and sustainable procurement, making it a more all-encompassing risk assessment.
As you delve into the EcoVadis assessment process, expect a thorough examination of your company’s ESG practices; it aims to deeply understand material risk through quantifiable metrics, policies, and audit reports. The assessment offers companies both a challenge and an opportunity to demonstrate their ability to become a leader in sustainability.
Further reading: What are the GRI Standards?
A step-by-step guide for companies facing an EcoVadis assessment
It’s becoming increasingly common for businesses to be asked by their partners to complete an EcoVadis assessment. Why? Because companies must be held accountable for not just their direct emissions but their entire supply chain (encompassing scope 3 emissions).
We’re seeing this in policies around the globe— Corporate Sustainability Reporting Directive (CSRD), the Corporate Due Diligence Directive (CDDD), and potentially the SEC’s Climate Disclosure Proposal—as well as through stakeholder pressure. EcoVadis is an ESG tool built specifically to identify sustainability risk in the supply chain—and asks companies about the programs, policies, and performance across four categories to help partners fairly evaluate their suppliers.
Step 1: Understand the EcoVadis questionnaire
The EcoVadis questionnaire is a comprehensive assessment tool that evaluates a company’s sustainability performance across 21 ESG criteria, grouped into four main themes:
Theme 1: Environment
- Section 1: Environmental Policy
Assesses the company’s commitment to environmental sustainability and its integration into business strategies.
- Section 2: Environmental Actions
Evaluates the company’s efforts to reduce its environmental impact, including energy consumption, greenhouse gas emissions, waste management, and water use.
- Section 3: Sustainable Supply Chain
Assesses the company’s integration of sustainability practices into its supply chain management activities.
Theme 2: Labor and Human Rights
- Section 4: Labor Practices
- Evaluates the company’s commitment to fair labor practices, including respect for worker rights, health and safety standards, and non-discrimination policies.
- Section 5: Human Rights
- Assesses the company’s identification, prevention, and mitigation of human rights risks throughout its operations and supply chain.
Theme 3: Ethics and Transparency
- Section 6: Ethics
Evaluates the company’s commitment to ethical business practices, including anti-corruption policies, conflict-of-interest management, and whistleblower protection mechanisms.
- Section 7: Transparency
- Assesses the company’s transparency and disclosure practices regarding its sustainability performance and non-financial information.
Theme 4: Sustainable Procurement
- Section 8: Sustainable Procurement Policy
Evaluates the company’s commitment to sustainable procurement practices and its integration into purchasing decisions.
- Section 9: Sustainable Procurement Actions
Assesses the company’s efforts to promote sustainable practices among its suppliers, including environmental and social considerations.
Ultimately, the questionnaire assesses a company’s climate governance structure and evaluates its management of sustainability risks.
Step 2: Gather evidence to support your responses
Your EcoVadis response isn’t about ticking boxes—including supporting evidence to prove your commitment to sustainable practices is essential. This could mean providing your most recent sustainability report, certifications like ISO 14001 for environmental management, or records of energy-efficient practices.
Start by creating a comprehensive checklist of all the documents that EcoVadis might require and gather them systematically. For instance, if you claim to have reduced your carbon footprint, expect to show the data and metrics demonstrating these results, like your base year inventory, GHG emissions scopes and category included, and reductions expressed in absolute or intensity values.
The requested documentation can significantly impact a company’s score by providing tangible evidence of its sustainability practices and achievements; the assessor reviews submitted documentation and uses it to evaluate the company’s performance across the 21 ESG and sustainability criteria. In general, measured progress and audited reports are considered more valuable evidence than plans and policies because they demonstrate concrete action and measurable results. However, plans and policies are still important to establish a foundation. In short, it’s best to provide a balanced mix of evidence, including plans, policies, measured progress, and audited reports, to demonstrate a comprehensive approach to sustainability. This will give the assessor a complete picture of the company’s commitment and achievements.
Step 3: Complete the EcoVadis questionnaire
When filling out the questionnaire, think of it as telling the story of your company’s sustainability journey. Allocate sufficient time for thoughtful reflection on each question—typically, companies might spend several weeks to ensure accuracy and completeness. It’s not a race to the finish line—inaccurate or rushed responses can misrepresent your company’s efforts—and once you hit ‘“submit,“ the questionnaire is locked. Be meticulous, provide context where necessary, and remember, every question is a chance to validate your company’s dedication to sustainability.
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Step 4: Review your EcoVadis scorecard
After submission, your completed questionnaire will be analyzed, culminating in an EcoVadis score. This score can be requested and accessed by potential clients and partners, meaning it will impact their perception of your company’s sustainability posture. Each rating—bronze, silver, gold, or platinum—serves as a benchmark for your company’s performance and areas of improvement.
Companies can manage permissions through their EcoVadis account and track who has accessed their scorecard and documents. They can also revoke permissions at any time. Permission levels are typically assigned based on the user’s role and relationship with the company. For example, employees may access the scorecard and supporting documents, while suppliers can only view the overall score and performance indicators.
A breakdown of how a company’s EcoVadis score can be accessed:
Public access:
- EcoVadis website: Companies with a Premium, Select, or Corporate subscription can make their EcoVadis scorecard publicly accessible on the EcoVadis website. This allows anyone to search for the company and view its scorecard.
- Third-party platforms: Some third-party platforms, like supply chain management (SCM) software or procurement databases, may integrate with EcoVadis to display a company’s scorecard. However, this typically requires the company’s consent or a specific agreement between EcoVadis and the third-party platform.
Protected access:
- Direct sharing: Companies can share their EcoVadis scorecard directly with individuals or organizations by providing a secure link. This method allows for controlled access and ensures that the scorecard is only visible to authorized parties.
- Partner requests: Companies can also receive requests from EcoVadis platform users interested in viewing their scorecards. This typically happens when a company is part of a supply chain or has a business relationship with the requesting party. The company can then decide to grant access.
Permission levels:
- Scorecard access: This permission allows users to view the company’s EcoVadis scorecard, including the overall score, detailed breakdown by theme, and specific performance indicators.
- Document access: This permission grants users access to supporting documents submitted by the company, like policies, reports, and certifications.
- Sharing permission: This permission allows users to share the company’s EcoVadis scorecard with others.
Step 5: Develop an action plan to improve your sustainability performance
Ecovadis will provide some actionable insights to improve your score and sustainability efforts. The comprehensive EcoVadis scorecard provides a detailed performance breakdown across the 21 ESG criteria. This includes an overall score, scores for the four main themes, and specific performance indicators. Based on this, the scorecard also includes customized improvement recommendations based on the assessor’s evaluation of the company’s submitted documentation and their expertise in sustainability best practices.
Armed with the insights from your scorecard, draft a comprehensive action plan to tackle areas needing improvement. For example, if your scorecard highlights a gap in ethical labor practices, set a clear objective to implement a supplier code of conduct within the next six months. Define specific, measurable, achievable, relevant, and time-bound (SMART) goals.
The wisest actions a company can take are to build a solid sustainability governance structure, perform ongoing emissions measurement, and engage and decarbonize your supply chain.
Going through an EcoVadis assessment can be rigorous, but it is undeniably beneficial, especially when getting ahead of competitors and preparing your company to shine when stakeholders request the assessment. Sustain.Life is happy to help guide you in the process—reach out today to learn how.
Sources
1. EcoVadis, https://ecovadis.com/ Accessed November 22, 2023
2. CDP, “Why Disclose as a Company,” https://www.cdp.net/en/companies-discloser Accessed November 22, 2023
3.) European Commission, “Corporate Sustainability Reporting,” https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en Accessed November 22, 2023.
4.) European Commission, “Corporate Sustainability Due Diligence,” https://commission.europa.eu/business-economy-euro/doing-business-eu/corporate-sustainability-due-diligence_en Accessed November 22, 2023
5.) World Resources Institute, “Trends Show Companies Are Ready for Scope 3 Reporting with US Climate Disclosure Rule,” https://www.wri.org/update/trends-show-companies-are-ready-scope-3-reporting-us-climate-disclosure-rule Accessed November 22, 2023
