Global companies are making measurable progress on a broad spectrum of sustainability challenges, with the average organization improving its score from 46.7 to 55.1 between its first-time rating and its next reassessment, according to a report from business sustainability ratings provider EcoVadis.
Paris-based EcoVadis found that trend in the data from the eighth edition of its “Business Sustainability Index,” released today.
The score trends give a view into how large purchasing organizations are leveraging ratings in their supply chains to reduce risk, build resilience, prepare for compliance with ESG reporting and due diligence laws, and unlock the value needed to thrive today and into the future. It also reflects how suppliers are reducing operational risks, enhancing efficiency, saving costs, collecting better data and enhancing their relationships with business partners.
This edition of the Index explores the trends behind the 125,000+ supplier sustainability ratings—including some 38,000 in 2023 alone—that EcoVadis has delivered to 1,200 procurement teams from 2019 through 2023. Through data-driven analysis, it looks at how these suppliers, spanning all global regions and major industries, are performing on four core assessment themes:
- Environment
- Labor & Human Rights
- Ethics, and
- Sustainable Procurement.
Despite that improvement trend, the results showed that there is much work to be done. The “first rating baselines” highlighted throughout the report show that 42% of suppliers that were rated for the first time in 2023 fell into the Insufficient/Partial performance levels, indicating significant sustainability risks and non-existent or ineffective systems in place to manage them.
“The Sustainable Procurement theme is becoming an even more crucial area to watch as supply chain and due diligence laws continue to expand,” said Sylvain Guyoton, chief rating officer at EcoVadis. “The principle of ‘substantiated concerns’ in the Corporate Sustainability Due Diligence Directive, for example, will require many companies to cascade sustainable procurement practices to their Tier 1 suppliers, and who may be anywhere in the world. Companies must work more closely with suppliers than ever before to remain both compliant and competitive.”
