EcoVadis, a pioneering platform providing sustainability ratings and performance improvement tools for global supply chains, has published the first annual edition of its Global CSR Risk and Performance Index. The report shares the CSR performance of more than 20,400 companies evaluated by EcoVadis, based on Scorecard Ratings that analyzed nearly 800,000 data points between 2015 and 2016.
The Index is based on EcoVadis’ CSR Ratings, which evaluate companies on 21 key 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. Within each industry, companies were broken down into two categories — small and medium sized businesses (fewer than 999 employees) and large organizations (1,000 or more employees).
In terms of regional performance, EcoVadis’ research found a stark contrast between Europe, the Americas and AMEA. Europe achieved the highest percentage (61 percent) of low-risk companies (scores about 45), compared to the Americas (42 percent) and AMEA (35 percent). 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 four percent.
Food and Beverage topped the Small and Medium segment for environmental performance with a score of 50.2, as well as sustainable procurement (41.9).
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The Large segment was led by the Manufacturing Light industry (56 percent), followed by the Finance, Legal, Consulting and Advertising industry (51 percent). The latter achieved the highest overall CSR score for the segment with an average score of 46.2. Manufacturing Light improved its CSR performance the most (19.2 percent) from 2015 to 2016 and took the top spot in the Large category for sustainable procurement (41.4). Finance, Legal, Consulting and Advertising scored the highest (47.3) for labor practices and human rights and led all groups and sizes in the Fair Business Ethics segment with scores of 47.5 for Large companies and 46 for Small and Medium companies.
“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 was around 44, small and medium sized businesses are improving CSR scores at a faster rate than their larger 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 materials, 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.”
This year’s inaugural index also uncovered trends across major global industries related to, among others, the circular economy in supply chains, science-based targets to fight climate change, the relevance of cybersecurity for CSR and the nexus of corruption, human trafficking and modern slavery.