August 16, 2022

EcoVadis Targets ‘Millions’ in Supply Chain to Drive ESG Impact

It’s been a busy month for Pierre-Francois Thaler is not only EcoVadis, the sustainability rating firm he co-founded and serves as CEO along with business partner Frédéric Trinel. More than half a billion dollars in funding But after that, the company acquired ecotrek, a German sustainable data mining company.

“We started 15 years ago, over the years we’ve seen adoption slowly,” Thaler said. “Today, we’re seeing widespread adoption. have a continuous impact The Fortune 500 companies added momentum. All work to drive improvement and scale in sustainability impact.”

EcoVadis offers a collaboration platform where companies EcoVadis ratings are used to assess and rank environmental, social and governance (ESG) activities and projects, and then create strategies and plans to improve their scores. Since 2007, EcoVadis ratings have become widely used by Environmentally conscious enterprises and investors The Paris-based company reports that approximately 750 multinational companies representing more than 47,000 procurement and sustainability professionals use its internal platform and to assess and audit a global base of suppliers or selected business partners. To date, the EcoVadis database contains more than 90,000 rated companies in 175 countries and 200 industries.

Co-Founder and Co-CEO of EcoVadis

Pierre-François Thaler and Frédéric Trinel, Co-Founders and Co-CEOs of EcoVadis.

For anyone questioning the influence EcoVadis has, its largest 1,000 customers account for $3 trillion in annual procurement in the supply chain.

The EcoVadis methodology uses seven management indicators from 21 sustainable criteria across four topics: Environment; labor and human risks; ethics; EcoVadis adheres to international sustainability standards such as the Ten Principles of the United Nations Global Compact. International Labor Organization Convention and the United Nations Guiding Principles on Business and Human Rights.

In June, EcoVadis raised $500 million to become one of the first “unicorns” in the ESG ratings sector, an unlisted company worth $1 billion or more. Private equity firms Astorg and BeyondNetZero Take the lead in fundraising Along with General Atlantic’s climate investment arm, GIC and Singapore’s Princeville Capital, the fundraising brings the total capital raised by the company to more than $725 million in July. EcoVadis went a step further with the acquisition of ecotrek. It plans to use ecotrek’s automated sustainability data collection, scanning and analytics capabilities to complement the EcoVadis portfolio.

EcoVadis ratings are available in a number of ways. First, companies are rated for their own ESG activities and performance. Upstream organizations in the supply chain use that information to improve internal processes and procedures, create ESG strategies, and publish ratings. Rank to investors and customers Many of these large companies are trying to be a role model for their suppliers. Large companies can use this platform to assess and track their affiliates. Small to medium sized suppliers also use EcoVadis to assess and improve operations. while reporting to upstream partners and to investors and markets. All companies using EcoVadis pay subscription fees that vary by size and whether they are asking for internal ratings only or are following companies in their supply chain.

John Wagner, founder of sustainability consultancy Paladin Pathway LLC, said EcoVadis is closing the gap surrounding inconsistent data collection in the ESG market.

“Each company has its own questions and themes. Companies can now report to EcoVadis, receive reports and ratings in a consistent format. and then share that information with suppliers and customers,” Wagner said. “EcoVadis stands on the road to pursuing those responses and reporting them in a competitive manner across all categories.”

According to Thaler, EcoVadis was initially launched with a vision to address the urgent business need for performance reporting. over time The company’s rationale has evolved.

“The vision initially was to build a cloud platform and technology to solve performance problems. The whole system is not efficient,” Thaler explains. As the company grows and environmental concerns increase, The vision had changed. “We feel a role and responsibility. Our customers are an important part of the solution. This will have a greater impact than what regulators or countries can do.”

Thaler said the hardest aspect of collecting ESG data was finding the right combination of size and impact. “Some actions can drive change. but cannot resize Other actions, such as filling out endless forms can be scaled but no effect”

The real impact will come when as many companies are involved as possible, Thaler said.

“There are about 2 million companies in the Fortune 2000 supply chain. We wanted to be very deep and broad. and covering millions of companies in that supply chain.”

Key large corporate clients include pharmaceutical giant Johnson & Johnson, heavy equipment maker Deere and Company, British multinational consumer goods company Unilever and automakers Volvo and General Motors.

While all of these companies have pledged to improve ESG practices and ratings, GM has asked suppliers to sign the ESG Supplier Pledge to join the Carbon Neutral Pledge. “Last year we took an internal trip to look at the landscape of supplier rating platforms. [EcoVadis] to be a good solution for GM.” Fred Gersdorf said senior manager of socially responsible and sustainable supply chain for automakers.

Likewise, John Deere founded Leap Ambitions with a focused goal designed to increase economic value and sustainability for Deere and all stakeholders. including suppliers

We want to go deep and very broad. and covering millions of companies in that supply chain.

Sustainability Program Manager Kimberly Noe explains: “By embedding sustainability deeply into Deere’s business to be the focus of our decision-making,” “to manage the economic, environmental and social impacts of our decisions. It’s not just pure economics.”

Noe said sustainability can only be achieved when large companies consolidate their networks of smaller companies.

“At Deere, we take a holistic view of our supply chain. And ask the companies we work with an important ESG question: Do you take care of the environment and consider the environment in your decisions? Are you considering your employees? Is there control in place and are you doing what you say you are doing? It is more than delivering on time.”

EcoVadis has also partnered with technology companies such as Microsoft, SAP and TealBook, its supplier intelligence platform. All of which have embedded the EcoVadis platform into their offerings. TealBook provides purchasing, finance and supply chain information for companies looking to find and partner with other ESG-conscious companies.

Matt Palackdharry, Chief Strategy and Revenue Officer at TealBook said, “One of the reasons EcoVadis dominates the market is the freshness of the data and getting the right information from its suppliers. which allows for clear decisions that affect This capability is critical to disruptions such as pandemics or geopolitical wars that change supplier data on a daily basis, he said.

EcoVadis offers educational and informative products to customers and partners at all levels. EcoVadis IQ provides insights into sustainability risks across the supply chain. This tool can provide guidance on next steps and proactive sustainability risk management for a better assessment strategy. EcoVadis Academy is a 16-course e-learning module covering introductory courses and further details in the EcoVadis Academy. Multilingual designed to educate small and medium-sized businesses. And to address the issue where only 15 percent of suppliers worldwide report emissions, EcoVadis offers a Carbon Action Module, which provides a carbon-specific rating scorecard.

Editor’s Note: This story contains information contributed by GreenBiz Editorial Director Heather Clancy.

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