Third-Party Sustainability Assessments of Supply Chains
Sustainable value chains are a crucial aspect of doing business in the modern world. Improving the environmental and social impact of products is no longer “nice to have,” but a (legal) requirement. Particularly when it comes to sectors, such as food or agriculture, evidence of compliance with ethical and sustainability standards is becoming an expectation from business customers.
Many companies use sustainability assessments from third-party providers to request information, reports and ratings from their suppliers through a standardized process. One of the most widely used and accepted providers is EcoVadis, a company which has assessed over 100,000 companies across the globe.
The challenge of being a supplier within the network of multiple brands and enterprises is the intense workload which comes with answering sustainability assessments such as EcoVadis. In addition to other reporting requests you might receive as a supplier, you are inundated with long questionnaires, to which your current and future partners want you to respond. Even with a designated sustainability task force, processing all EcoVadis questions can be very time consuming, cumbersome and confusing.
If you want to learn more about efficient strategies to master EcoVadis, you can jump to the section on setting up efficient processes and read how automation software can help you. But first, let’s understand what EcoVadis is and why it is critical to your business success.
What is EcoVadis and Why Does It Matter?
EcoVadis, founded in 2007 in Paris, and now present in Europe, North America, Africa, Asia and Australia, is the world’s largest provider of sustainability ratings for global supply chains. Businesses from financial institutions to public organizations, and their partners at every level of the supply chain across more than 175 countries, are rated by EcoVadis. Some examples of well known corporations who have completed the EcoVadis assessment include Toyota, Berlon, Amazon, Nestlé, and more.
As the business world evolves, sustainability is becoming a key factor in procurement decisions, particularly when it comes to topics like supplier’s raw material acquisition methods, employee rights, and environmental impact. In fact, EcoVadis claims that “91% of companies take sustainability criteria into account in purchasing decisions.” The EcoVadis assessment is a critical tool for many companies to evaluate and manage the sustainability risks and opportunities within their supply chain.
As a supplier, your EcoVadis rating can directly impact your business opportunities. An above average score can set you apart from a competitor, and be the reason a customer chooses to partner with you over another company. On the other hand, ignoring an EcoVadis request from your customer or deciding not to complete one, can also be a red flag to a potential customer.
While it can feel like a chore to complete the EcoVadis questionnaire year after year, it is essential to keep up with your customer demands to secure more business. Thus, to remain competitive within the market, it is recommended to look into the requirements of EcoVadis early and find ways to enhance response times.
How Does the EcoVadis Procedure Work?
The EcoVadis process can be completed in four steps:
(1) online registration,
(2) completion of assessment questionnaire,
(3) EcoVadis expert analysis,
(4) online scorecard rating.
The bulk of the time is spent on the questionnaire and collecting the appropriate documents and data.
Mastering the EcoVadis Questionnaire
The EcoVadis questionnaire is customized to your company’s industry, size and location. Therefore, allot an adequate amount of time for preparation under consideration of these aspects. Regardless of your company’s features, all questions can be categorized across 21 indicators in four categories:
- Labor and human rights
- Sustainable procurement
The questionnaire cannot be answered without the support and evidence of official documents, of which up to 55 can be uploaded. However, the same document can and oftentimes must be used in the response of multiple questions, making the process redundant and time consuming.
With specific questions requiring particular documentation, attention to detail is key, but also tiresome and still mistakes can easily be made due to misunderstanding a question or uploading incompatible documents.
The documentation used can take many forms, exemplifying both policies and the proof to support implementation of these policies, such as action plans, certificates, work instructions, performance data and more.
Failure to provide the right documentation can result in the question not being scored, which negatively impacts the final rating. Thus, it is imperative to complete the questionnaire in accordance with EcoVadis’ desired format.
How Long Does it Take to Complete the EcoVadis Assessment Questionnaire?
As the length of your EcoVadis questionnaire will vary depending on the size and complexity of your business, as well as your level of sustainability maturity, so will the time required for its completion.
According to EcoVadis, filling out the questionnaire can take anywhere from "a few hours to a few days to complete." However, in reality, it can take several weeks or even months to prepare the responses before you can start filling out the questionnaire.
With finite resources, most companies have limited capacity to complete all questions in adequate time, leading to a lengthy response time. Even if you are a large sustainability team in an established company, communication across different departments to accumulate the necessary documentation is a time-consuming process.
The questionnaire is available via the EcoVadis account and can be downloaded as a PDF. Once the questionnaire is started, the company is permitted a maximum of three weeks to submit. If a company is unable to submit their questionnaire within this period, they can request an extension, which, if granted, incurs additional fees.
Because the rating is only valid for a 12 month period, and it can take several months to prepare all the required documentation, some companies might already start working on the following year’s assessment just a few months after completing the first one to ensure they will have it completed in time.
What Happens After Submission of the Questionnaire?
The subsequent expert analysis will take 6-8 weeks. The EcoVadis experts utilize international sustainability standards to guide their review, including the Global Reporting Initiative (GRI), UN Global Compact and ISO 26000.
After this waiting period, you will receive a sustainability scorecard which can be shared with customers and compared against other companies. Then, time must be dedicated to making improvements in order to see year-over-year company progression and enhanced sustainability practices and ratings.
EcoVadis also offers recommendations and a corrective action plan to promote continuous improvements and an opportunity to set goals for your next annual EcoVadis review.
Some improvements can be tackled right away if, for example, they concern the evidence you provided. Otherwise, you will have 12 months to work on improvements before the process must be completed again.
How to Establish Efficient Processes to Answer the EcoVadis Questionnaire
If you have been entrusted with the tasks to spearhead the process of responding to EcoVadis, the insights into each of the five steps will help you to manage your tasks confidently.
Five steps for efficient assessment processes:
- Review and organize requirements
- Manage and govern tasks for collecting evidence data
- Set up control and approval processes
- Gather all sustainability data in one place
- Contextualize data for responses
We recommend that you prepare a respective project plan well in advance of starting the EcoVadis questionnaire online.
1. Review the requirements and the needed documentation
Organize the requirements according to the four categories of questions:
- Environment (e.g., greenhouse gas emissions, energy and water consumption, impact on biodiversity)
- Labor and Human Rights (e.g., employee health and safety practices, working conditions, social dialogue)
- Ethics (e.g., corruption, anti-competitive practices, responsible information management)
- Sustainable Procurement (e.g., suppliers environmental and social practices)
Each of the categories above structure the questions according to policies, actions and key performance indicators that your company may have in place. So, try to stick to the same structure when preparing your answers.
These 3 layers have specific weights: policies account for 25%, actions 40% and results or KPIs 35%.
2. Manage and govern tasks for collecting evidence data
- Assign tasks and responsibilities to various employees
- Hold individuals accountable for delivering requested answers and evidence
- Set internal timelines for the collection and/or maintenance of answers and evidence
3. Set up continuous approval and review processes
- Initiate and manage control process to ensure evidence has been reviewed and is up to date
- Know the EcoVadis acceptable documentation guidelines and update your evidence accordingly
- Govern internal approval processes if answers need to be approved by executives
Tip: Since responding to rating systems such as EcoVadis requires executive participation, organization-wide collaboration and support, top-down influence is essential. Make sure you have executive buy-in to set up long-term processes in your organization and implement them in a way that will continually provide responses to future requests.
4. Gather all sustainability data in one place
Set up a central place to collect all your answers and evidence
Keep up to date with the latest regulations and standards used by EcoVadis and compare them to your answers:
- See information about Global Reporting Initiative standards (GRI is just about to adopt their standards according to the European Sustainability Reporting Standards (ESRS))
- See information about UN Global Compact
- See information about ISO 26000
- See information about Science based targets
5. Contextualize sustainability data from your evidence documents
Structure and present evidence in a clear way by including
- Reference time periods
- Historical data on your KPIs
- Consolidation of information sources
Tip: Make sure that you reference pages and sections within documents, especially when the same document is used multiple times to provide evidence for more than one answer. For example, your Sustainability Report may be referenced to as many answers as applicable from environmental to human rights procedures.
How Automation Software Can Help
While processing a yearly EcoVadis assessment manually can be done through Excel spreadsheets and emails between team members, this adds complexity to an already demanding process.
Verifying evidence manually is time-consuming and error-prone, considering that data constantly changes and the volume of files and documents increases. Without the right solution in place, performing the yearly recurring assessment can seem like a daunting task.
To simplify this process, companies can use robust software to automate response processes to stakeholder requests. The best automation solutions:
- Save time by automatically mapping answers to past requests and the EcoVadis methodology
- Have an intuitive user interface that enables you to easily confirm or customize answers
- Suggest new answers based on your data sources in the system
- Provide automated data collection from various sources, such as your ERP system, your sustainability reports, or your suppliers' reports
- Enable seamless collaboration among team members and suppliers
- Come with predefined processes to ensure efficiency and audit-readiness of answers
Using software will not only save you time, but also ensure consistent responses. With just a few clicks, you can avoid hours of manual data entry and significantly reduce the risk of errors. Additionally, using automated software ensures your responses are organized in a manner which is easy for the EcoVadis experts to assess, preventing unwanted errors during the analysis.
Your answers will also be saved from previous years so that you don’t have to start from scratch every year. With the support of software, you'll be able to prevent delays, misunderstandings, and missing information.
Tip: Sunhat offers automated processes for responding to sustainability assessment requests, such as EcoVadis. Through providing templates and one organized, central space to keep all your sustainability documentation and policies, Sunhat will help you dramatically cut down the amount of time needed to complete the EcoVadis questionnaire, leaving you with more time to work on new sustainability initiatives and further advance your company’s business and partnerships.