EcoVadis' first global index reveals SMEs are making strides in corporate social responsibility
- Supply chain social responsibility auditor EcoVadis unveiled its first Global CSR Risk and Performance Index Tuesday, evaluating more than 20,400 companies using data from 2015 and 2016.
- The index evaluates companies based on four themes: environment, labor practices and human rights, fair business ethics, and sustainable procurement. Overall, the index shows businesses — particularly small and medium enterprises — making strides in corporate social responsibility and lowering their risk scores.
- SMEs in the Food & Beverage and Construction industries were the best performing, with more than 61% of surveyed companies meeting "low-risk" levels. Regionally, Europe had the lowest risk companies (61%) and the Asia-Middle East-Africa region had the least low-risk enterprises (35%).
Efforts to contain and reduce both human and environmental corruption within the supply chain are growing, but the need for change remains.
“While the results are promising, there is still significant regional and industry-specific risk present across supply chains, and a lot of room for organizations to increase their CSR and sustainability impact," EcoVadis Co-founder and co-CEO Pierre-Francois Thaler told Supply Chain Dive. "Business leaders need to continue to prioritize and invest in sustainable procurement and supply chain transparency."
Recent research reveals promoting a sustainable procurement program can yield an improved brand reputation, stronger and longer-lasting supplier relationships, and improved rankings in green indices. Despite those improvements, however, traceability efforts generally fail to become a priority for many procurement managers, who remain unaware of the business benefits of ethical management.
More than the traditional risk measures, EcoVadis' index reveals an encouraging shift in the importance of CSR to small and medium businesses, and worldwide.
Of the 20,400 companies evaluated by EcoVadis, roughly 80% are considered small or medium-sized (less than 1,000 employees), according to the report. However, these companies have been improving their CSR scores at a faster rate (14.9%) than their larger peers (12.3%).
"Since value chains are mostly made up by S-M companies, this improvement of CSR performance by S-M companies is important for stakeholders to notice," EcoVadis wrote in its report. "It suggests that recent initiatives focused on CSR issues (e.g modern slavery, conflict minerals, environmental pollution) in the value chain are paying off, and we can expect greater dividends in the future as long as initiatives continue their efforts."