Corporations love nothing better than proclaiming their social and environmental bonafides, but whether thoughts translate into deeds is another matter altogether.
In fact, despite corporate commitments to create a more responsible economy, global sustainability performance has remained “mostly flat,” according to EcoVadis, a business ratings firm that evaluated the sustainability performance of more than 30,000 companies worldwide from 2016 through 2018.
In the third annual edition of its Global CSR Risk and Performance Index, published Wednesday, EcoVadis found that only 32 percent of business globally maintained diversity, discrimination and harassment measures such as effective whistleblowing procedures, awareness training and anti-discrimination recruitment tactics.
Or to put it a little differently, 68 percent of businesses have zero measures in place to promote equitable and inclusive workplaces. This despite the fact that sustainability commitments in the private sector have and continue to mushroom.
“While we’re seeing slight year-on-year improvements across most themes, and many headline-grabbing public promises, this year’s analysis shows companies remain mostly stagnant around supply-chain sustainability,” Pierre-Francois Thaler, co-CEO of EcoVadis, said in a statement.
EcoVadis generated its scores, which range from zero to 100, based on 21 corporate-social-responsibility criteria across four themes: environment, labor practices and human rights, business ethics and sustainable procurement. Companies that scored less than 25 are labeled “high risk,” and those that scored 45 and above are “engaged.” (Any business graded 65 and above is considered “advanced to outstanding.”)
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Overall, sustainability scores have “remained consistent” over the past three years, meaning there were no significant increases but no losses, either. Just a little more than half (50.7 percent) of companies received scores of 45 or higher in 2018, compared with 49.2 percent in 2017 and 50.5 percent in 2016. The proportion of “high risk” companies hovered between 4 percent to 5 percent—roughly the same as those that earned the appellation “outstanding.”
“Clearly, plenty of improvement still has to be made at both ends of the spectrum,” the report’s authors wrote.
The size of the company can shape the focus of its efforts, EcoVadis discovered. Larger companies, for instance, scored higher in the environmental (43.5 versus 41.3) and labor and human rights themes (46.7 versus 44.4) compared with their smaller counterparts, which outperformed them in corruption, anti-competition and data privacy (40.9 percent versus 39.8).
Globally, Europe “leads the world” in sustainability performance among large companies, followed by North America, Latin America and the Caribbean and, finally, Greater China.
The weighted overall score for large companies in Greater China, EcoVadis noted, is 33.6. Though this represents a 3.6-point increase in 2018, Greater China remains the “lowest-scoring region” assessed, with a weighted large organization score more than seven points below the global average.
Among the four themes, sustainable procurement garnered the lowest scores, a trend EcoVadis said underscores the need for organizations to more proactively engage with supply partners to identify and address hidden CSR risks. Left unmanaged, the deepest tiers of the supply chain can “expose organizations, people and society to serious issues, including slavery, forced labor, dangerous working conditions, environmental waste, corruption and more.”
“There needs to be a conscious effort to improve supply chain visibility, transparency and collaboration—with a focus on risk identification and improvement,” Thaler said. “Stated more bluntly: Enterprises can’t mitigate the risks they don’t see.”
But sustainable procurement commitments can “make a difference.”
Case in point? More than 75 percent of companies assessed at least twice by EcoVadis maintained or improved their score in the current index, demonstrating that once a business commits to sustainability improvements, they pay off.
“Procurement leaders have immense power to spark change, reduce exposure and move the dial on corporate purpose and responsibility,” Thaler added. “Success starts with getting assessed and properly assessing the supply base.”