Companies, including our clients, are increasingly engaging with sustainability ratings platforms, such as EcoVadis, for independent assessment of their sustainability performance and to demonstrate their sustainability credentials to key stakeholders.
These platforms can be particularly beneficial to companies in the following cases:
Small to medium sized companies that are not captured in the scope of the larger sustainability rating agencies, such as MSCI or Sustainalytics, and would otherwise not be assessed or scored for their sustainability credentials.
Standalone subsidiaries or business units within larger parent companies that would otherwise not be assessed independently of the parent company.
Companies facing increasing sustainability-related requirements from clients, or those who are mandated to disclose sustainability-related criteria on their supply chain.
However, these platforms periodically adapt their methodology and scoring systems to keep up with the evolving sustainability landscape. Companies must, therefore, continually improve their sustainability efforts to both maintain and enhance their sustainability response and positioning each year.
Here we focus on the changes made to the EcoVadis Medals and Badges Programme and how it will impact companies with scorecards published from January 2024.
What is EcoVadis?
The EcoVadis Corporate Social Responsibility (CSR) Assessment measures and scores the quality of a company’s CSR management system through its policies, actions and results. The assessment scores up to 21 CSR issues grouped into four themes: Environment, Labour & Human Rights, Ethics, and Sustainable Procurement.
Each CSR issue is assessed against the three management layers that together comprise an effective Sustainability Management System: Policies, Actions, and Results.
Each assessment is customised according to a company’s size, location and industry. Relevant weightings are applied when scoring is calculated.
Importantly, the EcoVadis rating methodology is evidence based, with the burden of proof falling on the reporting company to demonstrate that Policies, Actions and Results are incorporated into its Sustainability Management System. Companies are therefore required to attach supporting documentation, such as sustainability reports, policy documents and certificates to their CSR assessment, which must be approved for declarations to be credited.
What are the proposed changes?
In keeping with the changing regulatory landscape, and to reflect the evolving role of sustainability in businesses, EcoVadis will be making changes to its Medals and Badges Programme.
Sustainability Recognition Levels
The thresholds for the Sustainability Recognition levels will be increasing. From January 2024, Bronze Medals will be awarded to companies in the top 35 percentile of EcoVadis rated customers, increasing from companies in the top 50 percentile. Similarly, Silver Medals will be awarded to companies in the top 15 percentile of EcoVadis rated customers, increasing from companies in the top 25 percentile.
The percentile compares a company’s performance with all rated companies in the EcoVadis database over the previous 12 months.
Eligibility Criteria for EcoVadis Medals
The eligibility criteria for the EcoVadis Medals Programme will also be increasing. From January 2024, companies must meet the following eligibility criteria to earn an EcoVadis medal:
A minimum score of 30 in each of the four sustainability themes
Restrictions on negative 360º Watch findings, becoming ineligible if:
One severe finding in any theme is identified
One or more major findings in two or more themes are identified
More than five major findings in any single theme are identified
Restricted industries, becoming ineligible for participation in:
Manufacture of tobacco products
Manufacture of weapons and ammunition
Mining of coal and lignite
Substantial revenues from coal sources and/or coal-based power generation
EcoVadis Badges
In addition, EcoVadis will also be launching two new badges to recognise companies that are making meaningful progress in their sustainability journey.
The Committed Badge will be awarded to companies that demonstrate a sufficient level of dedication to their sustainability programme through their Sustainability Management Systems. The badge will be awarded to companies that score a minimum of 45 points, representing “Good” performance in the EcoVadis Methodology.
The Fast Mover Badge will be awarded to companies that demonstrate substantial progress in their sustainability programme through their Sustainability Management Systems. The badge will be awarded to companies that score between 34-44, with a minimum 6-point improvement compared to their previous assessment in an 18-month period.
Timing
The changes to the EcoVadis Medals and Badges Programme will apply to any scorecards published from January 2024. The standard publication timeframe is six to eight weeks after submission, so any questionnaire submitted from November 2023 may be subject to the new rules.
CEN-ESG can provide comprehensive EcoVadis support
The preparation and submission of an EcoVadis CSR Assessment requires considerable planning, data gathering and resourcing to complete, alongside extensive knowledge on the scoring methodology.
Our team can support organisations at all stages of EcoVadis engagement, ranging from company’s requiring support for their first submission, to more experienced companies looking to enhance their score year-on-year.
Experienced in the EcoVadis process, we can:
Assess and score available disclosure to generate targeted recommendations that will enhance scoring.
Provide ongoing implementation support to ensure recommendations are suitably actioned.
Provide questionnaire support and guidance throughout the submission process to ensure scoring is maximised.
Prepare, or guide the development of, policy documents that will be attached as supporting evidence.
Provide data management and improvement support to enhance the quality of data attached as supporting evidence.
Support with sustainability strategy design (e.g., Materiality Assessment, UN SDG alignment, and target setting) that will underpin an EcoVadis submission.
Provide net zero transition support (e.g., full carbon foot printing, science-based targets, and transition plan development) that can be attached as supporting evidence.
Contact us
CEN-ESG helps businesses maximise their sustainability potential, performance and ESG disclosure.
If you would like to further understand the EcoVadis process, are interested in submitting an EcoVadis assessment with our support, or have concerns about the increasing Sustainability Recognition levels, our team would be more than happy to help.
Jasper Crone, Director
jasper@cen-esg.com
Roger Johnston, Director roger.johnston@cen-esg.com
For more information about our Sustainability Consultancy, Investor Relations, or CEN Data services and expertise, please click on Services above or go to https://www.cengroupholdings.com.
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