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The Market Speaks: Procurement practitioner requirements and the tech vendor response — EcoVadis

09/21/2023 By


Spend Matters constantly updates its understanding of the state of the procurement tech market via RFIs for our SolutionMap dataset, vendor interviews, global event attendance and product demos with the aim of keeping tech-selection decision makers ahead of market trends. But we also endeavor to grow our understanding of the wants and needs of the customers using that tech – the practitioners.

In one series of interviews this summer and through to the end of the year, we are talking to vendors about what their customers really want from them and how they are proposing to address those needs. In a second one, we are talking to the end users about their expectations and requirements.

This week we spoke with Emily Rakowski, Chief Marketing Officer, EcoVadis.

What are the challenges and asks of your customers?

The market for sustainability ratings is changing rapidly. Regulatory compliance is becoming a bigger challenge for procurement as more supply chain due diligence laws come online. While many large multi-nationals have been driving sustainable procurement programs for years, a broader swath of companies now realize that they need to collaborate closely with their trading partners on sustainability to build transparency, manage risk and drive tangible improvement throughout their value chains.

We are hearing from our customers that they want help in three main areas:

  • The first major thing customers are asking EcoVadis is to help comply with supply chain ESG, due diligence and reporting regulations, and in particular, understanding and remediating that risk at scale.
  • The second thing relates to corporate commitments on Net Zero. Many companies are realizing that Scope 3 emissions make up a huge proportion of their footprint, and that they need to more effectively decarbonize within their supply chains to reach carbon-neutral goals. To do that, our customers need a clear understanding of hotspots to address as well as accurately report GHG emissions data from suppliers. And our more advanced customers are even looking for product-level emissions data that can be used across systems.
  • The third thing we’ve responded to this year is feedback from suppliers themselves. They want to understand more clearly how EcoVadis’s assessment process maps to their scores and see more depth in the scorecard itself.

Are you witnessing a shift in demand towards more ESG and supply chain risk capabilities?

Yes, our customers require business solutions that can help them comply with ESG initiatives, laws, and regulations, plus manage supply chain risks, all of which have been rising in urgency for more than a decade. For example, most of the supply chain due diligence laws such as the German law (LkSG) or the upcoming EU Corporate Sustainability Due Diligence Directive (CSDDD) require companies to screen their entire supply base for potential social and environmental risks, and then take next steps with risky or higher-spend suppliers. So as a first step, our customers require immediate, broad visibility across their supply base with access to country, industry, and procurement-focused sustainability risk intelligence.

What is EcoVadis doing to address these customer challenges?

We provide our customers with a comprehensive yet manageable approach that gives them confidence to comply with ESG-related laws and regulations and readies them to accelerate their journey toward more impact-driven sustainable procurement programs that align with larger corporate sustainability goals. For example, our EcoVadis IQ Plus tool provides a highly effective bulk screening solution, powered by AI and data mining-enhanced predictive intelligence, so customers can get a fast but meaningful understanding of the sustainability risks in their supply chains. With that information in hand, they can go deeper with the suppliers representing key risks or significant spend and obtain EcoVadis Ratings, determining the improvement areas those suppliers need to address. Lastly, we provide corrective action planning, coupled with rich learning content and checklists through EcoVadis Academy, so that suppliers and customers can collaborate on remediation activities as required by due diligence laws.

Our customers also need a clear understanding of carbon hotspots to address as well as accurately reported GHG emissions data from suppliers. Just like the broader risk screening I mentioned earlier, the first step here is to evaluate the entire supply base and understand which suppliers are the most likely to contribute significant emissions to the supply chain. To do this, we have a Carbon Heatmap that produces immediate hotspot views based on industry, geography, and size of the suppliers, as well as spend levels. The second step is obtaining carbon management practice information through our ratings. Having produced over 35,000 unique carbon scorecards in the past two years, EcoVadis has seen that only 3% of rated suppliers are at an Advanced or Leader maturity level in their carbon management practices. Our goal is to guide these companies with strong educational content and action lists so they can make meaningful progress toward lowering emissions. We’re seeing promising results with those suppliers who are reassessed on carbon; the majority move up at least one maturity level year over year. We’ve also collected real GHG emissions data from over 18,000 suppliers and can provide intensity-based benchmarks and guidance for them.

We also participate with a consortium group called the Partnership for Carbon Transparency out of the World Business Council for Sustainable Development, which is helping us develop a data exchange-based approach for product family carbon foot-printing that will be released in a few months. We’ll be excited to delve into that further later this summer!

We recognize that procurement views sustainability as a commitment to the companies they work with, industries they are in, people and the planet. It’s still a top priority for procurement leaders, despite all the disruptions we’ve seen in the world in the last few years. We’re more committed than ever to provide procurement teams across the globe the resources to drive their environmental, labor, human rights and sustainable procurement programs and compliance requirements, and scale these efforts to meet their goals and commitments.

Many thanks to EcoVadis. That concludes our Market Speaks series but look out for our analyst roundup of the main themes to come.

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The Market Speaks
Procurement Strategy