CSR Content

EcoVadis CSR Index sees progress on labor and human rights, but procurement sustainability falls short

sustainable

Sustainable practices are slowly being embraced by companies around the globe, but performance has actually fallen in some key areas, according to EcoVadis’ newly released Global CSR Risk and Performance Index 2019.

The greatest increase was recorded in human rights and labor rights activities where aggregate scores for performance rose from 45.4% in 2017 to 46.7% in 2018, said the report from EcoVadis, a provider of  ratings for CSR, sustainability risk and performance for companies that fuel global supply chains.

EcoVadis attributed much of the gain to increased awareness and scrutiny of modern slavery as well as diversity issues in the workplace, with many governments introducing legislation requiring enhanced due diligence and reporting on these issues

EcoVadis — Catching Up on a Provider to Know

EcoVadis, a provider of ratings on companies’ sustainability and corporate social responsibility efforts, was named to Spend Matters’ 50 to Know list six months ago. It’s the third year running that it has been highlighted as one of the providers to know in the procurement technology sector that we cover.

This year, we’ve taken an in-depth look at EcoVadis in a PRO series by our analysts, and we’ve covered some of EcoVadis’ latest findings on sustainable procurement.

EcoVadis can be a slightly challenging provider to put into a box and review. But let's look into its products and technology to see where it fits in the market and as a solution for your business.

EcoVadis, NYU report on the state of sustainable procurement

sustainability

Sustainability efforts paired with technological growth continuously affect the way business leaders plan for their companies’ futures. As budgetary and operational plans are considered, thought leaders in the supply chain and procurement space are evaluating sustainability as an asset that can stifle risk and bring about further economic growth.

EcoVadis, a firm that works to provide sustainability risk and performance ratings for global supply chains, recently launched its 2019 Sustainable Procurement Barometer in partnership with the NYU Stern Center for Sustainable Business.

ASCM launches Enterprise Certification to improve supply chains’ focus on ecology, economics, ethics

The Association of Supply Chain Management (ASCM) announced the launch of the ASCM Enterprise Certification, the first-of-its-kind, global cross-industry standards guide to benchmark progress and measure the ethical, environmental and economic initiatives of corporate supply chains.

Digital Business Strategy: The CPO’s Outside-In Agenda (Part 3) [PRO]

In the first two installments of this Spend Matters PRO series (see Part 1A, Part 1B), we noted that a number of pressing issues are shaping procurement from the outside in, yet chief procurement officers (CPOs) are still primarily concerned with issues set by an inside-out agenda — that is, cost-cutting and supply assurance targets mandated by upper management. Our PESTLE analysis of factors shaping the modern CPO agenda identified broad trends like economic instability, globalization, changing digital business strategies and the need to address corporate social responsibility (CSR) as areas that procurement organizations need to consider if they want to truly tap and manage the opportunities (and risks) offered by external supply markets, starting with sustainability and CSR in Part 2A and Part 2B.

Today we move on to the second item topping the CPO’s outside-in agenda: digital transformation.

Digital transformation is increasingly creeping into a CPO's crosshairs because digitization is becoming a daily part of our personal and professional lives. Not only is software becoming critical for everyone in the organization to do their jobs, but the internet is becoming critical to sales and marketing to advertise and sell the product as well as to R&D to do research and engineering to control just-in-time manufacturing. Meanwhile, from a corporate strategy perspective, companies are aggressively looking at their digital business strategies — and consulting firms like Accenture, Deloitte, McKinsey and others are busy capitalizing on this. Distribution companies do not want to get “Amazoned.” (For example, Accenture is looking to next generation digital technologies to achieve it’s ZBx nirvana — and achieve sustainable zero-based spend in a zero-based supply chain.) Logistics firms do not want to get “Ubered.” Contract manufacturers want to become innovation incubators. And pretty much every finished goods manufacturer wants to embed telemetry to collect data and use it to improve customer satisfaction, increase top-line growth and pass the data back to the supply chain to improve operational efficiency.

Digitization is the new buzzword and just about every publication out there is talking about it, running articles on how to do it, and publishing “deep” exposes on the benefits of digitization. Best practice guides, case studies, futurist projections, and other in-depth studies are a daily occurence. Not all are equal, not all are relevant to your organization, and not all are even accurate. But that’s beside the point. Digitization is here, and its influence is only going to grow. So rather than sit back like a luddite and bemoan the coming wave of pink slips due to automation, CPOs need to rally their organizations around digital to help them see the benefits new technologies can bring (as tactical process cost reductions can always be invested in strategic value generation efforts if they use these same technologies to make the case, a case that does not necessitate a reduction in workforce, just a shift from the tactical to the strategic).

Visibility is Key to Managing CSR Risks in Indirect Spend, EcoVadis Says (Part 3)

Indirect spend often gets overlooked by businesses because the outcomes from buying those goods and services are not the company’s core product, which relies on direct spend. But the potential for lost money and increased risk is so great that businesses must find a way to manage indirect spend.

“The broad reach of indirect spend, coupled with a lack of visibility creates risk, so the key to gaining visibility and managing this risk is to prioritize indirect spend management within an organization and start assessing indirect supplier performance in a formalized way,” said EcoVadis, a risk mitigation provider that offers business sustainability ratings and intelligence.

EcoVadis joined us for a Q&A to explore the next steps to figure out how to identify weak points, prioritize areas to defend against and create a plan for mitigating risks.

AI in Supplier Management: Tomorrow (Part 1) [PRO]

In our last pair of Spend Matters PRO articles about AI in supplier management today, Part 1 and Part 2, we overviewed some situations where you can find AI in e-sourcing platforms today, where we define AI as “assisted intelligence” because, as we've stated in our series about AI, there is no true artificial intelligence in any enterprise technology today. In fact, there is nothing close, at least not on the open marketplace.

But when we get to the point where we have an augmented intelligence solution that can help us not only monitor supplier performance (across a community), automatically identify issues and risks, and even help us with automated resource — and asset — assignment but can also help us identify automated corrective action resolution plans, risk mitigation strategies, and real-time relationship monitoring and resource re-alignment, they start to approach augmented intelligence and become quite useful to us indeed.

In this article, we are going to discuss the AI-enabled functionality that we expect to see in the leading supply management platforms tomorrow. We will continue our pattern and start by defining what we expect to see, how it will likely work, and then give some hints of the technology platform that will underlie it.

Tomorrow, we expect that the leading supplier management platform will also have the following capabilities:

— Smart information selection and auto profile updates
— Market-based supplier intelligence
— Real-time relationship monitoring
— Automated resolution plan creation, monitoring and adjustment
— Automated risk mitigation strategy identification
— Optimized real-time resource re-alignment

Q&A on Digital Procurement’s Role in Sustainability, Ethics and Compliance [PRO]

As supply chains get increasingly externalized and globalized, the broad scope of operations is subject to equally broad regulatory oversight and supply risk. Meanwhile, as consumers increasingly demand transparency and ethical behavior by value chain brand owners, supply chain organizations at those brands (and also at their suppliers), are having to increasingly respond to these demands. Procurement organizations, for their part, are trying their best to support this externalization on all fronts, but they are so busy with strategic sourcing and P2P execution that even the “basics” of supplier qualification, certification and on-boarding are suffering — never mind having time for more strategic activities in supplier innovation, advanced risk management, digital transformation and other areas.

So, what’s the solution? Well, procurement must first practice what it preaches by tapping supply market innovation for itself, and this innovation is taking many forms. In an everything-as-a-service (XaaS) world, procurement must not only take a leadership role in robustly contracting for these diverse cloud services, but also:

— identifying how various providers beyond cloud applications can help procurement execute much more efficiently — at the cadence of the business.
— embedding the best digital supply market innovations into its own service delivery in order to expand its own influence and brand within the enterprise.
— enabling and empowering functional partners in GRC, IT, Finance, Legal, HR, Risk/Audit, etc. to enable their own service value (increasingly in a cross-functional GBS environment) and integrate the disparate services together much more coherently.

For example, consider the question: Who is responsible for establishing the single face to the supplier when we digitally on-board and manage them to not only transact with them in a compliant manner, but also ensure that they’re operating securely, ethically and transparently more broadly? It’s not just procurement, but rather a combination of procurement, IT, GRC and various centers-of-excellence that should be working tightly together. Unfortunately, misalignment is the norm, but not because of outright conflict or malfeasance, but because functional folks are too busy just trying to execute within their own silos. And they’ll never extricate themselves from that situation unless they have drastically new capabilities to deploy.

This is where procurement organizations need to make smart choices on how they apply digital strategies and tools/services to this area of sustainability, ethics and compliance.

I was recently catching up with an industry colleague of mine named Tomas Wiemer on the topic (he’s a former procurement transformation leader from Nokia and Alcatel-Lucent). He is very deep into this area and typical of leaders at European firms who are definitely in the vanguard here. Tomas is considering some career changes right now, primarily with some emerging tech players who can have a dramatic impact in the industry. Tomas reminds me a bit of a European version of Roy Anderson, who just joined Tradeshift (here’s part 3 of an interview that I did with him), and I think that Tomas will do similarly well when he lands somewhere. He’s doing some interim work for a client, and I agreed to let him interview me for my inputs, but given my role, I asked him for the questions in writing so that I could fully respond in kind and publish it to our subscribers. The questions are below:

How do you view topics as compliance and sustainability in the procurement digitalization landscape?
Do you foresee a convergence/harmonization of sustainability/compliance requirements toward suppliers thanks to the rise of S2P platforms/marketplaces?
What do you believe is the greatest added value of procurement digitalization / AI for compliance and sustainability?
What do you think are the key conditions/requirements to enable the emergence of sustainability/compliance topics in digital procurement?

What’s interesting is that this topic is very hot right now. My business partner Jason Busch just attended the recent EcoVadis conference in Paris, and the buzz (beyond the buzz from the sustainably grown coffee that was undoubtedly served there) was palpable. Part of the reason is that the topic is giving many procurement organizations new ways to engage the business and the suppliers alike in a way that drives much more meaningful value across the value chain beyond just price-centric cost savings. And it also engages a new generation of procurement professionals who want to have a meaningful impact on value chains rather than just being deal-makers and “firefighters.”

Anyway, the questions above are big ones, and require very thorough answers, so without further ado, let’s get to answering them ...

Sustainability, Environmental Stewardship and CSR: The CPO’s Outside-In Agenda (Part 2B) [PRO]

sustainable supply chain

In our last article in this Spend Matters PRO series, we focused on several pressing issues that are shaping procurement from the outside in, yet chief procurement officers are primarily still concerned with issues set by an inside-out agenda — that is, cost-cutting and supply assurance targets mandated by upper management. However, our PESTLE analysis of factors shaping the modern CPO agenda identified broad outside-in trends that an organization needs to consider if it wants to truly tap and manage the opportunities (and risks) offered by external supply markets. (Read the CPO’s Conundrum: Parts 1A and 1B.)

Nowhere is this more readily apparent than with the topic of sustainability and environmental stewardship, the focus of today’s brief. The environment is an inseparable component of any business. It forms the platform layer off which all goods and services are produced, and cannot be ignored. And the difference between effective and sustainable management and ineffective and unsustainable management, as pointed out in yesterday’s article, is shocking. Not only would investments in environmental sustainability focussed companies over the past two decades doubled an average rate of return, but millennials will pay a (small) premium for sustainably (and ethically) sourced products and you are ensuring that you will have raw material supply for years (and decades to come).

Sustainability, Environmental Stewardship and CSR: The CPO’s Outside-In Agenda (Part 2A) [PRO]

leading cross-functional teams

In this first installment of this Spend Matters PRO series (see Part 1A and Part 1B), we noted that a number of pressing issues are shaping procurement from the outside in, yet chief procurement officers (CPOs) are primarily still concerned with issues set by an inside-out agenda — that is, cost cutting and supply assurance targets mandated by upper management. Our PESTLE analysis of factors shaping the modern CPO agenda identified broad trends like economic instability, globalization, changing digital business strategies and the need to address corporate social responsibility (CSR) as areas that procurement organizations need to consider if they want to truly tap and manage the opportunities (and risks) offered by external supply markets.

Perhaps nowhere is this more readily apparent than with the topic of sustainability and environmental stewardship, the focus of today’s brief. The environment is an inseparable component of any business. It forms the platform layer off which all goods and services are produced, and, more fundamentally, the resulting ecosystem services from which humans benefit create the foundations for our species’ survival and quality of life. Due to multiple ongoing trends, however, the environment is changing, as are the ways that consumers, investors and governments think about our relationship to the environment.

Accordingly, Part 2 of this series on the CPO’s Conundrum examines the outside-in drivers pushing sustainability and environmental stewardship higher on the procurement agenda. It also explores recent examples of how businesses are integrating these issues into their supply management strategies, while simultaneously addressing them in balance with traditional procurement objectives, such as category management, supply base alignment and demand shaping.

EcoVadis to Add Risk Mapping Tool, On-Site Audit Feature to Its Core CSR Rating

wind power

EcoVadis, a provider that rates businesses on sustainability and corporate social responsibility (CSR), announced Tuesday that it is expanding its capabilities with the new Sustainability Intelligence Suite, which will include "predictive risk mapping, performance signals and audit management."

UX, Blockchain, IoT: The Future of Procurement Technology Unfolds at BearingPoint Speakers’ Series

Imagine ordering a replacement part with your camera, or having your IoT devices order supplies themselves, or just telling your chatbot assistant to assess and restock your inventory while you work on another project. Those digital-assisted feats aren’t futuristic. They’re already happening — but we’ll be seeing more uses of them in procurement as the digital transformation continues to evolve, according to speakers last week at a daylong discussion called Digital Procurement: Beyond the IT Landscape. Subjects ranged from blockchain and the internet of things (IoT) to process mining and best practices for digital implementation.