Firms are focusing sustainability efforts on their own operations but neglecting risks in their supply chain, according to a report.
EcoVadis’ Business Sustainability and Risk Index showed of the four factors examained in the index, sustainable procurement was the weakest-performing area.
Sustainable procurement was lagging as “companies continue to focus on societal impacts linked to their own operations, while risks that may be lurking in their supply chains are not prioritised to the same degree”, said the report.
EcoVadis warned that businesses “are neglecting the risks that exist among their suppliers – representing a missed opportunity to drive value and create resilience in the next tier of the supply chain”.
The Business Sustainability and Risk Index assessed over 40,000 organisations between 2015 and 2019 on four themes: environment, labour practices and human rights, ethics, and sustainable procurement.
Scores range on a scale from zero to 100, where below 25 represents high risk, 25-44 represents medium risk, and above 45 represents good performance.
Overall businesses had a sustainable procurement performance at medium risk, but the index fell from 38.6 in 2016 to 37.9 in 2019.
Excluding sustainable procurement, performance across the other areas increased overall by at least 9% since 2015.
Labour practices and human rights performance saw the highest improvement across businesses with an 11% increase since 2015 to 49.4 in 2019, followed closely by environmental sustainability performance at 47.5.
According to the report, 57% of companies achieved scores of 45 or higher this year, a 7% increase since 2015.
Pierre-Francois Thaler, co-CEO of EcoVadis, said this implied a “pivotal point” had been reached, allowing supply chains to “escape the compliance trap and embrace a performance-management approach to sustainability”.
Meanwhile, chemical suppliers of all sizes have consistently progressed with sector initiatives helping lead improvements. North American companies were the best at reporting CO2 emissions compared to other regions, with 18% directly reporting carbon levels.
Firms across all industries worldwide were also found to be unprepared for protecting employees from health and safety risks during a crisis. Leading up to Covid-19, 80% of suppliers lacked supply chain due diligence measures, 57% weren’t monitoring working conditions and 44% lacked health and safety preparedness.
Thaler said: “The recent pandemic put a magnifying glass on supply chain risks and vulnerabilities. As organizations look to rebuild operations, they must ensure strong sustainability practices remain front and center, especially when it comes to supplier selection and relationship management.”
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