Best Practices For Supplier Sustainability Evaluations
The majority of companies are not interested in evaluating suppliers for the sake of evaluation, but rather they are looking to drive improvements, reduce risks and push towards innovation in the supply chain. We would like to share 5 best practices based on our expertise and experience in assessing sustainable supply chain excellence.
1.) Keep it simple. Sustainability jargon can be complex and notions which appear obvious to Corporate Sustainable Procurement Managers such as CSR, biodiversity or climate change may not mean a whole lot to a SME located in Central America or even to some of your local procurement teams, for that matter. Keeping it simple is important in order to ensure communication efforts are understood. Additionally, providing support such as trainings to buyers and suppliers on what CSR means to you and to your company is increasingly required if corporate sustainability initiatives are to be effectively implemented.
2.) Address the root cause. Too many initiatives focus on addressing non-compliance (i.e. adding an additional fire extinguisher to a facility), but issues will continue to persist every year if the root causes have not been addressed. To be blunt, CSR site audits are useless for the majority of suppliers. It is for this reason that EcoVadis has pioneered an innovative approach to rating a company “Sustainability Management System” by looking at 21 CSR criteria, rather than simply checking boxes based on non-compliance. Understanding how a supplier’s management system is structured and what policies, actions and results they have in place regarding sustainability is crucial to long lasting performance improvement.
3.) Remember: it takes time. CSR improvements do not happen overnight and change usually will take longer than you think. Some companies establish policies that set impossible expectations of suppliers such as “all non-compliance to be resolved within 30 days of audit.” This sets up both the company and the supplier for failure and frustration. Truth be told, it does not work this way and companies need to allow 6 to 12 to 18 months to see real changes.
4.) Integrate sustainability into the procurement process. By definition, CSR is voluntary and it is not to be mistaken with “legal compliance”. Suppliers will not make the voluntary effort towards sustainability unless they feel there is a risk in not doing so or on the flip side if there are rewards for those who go the extra mile. Sustainability should be valued from the very start of a supplier relationship, especially within the RFP process. Progress will not take place unless suppliers are driven beyond business-as-usual and given incentive towards sustainable innovation.
5.) Industry collaboration is key. Even the largest of organizations lack the leverage to impose detailed improvements upon their suppliers which is why companies need to align with their peers to push in the same direction. It is for this reason that EcoVadis released a Collaborative Action Plan module, which is the first of its kind allowing suppliers to have an integrated view of all improvement requests made by different customers. In this way, suppliers can simply propose a single plan of action to all customers which saves time, energy and most of all allows the supplier to take ownership of their improvements.