Ecovadis Index 2018 PDF

Global CSR Risk and
Performance Index 2018

Table of Contents
Foreword.............................................................................................................. 4
Executive Summary........................................................................................... 6
What’s New......................................................................................................... 8
Global Overview.............................................................................................. 10
Contrasts and Similarities Across Regions..................................................14
Performance and Reassessment Comparison by Company Size...........18
Performance by Industry Division................................................................ 22
Industry Snapshots.......................................................................................... 24
Food and Beverage....................................................................................... 26
Advanced Manufacturing............................................................................ 28
Light Manufacturing..................................................................................... 30
Heavy Manufacturing................................................................................... 32
Construction.................................................................................................. 34
Wholesale, Services and Professionals...................................................... 36
Transport............................................................................................................................. 38
Information and Communication Technology..................................................40
Finance, Legal and Consulting................................................................................. 42
Guest Articles................................................................................................... 44
Using Data on Worker Sense of Value to Guide Improvements

in Social Performance in the Supply Chain......................................................... 46
The Critical New CSR Challenge: Third-Party Cybersecurity Risk........... 48
Science Based Targets: An Essential Piece of a Complex

Climate Strategy Puzzle...............................................................................................50
Tomorrow’s Brands Will Be Sustainable or They Won’t Exist at All.......... 52
Study Methodology.........................................................................................54
EcoVadis CSR Methodology Overview and Principles...........................60
© copyright EcoVadis 2018

Foreword
Dear Reader,
Welcome to the second edition of the EcoVadis Global CSR Risk and Performance Index.
According to data from the National Oceanic and Atmospheric Administration
(NOAA), 2018 will be the fourth hottest year on record. The impacts of global warming
are no longer hypothetical, we can see them in everyday life. The COP24, taking place
in December in Poland’s southern city of Katowice, will make yet another attempt to
motivate governments and companies to act.
On the human rights front, many countries are now enacting laws to push businesses
to mitigate human rights issues within their value chains. At the time of writing this
report, legislations intended to minimize the impact of modern slavery have been
passed by seven of the G20 countries. Procurement and sustainability teams are
feeling this rising pressure coming from legislators and civil society. Now, more than
ever, there is a need for a simple, reliable and global supplier CSR rating platform.
EcoVadis was founded with this idea in mind over a decade ago. Today, with offices in
nine countries and employing more than 550 professionals, we assess close to 20,000
companies per year on their environmental, human rights and ethical performance.
In 2017, we felt it was time to analyze and share this data with the global community.
This is why we introduced the Global CSR Risk and Performance Index. Following the
success of the first edition, in this, second publication we are looking at trends over a
three-year period. The data set has grown by 7.8 percent over last year to include more
than 862,000 data points. The larger sample sizes allow us to increase the number of
regions to five when doing cross-comparisons among the nine industry divisions and
two size groups.
This year, we also introduce Index Online, an interactive tool, which makes it possible to
drill down to view some of these cross-comparisons of sustainability scores of industry
divisions and geographic areas. The tool, which you can access at index.ecovadis.com
will allow you to save or share the data views and graphs you create. We welcome feedback
on this new feature and we will strive to make the future editions even more informative.
Enjoy the read and please don’t hesitate to join the conversation online and share
your comments.
Regards,
Sylvain Guyoton
Senior Vice President of Research
Executive Summary The Expected and Unexpected Regional Differences
Looking at performance across the regions, European companies continued to outperform
Following the success of the inaugural edition of the Global CSR Risk and Performance their counterparts from the rest of the world across all four themes. Businesses in Latin
Index published last year, this year’s edition provides an updated analysis of Corporate America were only slightly behind North American ones, with a potential to surpass them
Social Responsibility (CSR) performance of businesses around the world, now covering if they pass stronger anti-corruption and anti-bribery legislation. In terms of company size,
the 2015-2017 timeframe. small and medium-sized companies in Latin America and Europe improved consistently
Data drawn from more than 42,000 EcoVadis assessments of over 33,000 companies but large companies did not demonstrate the same performance in any of the regions.
allowed us to provide comprehensive snapshots of nine industry divisions along with Companies of all sizes in Greater China continued to lag in environmental performance.
observations on regional contrasts and similarities as well as performance analysis
of large vs. small and medium-sized companies. An analysis of the four underlying
theme scores, Labor & Human Rights Practices, Business Ethics (formerly Fair Business Companies Generally Improve on Second Assessment
Practices), Environment and Sustainable Procurement, also provides valuable insights
Roughly 80 percent of companies which have been assessed at least twice by EcoVadis
into how successfully businesses are addressing particular areas of CSR.
generally maintained or improved their performance in their latest assessment. This is
true for both large and small & medium-sized companies and arguably demonstrates
that once an organization commits to CSR improvements, this commitment pays off.
Small and Medium-Sized Companies Perform Better Overall
On the whole, the year 2017 saw mixed CSR performance, with small and medium-sized
companies (26-999 employees) generally performing better than large ones (over 1,000 Implications for Risk Management
employees), achieving overall scores of 42.4 and 39.6 respectively. Given that results below
What implications do these variations in CSR performance have for risk management?
45 indicate an unstructured approach to CSR management (medium to high risk on the
For procurement functions this report gives a view of how risks are shifting by region and
EcoVadis scoring scale), large companies have much further to go in improving their CSR
industry to help formulation of purchasing strategies to avoid harmful or illegal activities
practices. Zooming into the industry divisions, the small and medium-sized companies
by suppliers that can damage brand reputation and disrupt business. Companies which
portfolio average scores improved consistently across three years in six out of nine divisions
have been assessed by EcoVadis can use the Index to benchmark and contextualize their
(light, heavy and advanced manufacturing, food & beverage, construction and ICT). Large
own CSR performance. They can also identify areas where their industry is particularly
companies demonstrated the same result only in three industry divisions (heavy and
susceptible to CSR risks, so they can begin to future-proof their business longevity.
advanced manufacturing and ICT).
Also noteworthy is the fact that small and medium-sized companies account for some 80
percent of the organizations we assess. This likely mirrors the nature of most economies
around the world, with small and medium-sized enterprises making up the majority of
businesses in each country.
Varied Engagement Across Different Areas of CSR

In terms of performance across different areas of CSR, Business Ethics, which is primarily
comprised of corruption & bribery and information security criteria, is the theme that improved
the most in 2017. This is likely a result of increased efforts by companies to align with national
and international legislations, including the EU’s General Data Protection Regulation (GDPR).
The Labor & Human Rights and Sustainable Procurement themes stayed level. They cover a
number of aspects, including working conditions and human rights of both employees and the
community. But given that some 40 million people are still caught up in the grip of modern slavery,
lack of improvement here begs the question of whether enough is being done to eradicate it.
The scores for the Environment theme, which includes monitoring of Greenhouse Gas
(GHG) emissions, went down in most regions, suggesting that businesses may have
had difficulties to work on the goals set in the Paris agreement. Interestingly, however,
they went up in the U.S. despite the country relaxing its environmental regulations and
pulling out of the Paris agreement. (Details available in the Index Online).
Global CSR Risk and Performance Index 2018 6 Global CSR Risk and Performance Index 2018 7
What’s New Over 180 CSR initiatives and certification schemes around the world were updated or
newly added to the EcoVadis knowledge bank to enrich our assessments, including the
EU CertPlus and The Forest Trust (added in March and July 2017 respectively). These new
Index Methodology Updates additions to our knowledge bank bring the number of recognized initiatives and certification
schemes to more than 500 around the world today.
The first edition of EcoVadis Index was published in 2017. To ensure as accurate as possible
representation of trends across different regions and industry divisions, we made some We also reorganized our approach to human rights. In addition to child/forced labor,
changes to this year’s version, including: discrimination and harassment topics, we included external stakeholders’ human rights
as relevant to certain industries, i.e. primary materials, financial services, weapons,
• Introducing weighting in key global figures to remove bias; pharmaceutical manufacturing.
• Adding two additional zones when dividing geographic regions, for a total of five;
• Including observations on key trends in each industry division.
You can find a complete description of these updates along with other methodology details
in the appendix.
Also new this year, we added Index Online. This web-based tool includes additional data
views and graphs, which allow you to zoom into sectors and geographic areas. It is available
on our website at index.ecovadis.com.
EcoVadis Assessment Methodology and Business Updates

Businesses assessed by EcoVadis are classified according to the International Standard
Industrial Classification of All Economic Activities (ISIC). We added a new Industry ISIC
category: 5222 Transport via pipelines (Transport industry division). This brings the total
number of categories we can assess – with an adapted assessment questionnaire and score
weighting – to 190.
In addition to these 190 ISIC categories we can assess, we support a larger set of industry
ISIC categories in our list of Industry Risk Profiles, which are used for risk mapping. In 2017,
we published five additional ISIC categories related to chemical manufacturing.
In July 2017, we also added Regulatory DataCorp. (RDC) data to our 360° Watch research.
The new integration with RDC’s database bolsters the EcoVadis methodology when it
comes to identifying ethics and fair business practice risks in every company’s evaluation
from more than 2,500 sources.
The EcoVadis Research & Development unit developed a machine learning platform that
leverages neural networks and semantic analysis to complement the 360° research on
external stakeholder opinions. Artificial Intelligence supports our 360° research team by
automatically identifying information about CSR related content. From July 2017, more than
450 articles identified by our machine learning platform were published monthly.
Global Overview Top Trends and Issues
• The decision by the U.S. to withdraw from the Paris climate accord as well as gaps
Key Findings between emissions reduction requirements for the two-degree celsius scenario and
national reduction pledges by countries left global businesses – especially those based in
• Average CSR performance stayed level with the number of both leaders and laggards the U.S. – without clear government guidance;
increasing;
• Eight million metric tons of plastic pollute the oceans each year and more than 90
• Corruption & bribery and information security, included under the Business Ethics theme, percent of plastic waste is not recycled; plastic production is forecast to triple by 2050;
were the areas where businesses improved the most, likely to align with the General Data
• 40 million people are still victims of modern slavery and 152 million children are subject
Protection Regulation (GDPR) and anti-corruption legislations;
to child labor;
• Environmental management dipped, showing that businesses had not redesigned
• Digital responsibility and information security are becoming mainstream for businesses
environmental practices after Paris agreement;
due to the EU’s GDPR coming into effect in 2018 and high-profile personal data loss
• Labor & human rights and sustainable procurement management performance stayed incidents by companies.
level, indicating persistent risks of modern slavery.
Evidence-Based Business Sustainability Ratings

Index at a Glance: Key Global Scores
From 2015 to 2017, we conducted over 42,000 assessments on more than 33,000
companies, expanding our coverage by 60 percent over three years. This database
forms the data universe for the Index and – with a huge variety of business sizes and
locations around the globe – provides the widest coverage of evidence-backed business
sustainability ratings in the world. It also puts us in a strong position to discuss businesses’
CSR commitments and their impact.
39.6 40.1 39.6 40.7 42.1 42.4 In the index universe, the ratio of large companies to small and medium-sized companies
2015 2016 2017 2015 2016 2017 remained stable at about 20 to 80. We believe this mirrors the nature of most economies
around the world, with small and medium-sized enterprises making up the majority of
businesses in each country.
World World
Large Companies Small and Medium-Sized Companies
Score Distribution Over the Years With EcoVadis Medal Benchmarks
2015 2016 2017

BRONZE SILVER GOLD
2017 BEST SCORING 2017 WORST-PERFORMING 32.9
Top 65% Top 30% Top 5%
30%
Industry Division Globally Industry Division Globally 29.8
28.4 28.8 28.9 29.6
Proportion Per Score Range

24.9
23.7
20% 22.6
46.8 39.6 10%
7.5 8.3 8.5

6.1 6.8 6.6
0.7 0.5 1.1 0.9 1.4 1.7
0 0 0 0.1 0.1 0.1
Food & Beverage Wholesale, Services & Professionals 0%
0-9 10-19 20-29 30-39 40-49 50-59 60-69 70-19 80-89
Small and Medium-Sized Companies Large Companies
Score Range
Looking at the unweighted overall score distribution in 2017, there was a larger proportion of
leaders (>60 points) than in 2016. However, the number of laggards was also up (<30 points),
with no clear pattern emerging in the middle ground.
Progress and Decline Across the Themes Sustainable Procurement Theme Score Distribution
A closer analysis of the four themes’ unweighted scores reveals a marked improvement in Business Large Companies Small and Medium-Sized Companies
Ethics, which includes corruption & bribery and information security. This is the only theme that 50%
saw a score improvement in 2017. Given several high-profile data breach incidents in recent years
Percentage Within Score Range

and the EU’s GDPR coming into force in 2018, it is also an optimistic indicator that businesses 40%
42%
recognize the importance of information security and are working on improving their practices.
30%
The unweighted score for the Environment theme dipped in 2017, after a boost in 2016. It is
of concern that the U.S. decision to pull out of the Paris agreement may jeopardize the gains 27%
in environmental protection. Notwithstanding the U.S. decision, there are still gaps between 20% 24% 24%
emissions reductions needed for the two-degree scenario and what countries have pledged
to reduce. 10% 15% 15% 14%
9% 9% 4%
It appears that most businesses still do not see the climate agreement as an opportunity 7% 7% 1% 2% 1%
0% 0% 0%
0%
to redesign their activities, and are therefore not improving their environmental impact. 10 20 30 40 50 60 70 80 90
Another global trend pertains to the scale and longevity of plastic pollution, along with a
growing public awareness of the situation. The dip in the environmental score in 2017 is The Sustainable Procurement theme measures how companies are engaging their own
likely also linked to the insufficient effort by businesses to change plastic usage and disposal suppliers on sustainability topics. The year 2017 appears to have been pivotal for small and
methods. We expect that, amid numerous public campaigns, businesses will soon become medium-sized companies to seize the strategic advantages of sustainable procurement.
more concerned with plastic pollution. Given the size of supply chains of large companies, one would expect leaders in the
In 2017, the Labor & Human Rights theme unweighted score stayed more or less level, after an higher score ranges (70 and 80). But small and medium-sized companies dominate in
upward shift in 2016. While this represents a stable commitment to labor issues, modern slavery the “confirmed” ranges from 50 to 60. Given the strong positive trend, this may signal a
continues to persist in cost-competitive industries and countries with a less robust rule of law. cascading effect, where small and medium-sized businesses drive sustainability monitoring
And modern slavery incidents have been uncovered1 even in countries such as the U.K. to deeper tiers in the value chain.
This suggests that businesses are still at risk and may find that modern slavery victims are present
among their labor force. In addition, with Sustainable Procurement scoring the lowest out of the
four themes, it is likely that on the whole businesses do not invest enough effort into working with
their supply chain partners to ensure their practices are free of modern slavery.
Unweighted Theme Scores Over the Years
46
45.4 45.5 45.3

45.0
44
44.1 44.0 43.9 44.1
42 42.5
42.1
41.6
40
39.4
38 38.6
38.4
37.0
36
2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017
Overall Environment Labor Business Ethics Sustainable

& Human Rights Procurement
1 Reuters, October 2017, Human traffickers lure UK’s homeless into modern slavery: charities
Contrasts and Similarities Across Regions Weighted Overall Score Diversification Across Regions (Large Companies)
55
Europe
Key Findings
Latin America
• European companies continued to outperform other regions across all four themes; 45 and the Caribbean
• Businesses in Latin America were only slightly behind their North American counterparts, North America
and may surpass them if stronger anti-corruption and anti-bribery legislations are passed;
World
35
• North America was the only region to improve the Environment theme score despite
relaxed regulations and the U.S. pulling out of the Paris agreement; AMEA excluding Greater
China Area
• Companies in Greater China continued to lag in environmental performance. 25 Greater China Area
2015 2016 2017
Top Trends and Issues

• The U.S. relaxed environmental regulations following the appointment of the new Weighted Overall Score Diversification Across Regions (Small and Medium-Sized Companies)
administration and left the Paris climate change agreement;
50
• Greater China stepped up environmental regulation enforcement, shutting down tens Europe
of thousands of factories. Continued enforcement of regulations will likely result in more
North America
factories being shut down;
45
Latin America
• The EU enacted mandatory CSR reporting legislation for publicly listed companies with
and the Caribbean
more than 500 employees, along with conflict mineral regulations and introduced CSR
language into investing framework. EU’s GDPR takes effect in 2018; World
40
• More countries in Latin America increased focus on anti-corruption regulations and AMEA excluding Greater
programs, learning from the U.K. Bribery Act and U.S. Foreign Corrupt Practices Act. China Area
35 Greater China Area
2015 2016 2017
Regional Diversification: A Closer Look
The weighted score for both large and small & medium-sized companies in one geographical A theme-level analysis reveals that large companies in Latin America were on par with
region is the equal weighted average score of industry divisions. their North American counterparts in environmental management. Although last year saw
Large European companies have a definitive lead over large companies from other regions, scoring improvement in the environmental theme in U.S., with the regulations being relaxed due to
close to 20 points more than companies in Greater China. Interestingly, large Latin American the new administration’s policies, it is possible that the score for the region will dip and Latin
companies’ CSR performance is similar to those in North America. America will take the lead. Greater China’s environmental regulations enforcement have
forced manufacturing factories to shut down. Our observation shows that the impact of this
Small and medium-sized European companies also have a lead over companies from other enforcement will continue to be far-reaching going forward.
regions, however, it is less pronounced. Greater China and AMEA-excluding-Greater China,
faired worse in 2017 than their 2016 results. Meanwhile, small and medium-sized businesses The Labor and Human Rights theme, meanwhile, is where last year small and medium-
in Latin America continued to improve, narrowing their gap to North America. sized companies in Europe and the Americas saw their best results. Greater China
and AMEA excluding Greater China, however, saw a slight drop in the results on 2016.
However, large companies in all regions except for Latin America demonstrated poorer
performance in the theme.
In terms of corruption & bribery and information security, included under the Business
Ethics theme, both large and small and medium-sized companies improved in Europe and
the Americas.
It appears that in Greater China, and AMEA-excluding-Greater China, Business Ethics Sustainable Procurement Theme: Weighted Score Diversification Across Regions
remains a lower priority relative to the more mature themes such as the Environment and (Large Companies)
Labor & Human Rights, with the region showing no improvement on 2016.
Regulations enacted in the EU and the U.S. on large companies have also had visible effects, 45
Europe
with large companies from these two regions performing better than the rest of the world.
This, we hope, may serve as a good example to follow by other governments. North America
40
Environment Theme: Weighted Score Diversification Across Regions (Large Companies) Latin America
and the Caribbean
60 World
Europe 35
55
AMEA excluding Greater
Latin America
50 China Area
and the Caribbean
45 30 Greater China Area

North America 2015 2016 2017
40
World
35
AMEA excluding Greater
30 China Area

2015 2016 2017
Labor & Human Rights Theme: Weighted Score Diversification Across Regions
(Small and Medium-Sized Companies)
55
Europe
50 North America
Latin America
and the Caribbean
45
World
40 AMEA excluding Greater
China Area

2015 2016 2017
Performance and Reassessment Weighted Overall Score Over the Years
Comparison by Company Size 45

World
Small and Medium-Sized
Companies
Key Findings 40 World
Large Companies
• Both large and small & medium-sized companies did not adequately address labor and
human rights issues, putting their operations at risk of modern slavery;
35
• Corruption & bribery and information security issues (formerly Fair Business Practices, 2015 2016 2017
now Business Ethics theme) were improved upon relative to other themes, across large
as well as small and medium-sized companies;
• Large as well as small and medium-sized companies in manufacturing industries showed Labor & Human Rights Theme: Weighted Score Over the Years
better than average overall performance than non-manufacturers (e.g wholesalers).
45
World
The world weighted overall score is the simple average of our five regions’ weighted Small and Medium-Sized
overall scores. An analysis of the weighted scores reveals that small and medium-sized Companies
companies had better CSR performance2 relative to large companies. 40 World
A closer look at particular themes reveals further interesting findings. Small and medium- 2015 2016 2017 Large Companies
sized companies performed better than large ones in the Labor & Human Rights theme.
This includes discrimination/harassment, modern slavery and working conditions.
In the Sustainable Procurement theme, meanwhile, large companies’ performance Business Ethics Theme: Weighted Score Over the Years
remained the same as in 2016. Executives at large companies are less likely to have
a direct oversight of the labor force and suppliers providing goods and services, and 45
World
are therefore less aware of potential modern slavery incidents. These findings suggest Small and Medium-Sized
that large companies should invest more effort into the Labour & Human Rights and Companies
Sustainable Procurement themes to improve reduce the risk of modern slavery.
40 World
Business Ethics, which includes information security, is the only theme where large Large Companies
companies improved consistently over the three years. This continued improvement
may be partially due to the recent emphasis on cyber security, data privacy and data
35
security etc. and the fact that business were preparing for the EU’s GDPR coming into 2015 2016 2017
effect in 2018. See the related article on a new service called CyberVadis that went into
beta testing in 2017.
2017 Score Distribution
Large Companies Small and Medium-Sized Companies

50%
Percentage Within Score Range
45.8% 47.0%
40% 45.2%
30% 35.1%
20%
10%
9.7% 4.3% 3.5%
9.3% 0% 0%
0%
2 EcoVadis factors size into our scoring methodology, so that scores can be said to be size adjusted for Less than 25 25-44 45-64 65-84 85-100
comparisons High Risk Medium Risk Confirmed Advanced Outstanding
Reassessment Score Trends
Companies that have been assessed at least twice by EcoVadis generally improved or
maintained their performance in their latest assessment (59.1 percent of small and medium-
sized companies and 61.2 percent of large companies improved their score while 21.1 percent
and 14.4 percent achieved the same results). Given that standards and expectations continually
increase while certifications and evidence to support CSR commitment typically need updating,
maintaining the score does require considerable effort. This arguably demonstrates that once an
organization commits to CSR improvements, on average, this commitment pays off.
Score Change Between First and Second Assessment Per Region
Improvement No change Decrease

100%
57.5% 62.0% 61.0% 62.5% 62.9% 64.2% 41.4% 44.3% 48.6% 59.4%
75%
19.0%
50% 10.4%
26.4%
45.3%
24.2% 15.5%
17.3% 17.4% 39.6%
11.7% 20.8% 15.0%
25%
25.8% 25.0% 25.2%
20.7% 21.4% 20.8%
18.2% 16.3%
0%
Small/Med Large Small/Med Large Small/Med Large Small/Med Large Small/Med Large
Latin America AMEA Europe Greater China North America
We assessed more than 2,800 large companies, and 11,000 small and medium-sized
companies in 2017. The proportion of businesses assessed for the first time decreased to 54
percent for small and medium-sized companies and 33 percent for large companies.
A slightly higher percentage of companies with headquarters in risk countries was noted in
2017 than in the previous year (4 and 2 percent up for large companies and small & medium-
sized companies respectively.
Percentage of Companies Assessed for the First Time
80%
Companies
60% Large Companies
40%
20%
2015 2016 2017
Performance by Industry Division Weighted Overall Score Per Industry Division (Small and Medium-Sized Companies)
46.8
2015 2016 2017
An analysis of industry divisions reveals that all manufacturers – from both large and small
3
45.4
44.8
& medium-sized companies – performed better than other industries. In addition, small 45
43.9
and medium-sized manufacturers showed continued improvement over the years and last
43.4
43.1
42.8
42.5
42.5
year outperformed their world average. Meanwhile, large companies from the Wholesale,
42.4
42.3
42.1
41.8
41.5
41.7
41.6
Services and Professionals division were the poorest performers.
41.2
41.3
41.1
41.1
40.8
40.7
40.5
40.5
39.9
39.8
39.7
39.5
The Food & Beverage division in the small and medium-sized company group also showed
39.0
40
38.4
marked improvement over the years and performed particularly well. However, it appears
that the Finance, Legal and Consulting division in the same group found it hard keep in line
with accelerating industry expectations and intensifying regulatory environment.
There appears to be little correlation of average score performance – or trend – between large 35
and small & medium-sized companies in the same industry division.
Each industry division is discussed in detail below.
30
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2015 2016 2017
45.9
44.2
45
43.7
43.3
43.2
42.7
42.4
41.9
41.6
40.9
40.9
41.0
41.1
40.0
40.1
40.1
39.6
39.7
39.6
39.6
40
39.1
37.6
37.4
37.0
36.5
36.1
35.9
36.1
35.3
34.2
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3 Results for the Primary Materials division are not included due to a limited number of companies assessed,
making it impossible to draw meaningful insights.
Industry
Snapshots
In this Section
Food and Beverage............................................................................ 30
Advanced Manufacturing.................................................................32
Light Manufacturing..........................................................................38
Heavy Manufacturing....................................................................... 44
Construction....................................................................................... 50
Wholesale, Services and Professionals......................................... 50
Transport.............................................................................................. 50
Information and Communication Technology............................. 50
Finance, Legal and Consulting....................................................... 50

Food and Beverage
PERFORMANCE
LEADER Overall Score: Food and Beverage vs. All Industries
Small and Medium-
Sized Companies
48.0
Food and Beverage
Key Findings Small and Medium-Sized
Companies
• Small & medium-sized food and beverage companies with an average score of 46.8 46.0
All Industries
achieved the highest overall score of any portfolio in the last three years, indicating that Small and Medium-Sized
regulations facilitate best practice adoption by smaller companies; Companies
44.0
• Large food and beverage companies performed well in environmental management, but All Industries
had poorer scores in the Sustainable Procurement and Labor & Human Rights themes. Large Companies
These lower scores echo investigative journalists’ articles4 about poor working conditions in 42.0
Food and Beverage
factories; Large Companies
• Small and medium-sized food and beverage companies from all five geographical regions 40.0
performed well in 2017, resulting in the portfolio’s strong overall performance.
38.0
Top Trends and Issues 2015 2016 2017
• The food and beverage industry is tightly regulated and characterized by multiple
national regulations as well as international certifications, such as ISO 22000, due to its Weighted Theme Scores Over the Years (Large Companies)
direct impact on human health and safety;
46.0
• Consumers pay more attention to healthy ingredients, ecological packaging and organic Environment
products, e.g. Amazon’s purchase of Whole Foods, but are not always willing to pay for
44.0
them; Labor & Human Rights
• Cost pressure is high, with documented high labor turnover, high accident rates, poor 42.0 Overall
working conditions and vulnerability to modern slavery.
40.0 Sustainable Procurement
What’s in the Snapshot? 38.0 Business Ethics
The analysis is based on food and beverage companies from ISIC divisions 10 and 11, i.e. 36.0
manufacturers of food and beverage products. Companies in these industries process crops
and animal products, delivering goods ready for consumption by an end user or to be used 34.0
as ingredients for another product down the value chain. 2015 2016 2017
4 The Bureau of Investigative Journalism, Davies, M., Wasley, A., 2017, Blowing the whistle on the meat
industry,
Advanced Manufacturing
PERFORMANCE
LEADER
Overall Score: Advanced Manufacturing vs. All Industries
Large Companies
44.0
Key Findings Large Companies
43.0
• Large advanced manufacturing companies performed well in the Sustainable Small and Medium-Sized
Procurement theme, indicating strong awareness and ability to deal with the industry’s 42.0 Companies
long-standing supply chain problems, e.g those related to conflict minerals;
All Industries
41.0
• Both large and small & medium-sized companies continued to improve and performed Small and Medium-Sized
Companies
particularly well in the Environment and Labor & Human Rights themes. The Environment 40.0
theme performance has potential for improvement with product redesigned to include All Industries
end-of-life considerations; Large Companies
39.0
2015 2016 2017
• Small and medium-sized advanced manufacturing companies’ performance in the
Business Ethics (formery Fair Business Practices) theme was mediocre, which suggests that
their awareness of information security risks has not caught up with the latest technology.
Weighted Theme Scores (Small and Medium-Sized Companies)
45.0
Top Trends and Issues 44 44.3
44.6
43.4 43.5 43.5

• Incorporating the Internet of Things in the products made by advanced manufacturing 42.8
companies will increase capacity, efficiency and precision, but will also exposes more 42 42.1
products to cyber security risks; 41.5 41.4
40.8
40
• Rare earth metals are increasingly used as components for the products manufactured
by this industry, yet rare earth metals, similar to conflict minerals, are often sourced
38 38.6
from countries with less robust regulations, exposing manufacturers to potential legal 37.8 38.0
sanctions and/or consumer backlash via their supply chain; 36.2
36
• Product end-of-life and recyclability are still largely not accounted for in product design, 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017
with many products ending up in waste landfills, risking pollution to local environments. Overall Environment Labor Business Ethics Sustainable
Some countries have adopted Waste Electrical and Electronic Equipment (WEEE) & Human Rights Procurement
regulations, including extended producer responsibility, the first step toward circular
economies.
Theme Scores: Advanced Manufacturing vs. All Industries (Large Companies)
What’s in the Snapshot? 49.6

48
Advanced manufacturing represents businesses (ISIC divisions 25 to 30), which either
require more advanced manufacturing processes and technology and/or manufacture
technologically advanced products (e.g electrotherapeutic equipment). The CSR risks and 44 44.2
impacts of these businesses arise during the manufacturing process, and also from the use 43.0
and end-of-life of the products manufactured. 41.8 41.9
40.4 40.7
40
39.6 39.3
36.7
36
Large World Large World Large World Large World Large World
Companies Companies Companies Companies Companies
Overall Environment Labor & Business Ethics Sustainable

Human Rights Procurement
Light Manufacturing Light Manufacturing vs. All Industries
44.0
Light Manufacturing
Key Findings Large Companies
All Industries
• Overall, risk in this industry division has increased; 43.0 Small and Medium-Sized
• Small and medium-sized companies did not improve and large companies’ CSR Companies
management performance dropped, particularly in the Labor & Human Rights theme, Light Manufacturing
which arguably suggests that the Bangladesh accord, introduced in 2013 to improve 42.0 Small and Medium-Sized
working conditions made little impact during its five-year duration; Companies
• Scores for the Sustainable Procurement theme were down on 2016 among both large and All Industries
41.0 Large Companies
small & medium-sized companies, likely due to decreased market pressure for sustainable
resources, which may lead to more deforestation.
40.0
• Textile and fabric industries continued to be exposed to fast-fashion cost models, which
disincentivize investments in supplier capability building and in scaling up “greener” 39.0
2015 2016 2017
materials, despite consumer demands for ethical fashion;
• Deforestation activities continued to lead to ecosystem losses valued at USD 2-5 trillion
due to extraction raw materials, such as timber and wood pulp as well as repurposing land Weighted Theme Scores Over the Years (Large Companies)
for cash crop production, cause ecosystem losses valued at 2 to 5 trillion USD annually;
50.0
• Businesses continued to respond to consumer demands for more transparency in Environment
production and materials used, including a push for more use of recycled or sustainable
materials. Overall
45.0 Labor & Human Rights
What’s in the Snapshot? Business Ethics
Light manufacturing groups all categories involved in the production of textiles and Sustainable Procurement
footwear (ISIC 131-152) as well as wood and paper products (ISIC 1701 – 1709). Major CSR 40.0
issues associated with these activities are social and human rights abuses as well as excessive
water and energy consumption. A number of scandals have been associated with these
sectors, ranging from exploitation of factory workers in textiles, to irresponsible or illegal
sourcing of tropical wood and paper pulp. 35.0
2015 2016 2017
Heavy Manufacturing Heavy Manufacturing Theme Scores Over the Years (Small and Medium-Sized Companies)
Environment
Key Findings 45.0 Heavy Manufacturing
Labor and Human Rights

• Both large and small & medium-sized companies improved in 2017, which indicates
Heavy Manufacturing
commitment to CSR issues;
• The score for Sustainable Procurement was the lowest of the four themes, for both large 40.0
All Industries
and small & medium-sized companies. The latest supply chain legislations may facilitate
Environment
improvements in the management of sustainable procurement;
All Industries
• Small and medium-sized companies improved across all themes, but in Sustainable 35.0 Business Ethics
Procurement the change was slight; 2015 2016 2017
Heavy Manufacturing
• Manufacturers improved the most on environmental management among small and Sustainable Procurement
medium-sized companies from all industries. Heavy Manufacturing
Overall Score: Heavy Manufacturing vs. All Industries

45.0
• 3D printing technologies and big data analytics may change heavy manufacturers products; Heavy Manufacturing
there is significant potential to reduce waste, energy use and health & safety incidents, with Small and Medium-Sized
44.0 Companies
higher manufacturing precision;
43.0 Heavy Manufacturing
• Intense use of plastic has lead to “plastic pollution” in oceans, followed by increasing Large Companies
consumer pressure for alternatives; 42.0
All Industries
• Given the high energy consumption in this industry, carbon trading schemes are typically Small and Medium-Sized
41.0 Companies
applicable, including China’s trading scheme, poised to be the world’s largest one;
• Raw materials, e.g. rubber latex, metal ores, sand and palm oil, used in heavy manufacturing 40.0 All Industries
Large Companies
typically come from countries where the rule of law is less robust. As a result, recent
39.0
extraterritorial legislations pertaining to supply chains, e.g France’s Devoir de Vigilance, may 2015 2016 2017
impact companies in this industry.
What’s in the Snapshot Weighted Scores (Large Companies)
Heavy manufacturing represents a collection of industries, which presents significant risks 47.6
46.1 46.4
on CSR issues (e.g environment impacts, OHS impacts). Companies with the 2-digit ISIC 40%
41.9 42.7 42.2 43.3 43.6
40.9 40.6
divisions 19-24, typically process raw materials. During the manufacturing process, one or 36.9
38.6
36.2
more of the processing stages often includes hazardous materials, which carry significant 30% 32.6 33.7
risks for the environment and people. Companies with the 2-digit ISIC divisions 35 to 39, are
also included in this portfolio, because of the similar magnitude of CSR risks and potential 20%
impacts from their activities, e.g waste collection.
10%
0%
2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017

Construction Overall Score: Construction vs. All Industries
42.0 All Industries

Companies
• For the third year running, large construction companies had the second lowest overall 40.0 All Industries
score compared with their counterparts in other industries, indicating that new legislations Large Companies
and technologies are yet to prove effective;
Construction
38.0
• Both large and small & medium-sized companies continued to underperform in the Small and Medium-Sized
Business Ethics theme, potentially putting at risk confidential information entrusted to the Companies
companies; Construction
36.0
2015 2016 2017 Large Companies
• Small & medium-sized construction companies saw consistent improvements in the
Environment and Labor & Human Rights themes, suggesting that market pressure to
improve CSR practices are taking effect.
Business Ethics Theme Score (Small and Medium-Sized Companies vs. Large Companies)
Top Trends and Issues 42.0

All Industries
• The industry is seeing an increase in demand for sustainable and modular construction Small and Medium-Sized
40.0 Companies
methods as well as for labels for sustainable building, e.g LEED in the U.S. or DGNB in
Germany; 38.0 All Industries
Large Companies
• New technologies, such as drones, 3D printing, and virtual reality allow depictions of
completed constructions, which could allow for predictive analytics to reduce energy 36.0
Construction
consumption in buildings, accident rates during construction and waste reduction. Small and Medium-Sized
34.0 Companies
• As one of the most dangerous and accident-prone industries, new legislations and
technologies, e.g using augmented reality for health and safety training, are utilized more 32.0 Construction
2015 2016 2017
frequently to reduce accident rates. Large Companies
What’s in the Snapshot Weighted Theme Scores Over the Years (Small and Medium-Sized Companies)
This industry follows the UN ISIC of broad section F - Construction. CSR risks associated
45.0
to this industry division are generally significant and include environmental local pollution, Overall
health and safety accidents involving construction workers, child and forced labor incidents,
corruption risks regarding acquisition of land rights and approval of various permits, all with Environment
potentially severe impacts.
40.0
Business Ethics
Sustainable Procurement
35.0 Overall
All Industries

All Industries
30.0
2015 2016 2017
Wholesale, Services and Professionals Weighted Overall Score: Wholesale, Services and Professionals vs. All Industries
(Large and Small & Medium-Sized Companies)
Key Findings 42.0 All Industries

• Large companies in this sector consistently underperformed the world average in Companies
the Sustainable Procurement theme for large companies, especially in sustainable 40.0
procurement management, which shows that supply chain CSR risks remained largely Wholesale, Services
invisible to customers who depend on this industry for goods, people, services and and Professionals
38.0 Small and Medium-Sized
information; Companies
• Business Ethics (formerly Fair Business Practices) scores for large companies in 2017 36.0 All Industries
recuperated some of their point reduction from 2016, showing a degree of action taken to Large Companies
deal with digitalization and information security.
Wholesale, Services
34.0
2015 2016 2017 and Professionals
Large Companies
• Digitalization of systems and increased connectivity result in more information being stored
Sustainable Procurement Weighted Theme Score (Large and Small & Medium-Sized Companies)
on cloud systems, which increases cyber security risks;
• New legislations and potential use of Blockchain drive transparency in supply chains.
36.0 All Industries
Large Companies
What’s in the Snapshot 34.0 Wholesale, Services

and Professionals
This industry covers Wholesale (ISIC division 45 to 47), Services (55, 56, 78 to 82) and Small and Medium-Sized
Professionals (71 to 74). These are companies whose economic activities are all carried out 32.0 Companies
by people employed in office based environments even if the activities themselves are All Industries
very different from one another. This industry group facilitates the flow of goods, people 30.0 Small and Medium-Sized
and information between multiple parties. More importantly, the CSR risks related to this Companies
industry division are mostly those around health & safety, harassment and skill development, Wholesale, Services
28.0
and Sustainable Procurement issues (e.g environmental, social and ethics practices of 2015 2016 2017 and Professionals
suppliers and responsible procurement). Large Companies
Theme Weighted Scores Over the Years
38% 38.5
36% 37.0
36.5 36.3
35.9 36.2 36.1 36.0
35.3 35.3
34%
34.2
33.5
32%
30%
29.6 28.4
29.0
28%
2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017

Transport Weighted Overall Score: Transport vs. All Industries (Large and Small & Medium-Sized Companies)
45.0
All Industries
Companies
• Large transport companies’ overall performance continued to decrease and for the third
year running was below the world average for large companies; Transport
40.0
• Both large and small & medium-sized transport companies’ performance in environmental Companies
management and labor & human rights management went down in 2017, indicating All Industries
potential labor violations and environmental mismanagement in the industry; Large Companies
• Large transport companies consistently performed poorer across the years in Transport
environmental management, potentially indicating that global CO2 emissions from this 35.0 Large Companies
2015 2016 2017
industry are unlikely to fall.
Environment Theme Weighted Score: Transport vs. All Industries (Large and Small &
Top Trends and Issues Medium-Sized Companies)
• Companies are demanding faster delivery times at lower cost from their logistics providers,
which, compounded with increasing online purchase volumes, may potentially lead to labor 45.0
All Industries
mis-management; Large Companies
• The use of electric and hybrid vehicles has spread to the transportation industry for last-mile All Industries
delivery; Small and Medium-Sized
Companies
• Carbon emissions reporting is increasingly important for transparency within transport 40.0
industry, as it accounts for 20 percent of global CO2 emissions. Transport
Companies
What’s in the Snapshot Transport

Large Companies
This snapshot groups together ISIC divisions 49 to 53, i.e. companies with activities around 35.0
2015 2016 2017
land, water and air transport as well as warehousing, storage and other related services. The
material issues for these companies are fuel consumption, GHG emissions, working conditions
and employee health and safety.
Labor and Human Rights Weighted Theme Score: Transport vs. All Industries (Large and
Small & Medium-Sized Companies)
45.0
All Industries
Companies
Transport
40.0 Companies
All Industries
Large Companies
Transport
Large Companies
35.0
2015 2016 2017
Information and Communication Technology Weighted Overall Score: ICT vs. All Industries (Large and Small & Medium-Sized Companies)
44.0
All Industries
Companies
• The ICT industry had a great 2017, experiencing average score increases in all themes and
43.0 ICT
for both large and small & medium-sized companies;
Large Companies
• Business Ethics (formerly Fair Business Practices) was the highest scoring theme for both
ICT
size groups, also making this the highest scoring industry in the theme, showing proof of 42.0 Small and Medium-Sized
leadership; the industry looks poised to manage compliance with EU GDPR; Companies
• Scores for the Sustainable Procurement theme among both large and small & medium- All Industries
41.0
sized companies improved, indicating some progress in providing market pressure to root Large Companies
out conflict minerals.
40.0
• GDPR in the EU and push for other similar regulations around the world are nudging 39.0
companies to strengthen data protection practices; 2015 2016 2017
• Information security is becoming increasingly important due to consumer privacy concerns

and threats of cyber attacks; Weighted Theme Scores Over the Years (Large Companies)
• Issues of discrimination and harassment continue to be high profile issues within the
50.0
industry, more particularly among software development companies; Environment
• Telecommunication companies are faced with new conflict mineral regulations in the EU. Labor & Human Rights
45.0
Overall
What’s in the Snapshot
40.0 Business Ethics
The Information and Communication Technology (ICT) industry (ISIC divisions 58 to 63)
includes companies whose main activities are publishing and broadcasting content in different Sustainable Procurement
forms, e.g. paper, software, video and audio as well as telecommunications and computer 35.0
programming. The most material criteria is the responsible management of information.
30.0
2015 2016 2017
Finance, Legal and Consulting Business Ethics Theme Weighted Score: Finance, Legal and Consulting vs. All Industries
(Large and Small & Medium-Sized Companies)
Key Findings 50.0

Finance, Legal
and Consulting
• Small and medium-sized companies in the Finance, Legal and Consulting industry division Large Companies
fell consistently behind in managing their industry’s CSR issues;
45.0 Finance, Legal
• Scores in the Sustainable Procurement themes among large companies were the lowest and Consulting
in three years, increasing vendor liability risks. Both large and small & medium-sized Small and Medium-Sized
companies were able to deal with corruption and information security issues better than Companies
other industries; 40.0 All Industries
• A dip in the Business Ethics (formerly Fair Business Practices) theme score performance, Companies
particularly among large companies. In wake of increasing regulations, large companies
may potentially be exposed to future sanctions. 35.0 All Industries
2015 2016 2017 Large Companies

Theme Weighted Scores
• Consulting and finance institutions are adopting CSR issues into its products and
services (ESG investing, green bonds etc.), beyond their own operations (e.g. ING 44 %
Wholesale Banking) ; 42.1 42.7 44.0 43.9
39.7
37.1
• Banks face higher regulatory pressure to prevent money laundering and illegal tax 40 % 34.6
32.1
avoidance, and secure consumers’ financial data;
• Regulators implement stricter controls holding financial institutions liable for their vendors
36 %
(lender liability): With increasing amount of outsourced processes, banks can end up guilty
by association when lacking control and visibility of their supply chain;
• Minorities, and gender inequality (e.g gender pay gaps, minority representation), have 32 %
Small and Small and Small and Small and
become key issues for the industry in talent attraction. Medium-Sized
Large
Medium-Sized
Large
Medium-Sized
Large
Medium-Sized
Large
Companies Companies Companies Companies
Companies Companies Companies Companies
Environment Labor Business Ethics Sustainable

What’s in the Snapshot & Human Rights Procurement
This industry division groups ISIC divisions (64 to 70, 82) related to financial services activities,
insurance, real estate as well as legal and accounting activities. Business ethics risks and Weighted Overall Scores
impacts are significant for these companies (e.g. corruption, bribery, information security).
With ongoing debates on diversity, equality and respect for minorities in high-skilled sectors, 46.0
Finance, Legal
human rights criteria are a further key focus in CSR management. and Consulting
Large Companies
44.0
All Industries
42.0
Companies
Finance, Legal
40.0 and Consulting
Companies
38.0
2015 2016 2017 All Industries
Large Companies
Guest Articles
In this Section
Using Data on Worker Sense of Value to Guide

Improvements in Social Performance in the Supply Chain...... 55
The Critical New CSR Challenge: Third-Party

Cybersecurity Risk..............................................................................57
Science Based Targets: An Essential Piece of a

Complex Climate Strategy Puzzle................................................. 59
Tomorrow’s Brands Will Be Sustainable or

They Won’t Exist at All...................................................................... 61
Using Data on Worker Sense of Value to • Workers’ SOV scores increased by an average of 14.01 percent in 24 out of the 34 facilities
reassessed;
Guide Improvements in Social Performance • Workers’ sense of engagement scores increased by an average of 11.62 percent in 25 out
of the 34 facilities reassessed;
in the Supply Chain • Workers’ rating of management practices improved by an average of 11.49 percent in 25
out of the 34 facilities reassessed.
By Lawrence David, Communications and Marketing Manager, Verité
In short, this study found that this type of assessment can maximize workers’ participation
Once companies begin to engage their value chain partners on sustainability topics, either in setting facility improvement goals that matter most to workers, as well as measure the
through assessments, audits or similar data collection processes, the next challenge is how impact of programs on workers.
to help them improve. While many brands have gathered worker feedback to increase
engagement, when closely examined, the efforts have tended to be brand-centric with
workers’ interests often overlooked or marginalized in favor of supply chain risk management. A Huge Potential for the Garment Industry
The findings reported in a new white paper from Gap Inc. and Verité, Employing Workers’ “Verité’s new report shows that when our apparel suppliers make investments in worker
Sense of Value as a Key Performance Indicator (KPI) to Drive Facility Improvement in Social engagement – whether through supervisory training, innovative communications channels,
Responsibility, demonstrate that taking a worker-centric approach to sustainable supplier or career advancement opportunities – people and business alike can benefit,” said David
performance improvement can be mutually beneficial to both workers and management. Hayer, SVP of Global Sustainability at Gap Inc. and President of Gap Foundation. “We
The report, which covers Verité’s work with Gap to engage and improve labor practices of know there’s more work to be done, but by putting garment workers at the center of our
suppliers across five countries, underscores the importance of having an independent, local supplier partnerships, we believe these factories can become preferred places to work in the
partner, who can help engage suppliers and their workforce. communities in which they operate, and help drive our business.”
Most important, this project points to the significant potential for sector-wide, sustainable
change that is possible if the practices outlined here are adopted widely by brands and
A Local Program for an International Brand suppliers alike. The entire apparel sector will gain much from articulating and measuring
In 2015, Gap Inc. launched a Workforce Engagement Program to measure the degree to impact in terms of concrete, verifiable gains made in workers’ SOV and engagement as the
which garment workers feel valued and engaged at work, and the factors that affect these core building blocks of mutually beneficial worker/management cooperation.
feelings. The program sought to set priorities and goals for facility improvement. Another goal
was to develop connections between various CSR programs to effectively respond to the
feedback of workers. Gap Inc. partnered with Verité to develop and implement this program.
From 2015 to 2016, Verité assessors gathered information from workers and management
through written surveys, focused group discussions (FGD) and individual interviews to
derive insights on issues that are of concern to workers. The initial Verité survey assessments
were conducted in five countries (China, Bangladesh, India, Guatemala and Vietnam)
covering 78 facilities with a total worker population of 187,036.
Based on Verité’s findings, Gap Inc. partnered with its suppliers to make investments in
response to worker feedback. The assessment also informed the training programs for
facility managers, who can have a direct and profound impact on workers’ sense of value
(SOV), engagement, knowledge and overall well-being.
Improvement in Management Practices Leads to Higher Engagement

In 2017, Verité conducted 34 reassessments to measure improvement. The study indicates
that improvement in management practices, especially in the areas of Immediate
Supervisors, Training and Development, Fair Treatment, and Communication and Feedback
had significant impact, with positive changes in these areas driving score improvements in
workers’ SOV and engagement.
The Critical New CSR Challenge: Third-Party Managing Risk in the Digital Ecosystem
If CSR is intended to address the ways in which a corporation impacts people and the
Cybersecurity Risk environment, then it is increasingly crucial to include cybersecurity under the umbrella of CSR.
The handling of personal data is an act of growing social importance, as we increasingly place
By Greg Bouchard, Marketing Manager, CyberVadis our finances, health, and personal communications into the hands of digital processors.
As Scott Shackelford of Indiana University put it, “by protecting privacy, free expression
The specter of cyber-security related incidents in the supply chain has risen from a marginal and the exchange of information, cyber security helps support people’s human rights, both
concern to a top issue for many companies. BCI’s most recent Supply Chain Resilience Report online and offline.” Going beyond bottom line, and beyond compliance, cybersecurity is an
listed cyber attacks and data breaches as the second leading cause of supply chain disruptions ethical issue affecting corporations as they expand their digital ecosystems. They must rise
— outdone only by unplanned IT or telecommunications outages. This year’s EcoVadis to face the challenges, risks, and moral imperatives that this entails.
Index shows the only CSR theme that improved in 2017 was Business Ethics, which includes
among its criteria responsible information management. This was due in part to some major
cyber-incidents as well as GDPR preparation. This attention reflects a larger shift in the way
companies must think about their supply chains: The numerous third-party software solutions
that are shared across the value chain constitute a digital ecosystem. This ecosystem requires
the same attention to risks as do environmental and sociopolitical ecosystems.
Third-Party Cybersecurity Vulnerabilities on the Rise

When companies use third-party software vendors, they take on the cybersecurity risk and
vulnerabilities associated with each vendor, expanding their overall risk profile and raising
their chances of suffering a data breach. With companies depending on third-party vendors
for a wide range of functions — everything from HR operations to air conditioning, payment
processing to communications — third-party cybersecurity risk touches every part of an
organization and can only grow as an organization expands.
A 2017 Ponemon survey found that the majority of the reported data breaches occurred via
third-party vendors, crossing across industries and verticals. Delta Air Lines could be the
target of a class-action lawsuit after the company’s third-party chat software was exploited
to obtain an unknown amount of customer information. TCM Bank, which issues credit cards,
said many of its customer accounts were hacked via third-party vendor site, resulting in the
theft of the personal information (such as names, social security numbers and addresses)
of about 10,000 people. Healthcare providers, which handle some of the most personal,
intimate data about individuals, are at particular risk; the theft of about 800,000 records has
been linked to third-party vendors or associates.
A Growing Regulatory Response

Accompanying this growing third-party cybersecurity risk is an increase in regulations
affecting the processing of personal data, most of which hold companies equally responsible
for data breaches whether they occur through the company itself or a third-party vendor.
GDPR, Europe’s answer to managing and protecting individuals’ information at an enterprise level,
is only the tip of the iceberg. In the U.S., states are beginning to roll out their own protections that
require compliance. New York’s Department of Financial Services has included, as part of its mandate,
that financial services providers are responsible for performing their due diligence in regard to third
parties (section 500.11). More recently, the California Consumer Privacy Act of 2018 brings strict
new regulations to the processing of personal data by organizations and third-party vendors alike.
Science Based Targets: An Essential Piece of As stated above, there is no one catch-all answer to the question of how individual companies
will benefit from setting science-based emission targets. Some of the advantages can be
a Complex Climate Strategy Puzzle realized only in the long-term or cannot be planned with certainty. But SBTs make perfect
sense for companies that take a proactive and holistic approach to corporate sustainability,
as these targets become an essential puzzle piece in a consistent sustainability strategy. Seen
By Daniel Wiegand, Scientific Project Manager R&D at the DFGE, EcoVadis’ consulting from this angle, SBTs provide a link between emission reduction activities and a business
partner for the German-speaking region transformation strategy founded on a credible climate science-based story, which brings
advantages in terms of credibility, reputation and resilience.
Climate change is a fact and it is happening right now – this message has recently been To summarize, climate change is a fact, and further emission reduction measures are
reinforced by new findings showing that the Antarctic ice sheet is melting faster, which unavoidable. Setting SBTs may not always pay off when seen as a standalone measure; in the
leads to higher sea level rise than previously expected . The implications for life and business context of a holistic and proactive approach to corporate sustainability that aims for strategic
across the world are devastating to contemplate. However, while they highlight the scale and transformation of the company and its value chain. However, SBTs are an essential puzzle
urgency of the problem, they should not lead to despair: There is still time to mitigate the piece in a company’s approach to sustainability. Besides advantages in terms of transformation
most severe consequences of climate change, and the 2015 Paris Agreement has laid the credibility, reputation and resilience, this narrative also pays off in terms of better ratings on
foundation for a global and concerted action. platforms like EcoVadis or CDP.
The endeavor to keep the temperature rise well below two degrees is ambitious, to say the
least, given the gap between what has to be done and governmental commitments .
Governments, customers, employees, communities and stakeholders across the value
chain are all looking at the private sector as the key player responsible for closing the gap.
Setting Science Based Targets (SBTs) – emission reduction targets based on the two-degree
scenario – is the first step in the strategic transformation required.
Although the famous letter from Larry Fink, head of the world’s largest investor, Blackrock,
signaled the beginning of a significant shift seeing companies serve a social purpose, there is
no doubt that a business must be profitable. This begs a fundamental question: Is it possible
to tie Science Based Targets to a business case? The short answer is yes – provided your
strategic view is long-term. The Science Based Targets Initiative (SBTi) identifies four ways
setting SBTs can pay off:
• ●Strengthen long-term business resilience and competitiveness: Adopting SBTs enables
a company to go beyond reaping the financial benefits of the “low hanging fruit” of
incremental cost savings from direct energy use reduction and capitalize on opportunities
that are uniquely aligned with a low- to zero-carbon economy of the future;
• ●Drive innovation and transform business practices: Setting targets sends a clear signal of a
company’s strategic ambition to stimulate innovation that leads to truly transformational
change. This goes beyond tactical adjustments and incremental changes to how a
company delivers on its existing business model, toward for example collaboration among
value chain partners on new “circular” models for how they engage;
• ●One very visible advantage of a successful SBT engagement lies in boosting credibility
and reputation in the eyes of a company’s stakeholders. Aligning emission reduction
measures with an established standard based on scientific findings is becoming a
powerful differentiator compared with competitors, and unmistakably signals that a
company is a transformational leader in its industry;
• ●A further advantage of setting science-based targets lies in the anticipation of regulatory
measures, which enables a company to proceed at its own pace instead of just being
driven and constrained by legislation. Being a climate leader rather than a laggard also
ensures greater public attention and influence on policy, as a company is more likely to be
considered as a role model in this field.
Tomorrow’s Brands Will Be Sustainable or consumption. And this is a real revolution. Today, leading companies have already begun
the transformation of their portfolio and are facing the challenge of measuring product
They Won’t Exist at All sustainability, integrating it in existing processes and in their value chain in order to promote
product performance to consumers and stakeholders. It’s a long term job that requires
involving every layer of the organization.
By Eric Mugnier, Partner at EY Sustainable Performance & Transformation, France
The world today is facing social and environmental challenges with an awareness never Engaging Consumers and Stakeholders
seen before. The conventional wisdom in business has historically seen a necessary trade- New technologies and social networks have completely reconfigured interactions between
off between economic efficiency and social and environmental performance. But because companies, brands and stakeholders, and especially with consumers. Patagonia is a great
of this awareness, the way businesses are run has shifted with a more comprehensive example of a brand which successfully managed to involve consumers in the very core of the
and multi-dimensional understanding of value creation: Creating long-term social, brand’s history, generation after generation. Beyond the consumer base, investors, clients,
environmental and civic value for business and communities. suppliers, local communities, regulators and NGOs are now considered as a very tangible
Consumers are living their own revolution. Increasingly aware and demanding, they have eco-system a brand cannot afford to ignore and who can prove to being exceptional levers
the means to investigate before making a purchase and let the world know what they think of innovation and opportunity!
-- good or bad -- in just a few clicks. Connected and distrustful toward brands, today’s
consumers use mobile apps to compare products and ask peers about their experiences.
They also want to know the story behind the product: Where and how was it manufactured? Communicating With Honesty and Transparency
What is the impact on my health? Are the brands I’m using reflecting my own personal
Stakeholders around the world are demanding for robust, trustworthy and comprehensive
values? Are they genuine in their commitments and consistent in what they are their doing?
information on sustainability, from the HQ through the value chain. If challenges were too
The shopping cart has become a daily ballot!
complex to tackle with the tools available just a few years ago, new technology is making
At EY, we are convinced that building the brands of tomorrow will require companies to take transparency much easier. Companies and brands now have access to a wide selection of
four key steps: emerging tools and technologies to know their practices and impacts, all along the value
• Commit to being part of the solution to the great challenges of our time; chain and therefore communicate: real-time databases, blockchain traceability, QR codes
on products, dedicated apps and software… secrecy and confidentiality are no longer go-to
• Deliver sustainable products and services supported by a responsible value chain,
answers. Transparency is hardly risk-free and a real cultural leap for some, but it is becoming
• Engage customers and clients in dialogue and action, and irreversible standard to gain and maintain market trust.
• Communicate in a transparent and honest fashion.
Tomorrow’s brands will be sustainable or won’t be at all. Being sustainable is more than
worthy words, it’s about changing the business and operating model to make a bigger
Committing to Purpose difference and foster positive impact. We are convinced that only a genuine and in-depth
transformation project will enable brands to gain and maintain a competitive advantage,
A sustainable brand is a brand committed to solving our society’s challenges, as stated rebuild trust and give the brand a real purpose. Time for action!
by the United Nations with the 17 Sustainable Development Goals. The key will be linking
the commitment with the brand’s real purpose. Unilever strives to “make everyday living
sustainable,” and it works. Today, 70 percent of the company’s growth relies on the 26
committed brands -- out of more than 400! Starbucks, with its core activity focused on
friendliness and diversity, committed to hiring over 10 000 refugees over the next five
years…. A direct response to Washington’s protectionist policy.
Delivering Sustainable Products and Services Supported by a

Responsible Value Chain
Integrating environmental, social and societal criteria in product design and development
will soon become a must-have to align the product portfolio with corporate purpose
and CSR, consumer expectations and shareholder concern for resilience. Consumer
needs are evolving, slowly but surely, and sustainable products are entering mainstream
Study Methodology Data Universe8
Overview
EcoVadis assesses companies’ CSR management system performance according to 21 CSR 862,000 956,000 42,000 33,000
topics, across four themes5: Assessment Data Documents Evaluated Assessments Unique Companies
• Environment, including environmental impacts from business operations, e.g water Points Used
impacts, and also from the goods and services consumed by stakeholders, e.g impacts
from the use of goods and services;
• Labor & Human Rights, including impacts on employees, e.g working conditions, and
human rights of both employees and the community, e.g harassment;
• Business Ethics (formerly Fair Business Practices), including corruption & bribery, anti-
10 30 149 197
Industry Divisions 8
Portfolios Countries EcoVadis ISIC
competition, and information security;
Categories
• Sustainable Procurement, in other words and assessment of how companies are able to
influence environmental and social impacts of their suppliers.
More information on the EcoVadis Assessment Methodology is available on our website.

Each company is classified according to its ISIC category6, size, headquarters location and
geographical locations of the company’s operations. 5 2 1
Regions Size Groups World
Each company receives an overall CSR score, which is a weighted average of four theme
scores, all of them out of 100 points7. EcoVadis ratings methodology factor in industry,
location, and size adjustments, therefore allowing for comparisons between different
industries, size and locations. Number of Companies Assessed Over the Years
Global CSR Risk and Performance Index Scope Of Analysis 10000 11090
10027
The Index analyzes EcoVadis ratings from our index universe comprised of all of the companies
assessed since 2015, in total 42,000 assessments of over 33,000 companies. 7500 8441
5000
2500
2541 2873
2101
2000
Small and Small and Small and
Large Large Large
Medium-Sized Medium-Sized Medium-Sized
Companies Companies Companies
Companies Companies Companies
2015 2016 2017
5 For detailed explanation on the EcoVadis evaluation and methodology, please visit EcoVadis resources
6 See UN statistics board for ISIC explanation
7 See appendix for scoring scale. For detailed explanation on EcoVadis scoring methodology, please visit 8 Results for the Primary Materials division are not included due to a limited number of companies assessed,
EcoVadis resources making it impossible to draw meaningful insights.
This edition is based on assessment data from in the calendar years 2015, 2016 and 2017. companies globally. For example, as EcoVadis was founded in Europe this is also where many
of our longtime customers come from and they began by assessing business partners close
We further define the index universe by three broad parameters: to their headquarters. As a result we have a disproportionately high number of assessments
• Industry divisions: broad groupings of similar business activities, based on ISIC code; in Europe, compared to the rest of the world.
• Size groups: either small and medium-size (26-999 employees) or large (over 1000 Similar is true of industry divisions, we may receive requests to assess for our enterprise
employees); customers’ suppliers because our enterprise customers use EcoVadis to help them
understand and manage their supply chain CSR issues. Our enterprise customers may
• Regions: geographical location of a company’s headquarters. choose to assess only their European suppliers, or some specific raw materials suppliers, or
A portfolio refers to a subset of companies belonging to either one size group of one industry service vendors etc. in a specific industry based on their preferences. This means we have
division (e.g Transport - Large), or one size group of one region (e.g Europe - Small and virtually no control over who gets assessed. Consequently, this introduces bias to the our
Medium-Sized). EcoVadis Index data universe, which may become overpopulated by companies from a
specific region (geography bias) or from a specific industry (industry bias). Although these
In addition to average overall scores, we present several other indicators: biases diminish over time as the network expands, they also change from year to year.
To reduce these biases in our index, we assigned equal weights to scores from each a
Indicator Explanation particular region, or industry, when calculating a portfolio’s weighted score. By doing so, we
achieved a balanced view of global averages, and that allows our indices to be comparable
Average of the theme score for the indicated theme across time.
Average of [theme]
(environment, labor and human rights, ethics or sustainable
score
procurement) of companies in that portfolio For example in 2017 our industry portfolio “Transport - Large Companies,” 50 percent of our
data was populated by European companies and 10 percent by those from North America.
Average of score Average of score improvement of companies in that portfolio This would significantly bias an indicator such as the global average toward the performance
improvemen who had at least two assessments of Europe. Since the portfolio should theoretically reflect transportation companies
belonging to five geographical zones, equally, instead of allowing the portfolio’s average
Percentage of companies in that portfolio whose HQ is located score to be half explained by European companies, this year, we assigned 1/5 weight to the
Percent HQ country
in a Risk Country (The definition of risk country can be found in scores of European companies and 1/5 to of each of the other four five zones each (including
risk
the EcoVadis Methodology Overview document) Europe), to arrive at our weighted score 41.1 for Transport - Large.” (The unweighted score
Percentage of companies in that portfolio which were would be 43.4). Similarly, for a geographical portfolio, e.g North America -- Large, we
% 1st Assessment evaluated by EcoVadis for the 1st time since EcoVadis assigned equal weights to industries.
inception in 2008 With the weighted score approach, regardless of how EcoVadis customers change, or
how our customers change their preferences for suppliers to be evaluated, these changes
Score improvement is seen as the difference between overall CSR score in assessment N are neutralized, and we’ll be able to reliably track performance changes of regions and
and N+1. If a company had assessment 1 (A1) in 2015 and the two assessments (A2 and A3) in industries over time.
2016, the score improvement of A1 is not applicable, scoring improvement in A2 is ignored
because it is not the latest assessment in that calendar year, and only score improvement in
A3 is used. Industry Divisions
All assessed companies are associated to a business activity defined by International
Standard Industrial Classification (ISIC) code. For the EcoVadis index, scores are gathered
Weighted Scores into related ISIC groups called industry divisions. Nine are included in this study (the
In this edition, we have introduced weighted scores to reduce data bias generated by the tenth had too small a sample for meaningful analysis). Review the complete list of industry
fact that the geographic and industry distributions of the companies assessed within the divisions and ISIC codes in the Index Online.
EcoVadis Network do not match the true proportions.
Almost all EcoVadis assessments are performed at the request of our large enterprise
customers, who provide lists of their business partners (suppliers, distributors, contractors,
customers, etc.) to engage and onboard into the network. They decide on the geographic
regions, industries and sizes of companies they wish to assess based on their strategies
and priorities, which does not necessarily match the proportions of those attributes of all
Changes To Region Definitions Changes in This Year’s Edition Number of Large Companies Assessed Over the Years
We have expanded our region categories from three in last year’s edition to five in this year’s
1286
edition. 1200
• Europe continues to exist as Europe

1169
1000
• Americas is changed to: 1015
-- North America
-- Latin America (with the Carribean) 800
• Africa, Middle East, Asia is changed to:
-- Greater China 600
-- Africa, Middle East, Asia (with Australasia) excluding Greater China
572
524
400 478
445
Region Definitions 415
325
The number of companies (both large and small & medium-size) assessed per year increased 292 394
200 269
in each region, except for Latin America in 2017. In addition, there were fewer first timers for
both large and small and medium-sized companies in most regions, except large companies 129 122
80
in Greater China (4 percent higher in 2017). This suggests our scores are generally more 0
reflective of businesses’ actual performance (EcoVadis assessment learning effect) in 2017, 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017
while to a less extent for large companies in Greater China. Europe North America Latin America Greater China AMEA excluding
Area Greater China
Our region classification references United Nations publication “Standard Country or Area Area
Codes for Statistical Use” (commonly known as M49 standard).
We use M49’s definition of North America, consisting of 5 countries - Bermuda, Canada, Number of Small and Medium-Sized Companies Assessed Over the Years
Greenland, Saint Pierre and Miquelon, and United States of America.
6000
We also use M49’s definition of Latin America (with the Caribbean), and Europe.
5704
When analyzing Asia, we deviate from M49, and define a region we label “Greater China” 5363
5000
that includes People’s Republic of China, its two special administrative regions of Hong
Kong and Macau, and the Republic of China. Home to around 20 percent of the world’s 4611
population, the scope of Greater China and its unique characteristics that shape global
4000
markets make it worthy of separate, focused analysis, and allows clearer insights in
surrounding regions.
For our Africa, Middle East, and Asia (with Australasia), excluding Greater China region, 3000
we use M49’s definition of Asia (which includes Middle East as Western Asia), and include
M49’s Oceania, but we exclude Greater China (above).
2000
1765
1647
1000 1375
1271 1200
992 1065 1026 1054
909
778 723
0
2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017
Europe North America Latin America Greater China AMEA excluding

Area Greater China
Area
EcoVadis CSR Methodology Overview and 21 CSR Criteria
Principles ENVIRONMENT LABOR &

HUMAN RIGHTS
ETHICS
SUSTAINABLE
PROCUREMENT
For EcoVadis, an effective CSR Management System is composed of the following elements: • Energy Consumption • Employee Health & • Corruption • Supplier Environmental
& GHGs Safety • Anti-Competitive Practices
POLICIES, ACTIONS and REPORTING ON RESULTS.
• Water • Working Conditions Practices • Supplier Social
Performance
These three management layers are separated into seven management indicators: Policies • Biodiversity • Social Dialogue • Responsible
Information
(POLI), Endorsements (ENDO), Measures (MESU), Certifications (CERT), Coverage – • Local & Accidental • Career Management
Management
Pollution & Training
Deployment of Actions (COVE), Reporting (REPO) and 360° Watch Findings (360).
• Materials, Chemicals • Child Labor, Forced
& Waste Labor & Human
• Product Use Trafficking
POLICIES • Product End-of-Life • Diversity,
Discrimination &
• Customer Health &
Harassment
1 POLI Safety
• External Stakeholder
Policies, objectives, targets, • Environmental
Human Rights
governance Services & Advocacy
2 ENDO
Endorsement of external CSR
initiatives and principles (e.g. UN Interpreting EcoVadis Overall CSR score
Global Compact)
0 25 50 75 100
NONE PARTIAL CONFIRMED ADVANCED OUTSTANDING
RESULTS ACTIONS
No tangible Not all main Main activated Particularly Comprehensive
6 REPO 3 MESU
elements criteria activated criteria covered advanced and innovative
Quality of reporting readily available Actions implemented (e.g.
identified. covered or not with acceptable practices on all practices. External
to stakeholders procedures, training, equipment)
sufficiently practices. activated criteria. recognition.
addressed.
7 360 4 CERT
Standpoints of stakeholders, e.g. Certifications, labels, 3rd party audits
administrative & judicial authorities, The scoring of the seven management indicators is based upon strict scoring add a comma
trade unions, NGOs 5 COVE
after guidelines which are applied by all analysts. Each scoring level is associated to a
Level of deployment of certificates
or actions throughout the company detailed definition and a database of sample documents. The seven management indicator
scores will then generate a score for each theme based upon the weight
allocated to each management indicator. The three management layers, policies, actions
and results are given the following respective weights: 25%, 40% and 35%.
When assessing a company’s CSR management system, it is important to define what are
the CSR issues covered by the management system. The assessment considers a range of The overall score is a weighted average of the theme scores. The activation and weight of
CSR issues, which are grouped into four themes. The CSR issues are based on international each theme depends on the company industry, size, and its location. This allows taking into
CSR standards such as the Ten Principles of the UN Global Compact, the International account the characteristics of a company, each theme being more or less critical depending
Labour Organization (ILO) conventions, the Global Reporting Initiative (GRI)’s standards, on their activities.
the ISO 26000 standard, the CERES Roadmap, and the UN Guiding Principles on Business
and Human Rights, also known as the Ruggie Framework.
About
EcoVadis is the world’s most trusted provider of business sustainability ratings,
intelligence and collaborative performance improvement tools for global supply
chains. Backed by a powerful technology platform and a global team of domain
experts, EcoVadis’ easy-to-use and actionable sustainability scorecards provide
detailed insight into environmental, social and ethical risks across 190 purchasing
categories and 150 countries. Industry leaders such as Johnson & Johnson, L’Oréal,
Nestlé, Schneider Electric, Michelin and BASF are among the more than 50,000
businesses on the EcoVadis network, all working with a single methodology to
evaluate, collaborate and improve sustainability performance in order to protect
their brands, foster transparency and innovation, and accelerate growth.
www.ecovadis.com
Contributors from EcoVadis

Tianyang Cai, Pia Dewitz, Sylvain Guyoton, Anna Kapica-Harward, David McClintock, Brayton Noll, Yovana U. Samy-Duchesne,
Alexandra Uribe, Sheng Ou Yong. Special thanks to Stéphane Laderrière, Hypercut.
Guest articles
Greg Bouchard, CyberVadis, Eric Mugnier, EY, Daniel Wiegand, DFGE, Lawrence David, Verité. © copyright EcoVadis 2018

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Global CSR Risk and

Performance Index 2018

Contrasts and Similarities Across Regions..................................................14

Performance and Reassessment Comparison by Company Size...........18

Performance by Industry Division................................................................ 22

Food and Beverage....................................................................................... 26

Wholesale, Services and Professionals...................................................... 36

Information and Communication Technology..................................................40

Finance, Legal and Consulting................................................................................. 42

Using Data on Worker Sense of Value to Guide Improvements

The Critical New CSR Challenge: Third-Party Cybersecurity Risk........... 48

Science Based Targets: An Essential Piece of a Complex

Tomorrow’s Brands Will Be Sustainable or They Won’t Exist at All.......... 52

EcoVadis CSR Methodology Overview and Principles...........................60

© copyright EcoVadis 2018

Varied Engagement Across Different Areas of CSR

EcoVadis Assessment Methodology and Business Updates

Evidence-Based Business Sustainability Ratings

2015 2016 2017

Proportion Per Score Range

46.8 39.6 10%

7.5 8.3 8.5

Percentage Within Score Range

Unweighted Theme Scores Over the Years

45.4 45.5 45.3

Overall Environment Labor Business Ethics Sustainable

Top Trends and Issues

45 30 Greater China Area

25 Greater China Area

35 Greater China Area

Comparison by Company Size 45

Large Companies Small and Medium-Sized Companies

Score Change Between First and Second Assessment Per Region

Improvement No change Decrease

Latin America AMEA Europe Greater China North America

Percentage of Companies Assessed for the First Time

2015 2016 2017

Food and Beverage............................................................................ 30

Wholesale, Services and Professionals......................................... 50

Information and Communication Technology............................. 50

Finance, Legal and Consulting....................................................... 50

What’s in the Snapshot? 38.0 Business Ethics

43.4 43.5 43.5

What’s in the Snapshot? 49.6

Overall Environment Labor & Business Ethics Sustainable

45.0 Labor & Human Rights

What’s in the Snapshot? Business Ethics

Labor and Human Rights

Overall Score: Heavy Manufacturing vs. All Industries

What’s in the Snapshot Weighted Scores (Large Companies)

Overall Environment Labor Business Ethics Sustainable

42.0 All Industries

Top Trends and Issues 42.0

Labor and Human Rights

Key Findings 42.0 All Industries

What’s in the Snapshot 34.0 Wholesale, Services

Theme Weighted Scores Over the Years

Overall Environment Labor Business Ethics Sustainable

What’s in the Snapshot Transport