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Highlights from the EcoVadis Global CSR Risk & Performance Index Michael Smith, Senior CSR Analyst, EcoVadis Rosey Hurst, Founder, Impactt
Document Classification: EcoVadis Public
Highlights from the EcoVadis Global CSR Risk & Performance IndexMichael Smith, Senior CSR Analyst, EcoVadis
Rosey Hurst, Founder, Impactt
Document Classification: EcoVadis Public
Webinar Details
OBJECTIVES:
1. To benchmark CSR performance of companies from US, Europe and China2. To highlight key CSR issues that warrant increased attention from US companies
INTENDED AUDIENCE:
1. Procurement officers2. CSR/Sustainability professionals3. Compliance professionals
2
Document Classification: EcoVadis Public
1. Highlights EcoVadis Global CSR Index 2017
2. Reasons for Regional Performance Variations
3. Impacts for US Companies
4. CSR Spotlight Issue-Labor Practices & Human Rights
5. Q&A Session
Webinar Agenda
An Overview of the First EcoVadis Global CSR Risk & Performance Index
Michael SmithSenior CSR Analyst, EcoVadis
Document Classification: EcoVadis Public
The Data: 2015-2016
799,250evaluation data points
used
640,770documents evaluated
byEcoVadis
24,984evaluations
194EcoVadis ISIC
categories
21,927unique
companies
144countries
28portfoliosindustry
divisions
2size
groups
3
1
10world
regions
Document Classification: EcoVadis Public
(9 criteria)
(7 criteria)
(3 criteria)
(2 criteria)
Policies Endorsements
Reporting
Measures
Certifications
Coverage
4 CSR Themes – 21 Criteria – 7 Management Indicators
The EcoVadis CSR Rating Reference Model
Document Classification: EcoVadis Public
Results Overview
0
0,5
%
0,4
%
00-14 15-24 25-34 35-44 45-54 55-64 65-74 75-84 85-100
5%
10%
15%
20%
25%
30%
6%
4%
24
%
21
%
25
%
25
%
28
%
30
%
13
%
16
%
3%
4% 0,2
8%
0,4
1%
0 % 0 %
Year2015 Year2016
Score range percentages by year
Size breakdown by % across calendar years
Outer ring: 2016; Inner ring: 2015
27%24%
21%20%
56%53%
0
10
20
30
40
50
42
,4
44
,0
43,2
43
,8
45
,4
44,6
44
,0
45
,3
44,7
39
,3
41
,5
40,5
36
,9
38
,6
37,8
Year 2015 Year 2016
Theme Performance
2 Years
Document Classification: EcoVadis Public
US-EU-China: Aggregate Performance Results?
Europe outperforms the US and China across 2015 and
2016
Document Classification: EcoVadis Public
USA-EU-China: Size Matters
Document Classification: EcoVadis Public
US-EU-China: CSR Theme Breakdown?
Document Classification: EcoVadis Public
Sector Category Scores
Most portfolios edging closer to being considered low CSR
risk. Yet, certain portfolios continue to hold medium to
high CSR risks
X axis - number of companies in portfolio Y axis - % change in average overall CSR
score from 2015 to 2016
Document Classification: EcoVadis Public
What is Driving Responsible Sourcing Efforts?
A convergence between the US and Europe on the same
top three drivers and priorities for SP programs: Brand
Reputation, Risk Mitigation, and Compliance.
Document Classification: EcoVadis Public
What is Driving Responsible Sourcing Efforts? Cont.
Source: Global Reporting Initiative Carrots & Sticks 2016
Document Classification: EcoVadis Public
Impacts on US Companies
US Suppliers-Potential loss of business because they lack innovative practices compared to EU and Chinese companies, and lack price leverage that Asian companies maintain
US Buyers-Weak US supplier performance potentially undermines buyer efforts to manage operational CSR impacts-including supply chains-responsibly
Document Classification: EcoVadis Public
Poll Question
How do you engage your suppliers to drive improvements on sustainability issues (multiple choice)?
"Doing business with us" page on your company website
Formal supplier code of conduct
Sustainability/CSR clauses in contracts
Sustainability assessments and/or on-site audits
Set performance targets with recognition and/or incentives
Collaborate on improvement plans and/or education on CSR
Taking a Human Rights perspective
The challenges and opportunities in Global Supply Chains
Rosey Hurst, Founder and Director, Impactt Limited
• Which statement is closest to your experience? (one choice)
- We have no human rights issues in our supply chain
- We work with our suppliers to close audit non-compliances
- We analyse suppliers’ management systems to map risk
- We collaborate with stakeholders to remediate problems
Poll question
What workers say
It was a dream to work in the gulf countries as no opportunities back at home. Now I am here and do not want my relatives to be here, and work as an ox in the field. I want to go to home but do not have my passport in my hand, so I have to work till the contract finishes with my employer. I swear, I will not come back to construction work in the gulf.
Nepali worker, Qatar
What workers say
I am not happy with the life, after doing so much hard work and not being able to fulfil my dreams.
Worker, India
What workers say
Supervisors show little respect to workers: shouting, telling us to work faster, not allowing us
to go to the toilet…
Worker, UK
In the news
2010 2011 2012 2013 2014 2015 2016 2017
UNGPs
US Business Supply Chain Transparency Act introduced
UK Bribery Act Focus on Supply Chains
E.O. 13627: Strengthening Protection Against Trafficking in
Persons in Federal Contracts
UK Modern Slavery Act
California Transparency in Supply Chains Act Australian Slavery, Slavery-Like
Conditions and People Trafficking Act
EU Directive on Preventing and Combatting Trafficking in
Human Beings EU Directive on ESG Disclosure
US Business and Supply Chain Transparency on Trafficking
and Slavery Act 2015 introduced
Key legislation
Dutch Child Labour Due Diligence Law
Swiss responsible business initiative launched
French ‘Duty of Care’ Law
UNGP – The 3 pillars
PROTECTRESPECT
REMEDY
SDGs
Directly work towards SDG 8 Targets:• Eradicate forced labour and modern slavery• End child labour in all its forms• Protect labour rights for migrants and those in precarious
employment• Promote safe and secure working environments
Contribute towardsWork towards
Forced Labour
Discrim-ination FoA
Living Wages
Child Labour
Secure work
Working Hours
H&S
Respect
Worker pie – the trade off
RespectBetter future for family
Income security
• Having a voice• Confidence you will be
listened to• Status at home and in
the factory
• Personal development opportunities
• Promotion opportunities
• A fair wage in a normal working week
• Paid in full on time• Job security
IdentifyMapping the process
Understanding the risks
Understanding any breaches
RemediateAddressing identified risks
Righting any wrongs
EliminateLooking ahead and proactively ensuring risks are eliminatedPutting in place systems that close off risks one by one
Re-thinking the business to further reduce risks moving forward
In practice
Where are the risks?Who works in your operations and supply chain?
Levels of oversight
Directly employedIndirectlyemployed
Auxiliary
Locals
National Migrants
InternationalMigrants
Wage gapsAverage monthlytake home wage
(USD)*
Living Wage Estimate
(Monthly / USD)**
Monthly wage Gap (USD)
Monthly wage gap
% shortfall
Bangladesh 97 452 355 79%
Cambodia 226 472 246 52%
India 168 364 196 54%
Vietnam 258 280*** 22 8%
UK 2098 2239**** 141 6%
China 532 692 160 23%
• Impactt database • **Asia Floor Wage 2017 • ***Global Living Wage Coalition Figures, focusing on Garment sector workers 2016. No updated Asia Floor Wage available for Vietnam)• ****UK Living Wage Foundation, based on Living Wage Outside of London (£8.25/hour)
Prevalence in China from 2007 to Q3 2017
CHINA PREVALENCE INDEX*
Forced labour Hours over
60/weekNon-payment of minimum wages
Child labour No robust age
verification system
No union or ineffective
union
2007 77% 79% 82% 28% 77% 100%
2008 89% 95% 73% 36% 89% 87%
2009 73% 86% 38% 8% 66% 71%
2010 80% 93% 65% 22% 71% 74%
2011 71% 91% 47% 24% 70% 53%
2012 56% 88% 27% 36% 62% 89%
2013 45% 93% 23% 16% 53% 81%
2014 21% 98% 27% 13% 48% 64%
2015 10% 100% 17% 26% 50% 33%
2016 19% 98% 45% 2% 35% 79%
2017 6% 100% 50% 10% 48% 88%
Source : Impactt data * Years 2007-2015 are from August to July, e.g. 2014 is August 2013 to July 20142016 is from August 2015 to December 2016
2017 aligns with the calendar year – ask Impactt for further details
Services in UAE - 2017
Source : Impactt data
64%
56%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Hours over60/week
No union orineffective
workerrepresentation
In the food sector too - 2017Impactt have visited 121 food processing sites since 2012, including:
• Nut harvesting areas of the Amazon• Tea plantations in Kenya• Chicken and Turkey killing sites in the UK and
Ireland• Turkish apricot orchards• Berry-growing areas of Morocco
Source : Impactt data
9%
32%
50%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Forced Labour Hours over 60/week
Finally, the UK
UK PREVALENCE INDEX
Discrimination Abuse
2012 10% 32%
2013 39% 39%
2014 31% 19%
2015 20% 22%
2016 26% 25%
2017 11% 20%
Source : Impactt data
Identify
In practice
REMEMBER
FINDING A PROBLEM IS A GOOD THING!
Human Rights issues are everywhere…If you not finding them, you are not
looking hard enough!
Identification – Some best practice tips
• Review what you already do to understand what is missing to identify issues/risks• What more/different is needed?• How to leverage current processes and what new is needed?
• Supply chain mapping • Beginning at the first tier, eventually moving to second and third tiers.
• Risk assessment (including mapping risk by country, and worker type risk mapping)• Audits can support in this process• Due diligence beyond audit once risk is identified, for example understanding more
about your suppliers’ and your operation labour forces, etc.• Talking with suppliers to understand more about their business, their challenges,
their labour supply chains and ways of recruiting.• Talking with workers. • Ensuring your commercial teams are aware of key issues to spot• Using publicly available resources to determine risk spots, such as NGO reports or
media stories
Key elements
Remediation
Remediation - Don’t Panic
There are practical ways to remediate instances almost all types of exploitation
SLAVERY HARSH TREATMENT EXCESSIVE HOURS
Eliminate
In practice
Elimination
Elimination
Good regulation
Business caseRe-humanisation
What does good reporting look like?
Dos• Be honest, simple and
transparent• Focus on the greatest (salient)
risks to people• Show how it connects to the
business overall• Get specific – share examples• Set clear and realistic
commitment• Show your understand your
supply chain• Demonstrate impact• Be open about challenges• Explain gaps• Look forward
Don’ts• Leave gaps to the
imagination• Be too top-level without
giving details• Only share success• Share bits and pieces
without showing how they connect
• Make it hard to find connected information
For more information on Impactt contact:
[email protected] / [email protected]
020 72426777
For more information on EcoVadis contact:
[email protected] / [email protected]
917-398-3340
Q&A session
