In March 2023, at Sustain 2023 hosted by EcoVadis, I met and interviewed Richard Eyram, CCO of EcoVadis, a global supply chain assessment organisation. Part of the interview was reported in Asia Economy and “Trade” magazine under the Ministry of Trade, Industry and Energy, and the full interview is below.
Why ECONINE became a training partner
Seo Uk. I am curious why ECONINE was selected as EcoVadis’s approved training partner. And through this partnership, what plans and expectations do you have?
Richard Eyram. In Korea, both rated customers and requesting customers are increasing, so we were looking for a partner that could support these customers in completing assessments, understanding scorecards, and implementing improvement plans. ECONINE has earned a Gold medal in its own EcoVadis assessment, and it has considerable experience in ESG areas, particularly ESG strategy and sustainable supply chain development.
EcoVadis judged that in the areas where our own capability is lacking, we need organisations like ECONINE. It will be a good opportunity to cooperate and expand the Korean market together. What we are looking for in a partner is an organisation with authenticity and commitment to sustainability.
EcoVadis has the platform, methodology, best practices, and people. As a specialised organisation, we need an educational institution that can professionally consult on and train others in EcoVadis’s platform and methodology, and I think ECONINE can play that role. I believe ECONINE’s success and our success are intertwined and can lead to customer success.
Why buyers rely on EcoVadis
Seo Uk. Why do global companies refer to EcoVadis when selecting partners? Please tell us about EcoVadis’s assessment criteria, assessment targets, assessment purpose, and use.
Richard Eyram. I joined EcoVadis six or seven months ago. Sustainability was a new field for me because I had been working in consulting and technology. As I have been learning, I have realised that what EcoVadis has built over the past 15 years is remarkable. The answer to why companies look for EcoVadis is simple. EcoVadis is the world’s most trusted business sustainability assessment organisation.
Seo Uk. But for exactly what reason is EcoVadis a trusted assessment organisation? What is its assessment methodology, and for what purpose is it used?
Richard Eyram. EcoVadis’s assessment methodology is designed to help organisations improve sustainability performance, manage ESG (environmental, social, and governance) risks, and enhance brand reputation. This is one of the reasons many companies choose EcoVadis. Of course, there are other organisations that provide sustainability assessments and ratings, but EcoVadis holds a distinctive position because it has an impact model that helps build transparency through close collaboration with trading partners, drive visible improvement, and expand positive impact across the value chain.
The impact model
Seo Uk. Could you explain the impact model in more detail?
Richard Eyram. The impact model consists of three stages. First, multinational buyers and private equity firms request EcoVadis assessments from their trading partners and use our insights to include sustainability in procurement or investment strategies. Then, assessed companies use the scorecard results and the EcoVadis platform to improve ESG (environmental, social, and governance) management systems and adopt sustainable best practices. Finally, EcoVadis supports tracking and reporting the results of this process, helping both requesting companies and assessed companies fine-tune their approaches and scale their efforts.
Seo Uk. What is special about EcoVadis?
Richard Eyram. EcoVadis provides not just a scorecard, but an actionable programme. We have a technology platform, a SaaS platform, and we complement it with sustainability experts. The combination of these two makes us very strong. In addition, our methodology focuses on 21 sustainability criteria classified under four themes: Environment, Labor and Human Rights, Ethics, and Sustainable Procurement. These criteria are based on international sustainability standards such as the Ten Principles of the UN Global Compact, International Labour Organisation (ILO) conventions, and the Global Reporting Initiative (GRI) Standards. EcoVadis also builds a strong actionable programme to understand where customers currently stand, establish corrective action plans, and identify how they can improve over time. This is the driving force behind EcoVadis’s growth around the world. To date, EcoVadis has assessed 200,000 scorecards and has more than 1,000 enterprise customers. It is also growing rapidly worldwide.
What sets the assessment apart
Seo Uk. What differentiates the EcoVadis assessment from other ESG assessments?
Richard Eyram. The key is that we are evidence-based. Other organisations often provide self-assessment questionnaires and score companies according to the answers they want to give. But at EcoVadis, those answers must be supported by policies, documents, and evidence, and they must be relevant and timely. So if policies or statements have not been implemented recently, it can be difficult to receive a high score. In other words, evidence plays a major role in the EcoVadis assessment.
Another point is 360° Watch. Here we take the organisation’s assessment and all the supporting material it provides, and scan publicly available information about the organisation and its trading partners. We can then check whether there are any issues around the world concerning environment, labour, human rights, sanctions, and so on. The methodology, capability, and evidence base of 360° Watch help assess sustainability performance accurately.
The complementarity of technology and people is also a major feature of EcoVadis. We continue to invest in technology and scorecards, but what has helped drive this forward is the people who have been with EcoVadis. We have world-class methodology and best practices, and organisations can bring them together and turn them into action plans.
Another major feature is that we are a truly global company. We apply 200 business criteria around the world. This is a very deep and powerful methodology. I think that is what makes EcoVadis distinctive in the field of sustainability.
Seo Uk. What do companies that receive good scores in EcoVadis assessments have in common?
Richard Eyram. There are several commonalities. First, transparency and effort toward improvement. Receiving a score is a one-time event. Some companies may think, “We received an EcoVadis score, so we are done.” But if you want to commit to the journey of improvement, you need to establish a corrective action plan, identify areas for improvement, apply them to business practices, and do your best for sustainability. It is also important to share this throughout the organisation.
In addition, an EcoVadis response has to be reassessed. The trend has to keep showing next year and the year after. To receive a good score, companies must make transparent and committed efforts. They should not merely answer the questionnaire, but genuinely provide evidence that these policies are actually being implemented. Organisations that do this well generally tend to receive higher scores than others.
One more thing to keep in mind is that EcoVadis provides scores according to industry, country, and organisational size. You might ask how a large Korean company and a small Thai organisation can be compared. But because there are differences by industry, country, and size, a methodology that takes this into account is needed, and EcoVadis assesses corporate sustainability with these factors in mind.
Seo Uk. In general, what are the important risks that lead to a downgrade in an EcoVadis assessment rating?
Richard Eyram. We have found that only 15% of customers see their rating downgraded in reassessment. If a company joins EcoVadis, it is usually a company with an interest in sustainability, so score downgrades are not that common. But sometimes companies’ scores do go down. I would like to talk about the risks that explain why scores fall.
The first is failing to provide evidence to support the questionnaire. The evidence or documents may not have been updated for one or two years. If you do not update documents that prove your commitment to this journey, that can be a negative indicator.
The second relates to 360° Watch. If regulatory or environmental issues have occurred within an organisation, or if there are new regulations or issues involving the organisation anywhere in the world, EcoVadis can find them through 360° Watch. You may not have shared this information, but we discover it through our own analysis. This can have a negative impact on an organisation. These are the two biggest reasons.
Talking to stakeholders
Seo Uk. Then media management seems important.
Richard Eyram. I would say it is more important to work on sustainability internally. Not greenwashing. Do not just say, “We are doing our best,” but make sure there are strong underlying details in place. Using media to clearly express a commitment to sustainability and sustainable procurement is not a bad approach. But it is not essential. Absolutely not essential.
Seo Uk. You mean communication with internal and external stakeholders about sustainability is important?
Richard Eyram. It is very important. When I use the word transparency, I mean communication with all stakeholders, because the moment you begin communicating, you carry a sense of responsibility to tell the truth to all stakeholders, and over time this leads to better performance.
Where Korean companies stand
Seo Uk. Are Korean companies also participating a lot in EcoVadis assessments? ESG management, which is a global topic, is also receiving attention in Korea.
Richard Eyram. Yes. Many Korean companies have joined our network, and we are growing quickly among both large companies and small and medium-sized enterprises. They want to receive EcoVadis assessments and build programmes.
Seo Uk. I see. Compared with global companies, what is the level of Korean companies’ EcoVadis assessments?
Richard Eyram. Korean organisations, like organisations anywhere in the world, join the EcoVadis network and receive assessments from us. However, the group where we see the most room for improvement is smaller organisations. Our methodology has four themes, one of which is sustainable procurement. Small and medium-sized enterprises are not engaging with supply chains and trading partners at the level we want.
Advice for smaller suppliers
Seo Uk. Please offer advice for ESG management in small and medium-sized enterprises.
Richard Eyram. Get an EcoVadis assessment. Look at the processes of larger supply chain trading systems and consider how you can take part in sustainability efforts. It is also good to examine trading partners and focus on internal operations that include the supply chain, as in Europe. Korea is still at a lower level of maturity, but it would be good to consider the fourth theme, sustainable procurement.
Seo Uk. Then how do large European companies manage their supply chains?
Richard Eyram. In Europe, organisations of all sizes are leading the way by looking not only at internal operations and their own companies, but also at supply chains for sustainability. Large companies and suppliers, suppliers’ suppliers, and so on pursue sustainability through cooperation at various levels.
Seo Uk. I see. Korea also needs more companies to focus on sustainable procurement.
Richard Eyram. Yes. When I say Korea is less mature compared with some countries around the world, I do not mean it is lacking. But I would suggest that looking at the fourth theme, sustainable procurement, is one of the biggest areas. It is important not only to focus on environmental, social, and ethical issues, but also to consider management across the supply chain.
Seo Uk. Korean companies still seem to think of EcoVadis as a short-term outcome for transactions rather than as a way to improve their sustainability management systems. Is there anything you would like to say to Korean companies about the importance of supply chain management?
Richard Eyram. As with carbon footprints, you probably know that 70% of an organisation’s impact is in its supply chain. This shows the importance of responsibility for the trading partner network. Some organisations are not yet mature at the stage of network management. But customers such as Schneider Electric internalise sustainability among all employees and within the company, report transparently on these indicators every year, and embrace corrective action plans and improvement methods for downstream business practices and every part of trading partners and the supply chain. If you use the EcoVadis business assessment process and genuinely embrace the contents of these assessments, corrective action plans, and ways to improve, you can slowly see the organisation evolve and change over time.
I looked at Korean businesses and saw that there are around a thousand businesses as part of the EcoVadis network. Especially on the environmental theme, businesses in Korea are growing faster than some businesses in North America. That is a very impressive result. What we can also see in the data is that small and medium-sized enterprises and mid-sized companies are not yet committed to assessing trading partners. They are probably spending most of their time only on operating their own businesses. This is an area that is not yet mature and must improve going forward. I think this is one of the important areas of opportunity for Korean SMEs.
* ECONINE was selected in 2022 as EcoVadis’s first official training partner in Korea and the third in Asia. Since its founding, it has completed more than 120 ESG management projects and has a vision of contributing to innovation in the industrial ecosystem. EcoVadis is the first sustainability assessment collaboration platform operator to assess the environmental and social impact of global suppliers. EcoVadis assesses more than 100,000 companies across more than 160 countries and over 200 industries worldwide. Sustain 2023 was a sustainability event hosted by EcoVadis, and its theme was Committed. At this event, companies from around the world, including WBCSD and CDP, participated and addressed supply chain issues in depth.
Asia Economy article
Trade magazine interview article