How do you convince companies, especially those in cost-sensitive or traditionally low-margin sectors, that investing in ESG is not just good ethics but good business?
The business case for ESG is mainly about two things: resilience against risk and growth opportunities. Firstly, businesses need to manage risks – such as non-compliance with new regulations or risk of supply chain disruption – to avoid future costs. The second part of the value proposition is that businesses with advanced sustainability systems win more orders from Fortune 500 customers sensitive to this topic.
If you are selling to large B2B customers, the EcoVadis rating is the gold market standard— the easiest way to communicate your sustainability credentials. There are now lot of EU regulations against greenwashing, so companies want to have a third-party verified or independent rating. 1,500 of the largest global organizations use the EcoVadis system to measure performance of suppliers. In 2024, the total value of purchased goods and services influenced by our ratings was $2.38 trillion. That is more than the GDP of any country except China and the U.S. The big business driver is capturing a part of this trillion-dollar spend purchased using sustainability criteria.
Do you see a risk of greenwashing being legitimised through ratings or reporting tools?
In most cases, we are not working with Chief Sustainability Officers in charge of reporting, but with Chief Procurement Officers. They are using our data operationally to influence their purchasing decisions.
They are saying “for every call for tender we launch, sustainability will account for 10% in the bid award decisions - and depending on your EcoVadis score, you have a higher chance of getting the business.”
Or, “if you have a score below X, you have X months to improve — otherwise we will stop purchasing.” This is very positive. It means millions of dollars of spend are going to more responsible businesses — those who have a better emissions profile and ESG standards.
What is EcoVadis’ relationship to policymaking, and how does it enable its customers to achieve regulatory benchmarks?
We have lots of touchpoints with policy and regulation. The first level is that our tools help companies comply with regulations. They use our platform to implement a due diligence system aligned with, for example, the Corporate Sustainability Reporting Directive (CSRD) or Corporate Sustainability Due Diligence Directive (CSDDD).
Secondly, some regulations apply to us directly as a company. For example, we will soon become a regulated entity by the European Supervisory Market Authority (ESMA). Finally, we engage with the Commission to share feedback, based on our 15 years of data on supply chain, about the reality of sustainability business practices — which is useful for making sure that sound regulations are implemented.
If you could change one EU regulation or incentive structure tomorrow to accelerate the green transition for businesses, what would it be?
I think there are too many regulations focused on avoiding risks. It is always a play of carrot and stick. For example, the CSDDD - a critical piece regulation designed to ensure there are no human rights issues amongst your portfolio suppliers – is currently being discussed. But there is no reward incentive if, for the majority of spend, you work with suppliers with high standards for waste management or biodiversity.
I would like to see more robust incentive structures around good practice. For example, preferred access to public tenders or EU public procurement if you can demonstrate that 80% of your suppliers commit with SBTI.
What gives you hope in the success of the global net-zero mission?
Five years ago, we invited Al Gore to our annual customer conference. People were challenging him or asking why we should still be hopeful or confident. He quoted the German economist Rudiger Dornbusch: “In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.”
Yes, emissions keep increasing and we are further away from the targets. But, the foundation, which is these hundreds of thousands of businesses starting to make changes, combined with technological innovation, may – sooner than we think – generate a positive hockey stick effect in the green transition.
