EcoVadis is the leading provider of business sustainability ratings for global supply chains. They have assessed more than 75 000 companies on environment, labor and human rights, ethics and sustainable procurement. dormakaba has been working with EcoVadis since 2019 on its Supplier Engagement and Due Diligence Program.
70% of business impact on social and environmental topics is in the supplier base. How do companies manage it generally?
Companies are more and more aware of their impact and want to mitigate risks along their supply chains. Furthermore, there is a generally increasing demand both from the legislation and customers to ensure more transparency and visibility in the supply chain. According to the Business Sustainability Risk and Performance Index 2020 of EcoVadis, the overall sustainability performance of companies is improving globally. In 2019, 57% of the rated companies achieved scores 45 or higher (meaning good, advanced or outstanding performance), compared to 45.2% in 2015.
You have been working with dormakaba since 2019 on its Supplier Engagement Program. As an expert in the topic, how would you describe our performance?
dormakaba was one of the first big companies in the construction industry to engage with suppliers, which shows how innovative it is. Before 2019, dormakaba already had experience in supplier assessment and engagement by using its own Self-Assessment Questionnaire. This “in-house” solution was however too time and resources consuming with a limited coverage. Based on this experience, dormakaba decided to collaborate with us to expand its Supplier Engagement Program and developed a strategy to focus on high-risk suppliers, materials and countries in the first round, with ambitious targets set.
This approach already showed dormakaba’s commitment, but in order to perform better, we co-developed an action plan. This includes for example the appointment of “regional champions”, to engage with the buyers and through them with the suppliers. We also developed an escalation process, to implement actions in case of refusal of the assessment invitation, and if suppliers are classified as high-risk partners. In 2020, dormakaba added another criteria (“spend threshold”) to its strategy in order to expand the group of suppliers to engage with. By involving C-level managers in the process, organizing internal sustainability trainings and setting KPIs publicly, dormakaba clearly demonstrates its commitment towards the topic.
Where do you think dormakaba should improve?
dormakaba has been doing a lot since it started the journey on supplier engagement and assessment, but we are talking here about Change Management, which needs time to be fully integrated into the daily procurement processes. Procurement is generally reduced to a cost reduction division, although this is also an area where risks can be mitigated and value created. With its Supplier Engagement Program, this is exactly what dormakaba is aiming at, together with its buyer organization.
Considering dormakaba’s strategy, industry and pioneer role in it, the response rate looks good (about 30-40% global response rate) but there is still room for improvement. Thanks to the action plan, the baseline for success has been set and will ensure a better response rate.
What is the benefit for suppliers to go through the assessment?
Suppliers are increasingly understanding the value of improved sustainability performance and being assessed by EcoVadis, as it enables them to grow and to create stronger partnerships with their customers; moreover it has a positive reputational value. In case suppliers are at the beginning of their sustainability journey and get a reasonably low score during the assessment, we send them a corrective action plan to work on specific topics. They are guided through this action plan, to improve their sustainability performance before the next assessment.