EcoVadis: 80% of Firms Ignore Supply Chain ESG Risks

Four out of five companies rated by sustainability ratings provider, EcoVadis, have no documented process for managing sustainability risks within supply chains.

The widespread lack of processes seems shocking, as McKinsey has argued that businesses are likely to find that their supply chains hold the biggest opportunities for breakthroughs in sustainability performance. 

EcoVadis also found that as companies shift to an AI first strategy for supply chain management and sustainability reporting, serious issues have arisen in the supplier base which threaten the efficiency of technology and software rollouts. 

Key findings

80% companies rated by EcoVadis have no documented process for identifying or managing sustainability risks within their own supply chains. 

EcoVadis found that 73%  of companies have no Scope 3 upstream emissions reporting and 77% have no downstream tracking. 

Only 2% have an external grievance mechanism that workers deeper in the supply chain can actually use to flag human rights violations. 

There is also a transparency bottleneck, with fewer than 1% reporting granular, decision-grade sustainability data to buyer organisations.

These figures come from the latest edition of the EcoVadis Sustainability Ratings Index, drawn from nearly 200,000 scorecards of the more than 100,000 companies rated globally between 2021 and 2025.

Procurement practices impacted

Ecovadis found much verification of supplier performance still concentrated on paperwork. 42% of companies still rely on unverified supplier questionnaires and just 46% require suppliers to sign a sustainability code of conduct. 

It also found that only 20% conduct on-site audits, a number that has barely moved in four years.

Companies integrating AI apparently found a similar hurdle in data-readiness. EcoVadis data shows 68% of corporate buyers have deployed AI tools in their sustainable procurement programs, with carbon data validation cited as a top application by 62% of those buyers. 

However, the supply base is largely unequipped to support these systems: 30% of suppliers provide no carbon data and 26% supply only aggregated estimates.

Sylvain Guyoton, Chief Rating Officer at EcoVadis, says: “Organisations have built sophisticated tools to analyse supplier sustainability data. The suppliers either don't have that data or can't report it in a form the tools can use.”

Analysing the data and key takeaways

The Boston Consulting Group (BCG) found that AI adoption is significant in supply chain management. A BCG survey found that 44% of companies are deploying AI in supply chain management, more than in finance, HR and procurement.

As companies deploy AI tools to deal with issues in sustainability reporting, it is not just the companies deploying the technology who need to have shifted towards a digital first strategy, the suppliers must do the same to ensure data accuracy. 

Sylvain adds: “Better software does not close that gap. The measurement problem lives in the supply base itself, and closing it requires sustained engagement over time: structured assessment, scored performance and documented follow-through.

“Companies willing to treat supplier engagement as an ongoing process, rather than a one-time compliance exercise, close the distance between what they intend and what they can actually verify.”