EcoVadis: Lack of ESG Supply Chain Strategy in 80% of Firms
Supply chains face a documentation crisis that could undermine sustainability efforts and technology adoption. According to EcoVadis, four out of five companies have no documented process for managing sustainability risks within supply chains.
The gap appears substantial given that McKinsey argues that supply chains hold the largest 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, issues have arisen in the supplier base which threaten the efficiency of technology and software rollouts.
Tracking failures across tiers
According to EcoVadis, 80% of companies it rated are unable to identify or manage supply chain sustainability risks, or lack a documented process. The sustainability ratings provider discovered that 77% of companies have no downstream tracking, while 73% have no Scope 3 upstream emissions reporting.
Most companies (98%) do not have an external grievance mechanism so that workers can flag human rights violations. This is part of a wider transparency issue, as less than 1% report granular decision-grade sustainability data to buyer organisations.
The 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.
Verification relies on paper
According to EcoVadis, as many as 42% of companies rely on unverified supplier questionnaire, while only 46% require suppliers to sign a sustainability code of conduct. Moreover, there is a lack of auditing, with only 20% conducting on-site checks.
The lack of on-site verification could mean companies have limited understanding of actual conditions within their supply networks. Self-reported data from suppliers may not reflect operational reality.
“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. ”
AI tools meet data gaps
Companies integrating AI also faced issues of data readiness. According to EcoVadis data, 68% of corporate buyers have deployed AI tools in their sustainable procurement programmes, 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. According to EcoVadis, 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."
- 80% of companies have no documented process for identifying or managing sustainability risks within their supply chains.
- 73% of companies have no Scope 3 upstream emissions reporting
- 77% have no Scope 3 downstream tracking
- Only 2% have an external grievance mechanism that workers deeper in the supply chain can actually use to flag human rights violations.
According to The Boston Consulting Group, AI adoption is substantial in supply chain management. A BCG survey found that 44% of companies are deploying AI in supply chain management, which is 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."
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Sylvain Guyoton
Chief Rating Officer
