Assessment Scope in EcoVadis Methodology

Assessment scope in EcoVadis refers to the specific boundaries and areas of evaluation for a company’s sustainability performance. It defines which entities, sites, business units, or operations within a company are included in the assessment process conducted by EcoVadis. EcoVadis utilizes three distinct levels of assessment scopes, allowing for a tailored evaluation approach. These levels are:

• GROUP –

A company (legal entity) with subsidiaries or a subsidiary that has subsidiaries.

The assessment scope corresponds to the parent company or the subsidiary within the group structure.

• ENTITY –

A legal entity with no subsidiaries or a subsidiary within a group structure that has no other subsidiaries below it.

Assessment scope corresponds to the individual legal entity, which could be a mono-site company or a standalone company with multiple sites sharing the same Legal Entity Name (LEN).

• SITE –

A site or facility of a legal entity without an individual Legal Entity Name (LEN).

Sites are identified by using a suffix “(Site of XYZ)” in their EcoVadis Legal Entity Name.

Assessment scope corresponds to the parent entity, with the suffix indicating the specific site.

The assessment scope determines the scope of data collection, analysis, and evaluation by EcoVadis against their sustainability criteria. It helps provide a clear understanding of the areas of focus and the extent of the assessment. The scope can vary depending on the company’s size, structure, geographic presence, and industry.

When defining the assessment scope in EcoVadis, companies typically consider the following aspects:

Organizational Structure: Companies determine which entities, business units, or subsidiaries are to be included in the assessment. This may involve assessing the entire organization, specific divisions, sites, or legal entities.

Geographic Coverage: The assessment scope may encompass all global operations, specific regions, or individual countries, depending on the extent of a company’s operations and the geographical significance of its sustainability impacts.

Supply Chain: Companies may choose to include suppliers in their assessment scope to gain a comprehensive view of the sustainability performance of their value chain. This involves assessing relevant suppliers based on their importance or level of risk.

Business Activities: The assessment scope may focus on specific business activities within a company that are most relevant to EcoVadis sustainability criteria. This can include manufacturing facilities, operational processes, or specific product lines.

Material Issues: Companies prioritize the assessment scope by identifying the sustainability issues that are most material to their industry, stakeholders, and business objectives. This ensures a targeted evaluation of areas with the most significant impacts or opportunities for improvement.

The assessment scope is defined during the registration process with EcoVadis and can be updated periodically to reflect changes in the company’s structure, operations, or sustainability strategy. It is essential for companies to carefully consider the scope selection to ensure the assessment accurately reflects their sustainability performance and allows for meaningful benchmarking and improvement efforts.

Not Allowed Scopes:

EcoVadis identifies certain scopes that are not relevant or feasible to assess from a sustainable procurement standpoint. These not allowed scopes include:

Conglomerates: Sustainability issues can be diluted within conglomerates due to the diverse range of divisions and activities they encompass. Instead, it is advisable to select a second-tier scope, such as a subsidiary or a division with a legal entity name, for assessment.

Business Units or Divisions without a legal entity name: These entities cannot be assessed individually.

Pure commercial entities in manufacturing groups: Sales offices, trading agents, or marketing entities within manufacturing groups are not assessed.

Pure “financial investment” holdings: Investment funds with a legal entity name are not assessed.

Product names, commercial brands, and brand names: These are not considered for assessment.

Non-commercial entities: NGOs, academia/universities, or state-owned/governmental organizations without a legal entity name are not assessed.

Credit Information from Related Companies: When determining the assessment scope, EcoVadis takes into account information from related companies based on the company structure. The following companies are considered related to the assessment scope:

• Parent company (if applicable)
• Subsidiaries and/or operational sites (if applicable)

However, sister companies and third parties such as suppliers or contractors are not included in the assessment scope.

Companies Related to the Assessment Scope

EcoVadis recognizes that sustainability performance and practices can extend beyond the individual company being assessed. They understand that the activities and impacts of related companies can have a significant influence on the overall sustainability performance of the organization. Therefore, EcoVadis may request information or documentation from related companies to gain a comprehensive understanding of the sustainability practices and impacts within the corporate group.

The inclusion of information from related companies allows for a more accurate and holistic assessment of the organization’s sustainability performance. It helps EcoVadis evaluate the sustainability practices and impacts throughout the supply chain, identify potential risks and opportunities, and provide a more comprehensive evaluation.

How does EcoVadis Credit Information from Related Companies

EcoVadis recognizes the importance of supply chain management and encourages companies to include relevant information about their supply chain, including related companies, in their assessment. This allows for a more comprehensive evaluation of sustainability practices throughout the value chain.

When assessing a company, EcoVadis considers factors such as responsible supply chain practices, environmental management, labor and human rights, ethics, and sustainable procurement. These factors are evaluated based on the information and documentation provided by the company itself, which may include details about its relationships with related companies and supply chain partners. For e.g., the Policies express the Group’s strategies and are usually issued top-down whereas the Actions and Results need to be verified at the level of Rated Company to ensure concrete implementation and relevant coverage.

Conclusion:

Accurate assessment scope determination is a critical aspect of the EcoVadis methodology for sustainable procurement. By understanding the three levels of assessment scopes and the scopes that are not allowed, companies can align their assessments with their trading partners effectively.

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