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Can the supply chain become greener and more sustainable? Today, EcoVadis announced it’s raised $500 million in a new funding round from investors who believe that aggressive monitoring can help improve the environmental impact of every company along the supply chain. It plans to use the proceeds to expand its delivery of what it calls “sustainability intelligence” so that its clients — and their investors — can improve their business processes, from beginning to end. 

EcoVadis already works with more than 95,000 businesses in 200 industry categories and 175 countries. It delivers scorecards and evaluations that help businesses assess their efforts toward creating more sustainable economies. Its insights also help guide financing decisions made by banks and private investors who prioritize ESG (environmental, social, governance) goals.

“We do this for procurement, and we do this for the finance world as well, so that the private equity can monitor their investments for you,” explained Frederic Trinel, a cofounder who serves as co-CEO. “They can select new targets based on ESG performance and, overall, the market is incentivized to improve on those subjects. That’s really what EcoVadis is after: to guide all companies towards sustainability.”

Reaching ESG goals

A number of other groups are also working to help companies reach ESG goals but they’re often taking very different paths. Ayana and Bright Funds, for example, want to help companies engage their workers by helping them find volunteering opportunities. Millie helps build a “social impact program” around philanthropy. Selflessly offers a portal that can track, guide and celebrate giving throughout the workforce. 

Some are focused more on environmental goals and, in particular, helping companies achieve them up and down their supply chain. GreenBizCheck tracks what it calls Corporate Social Responsibility and offers CSR certifications after an inspection of the energy, water, recycling and transportation systems used throughout the procurement process. Esolidar offers a single portal that’s meant to track all ESG and CSR goals in one place including the environmental concerns. FigBytes offers a platform that tracks all ESG goals, something that can help companies file the necessary paperwork with the SEC. 

EcoVadis plans to spend some of the new investment on improving its software platform. It is already in negotiations to either merge or acquire a number of firms that will improve the general software platform used to score corporate ESG practices. 

Balancing scalability, cost and automation

The company hopes that better use of artificial intelligence will allow it to make smarter and more automated decisions about the companies. It explicitly plans to improve its scorecards with better algorithms that take a deeper look at corporate data. 

“There are many areas where cutting edge tech like AI is helping along the process,” explained Trinel. “We’re increasing the reliability of the score by really looking at how the company is providing evidence and statistically analyzing whether the company is in a normal pattern.”

Reaching such large goals means relying heavily on technology. Some companies are offering elaborate, human-run audits that are labor intensive. While they can be quite helpful, many can’t afford the cost. 

“You could spend six months in a company if you’re an auditor, but that will not scale. We are finding the right balance between automation, scalability and cost,” explained Trinel. “We [work with] 95,000 companies today and we need to go after millions – three or four million companies.”

EcoVadis also hopes to expand the current scorecard and improve the reliability and accuracy of its assessments. It’s looking at expanding the criteria by which companies are graded and also improving the way that the process evolves. 

“Many people are focusing on the carbon footprint, and this is one of the 21 criteria that we are assessing because, as you know, decarbonization of the society and in particular of the supply chain is a huge challenge and innovation here will help,” said Trinel. “But there are many others because the ESG spectrum is maturing all over the world, and as it’s mature  we are going into further detail on, for instance, water pollution or DNI (diversity and inclusion). There will be tools to help our customer to better manage each of those subjects as the maturity grows.”

The company also plans to expand its evaluation of biodiversity, in particular by looking at how a company and its practices either helps or hurts biodiversity in its ecosystems. 

The current round of $500 million is led by Astorg, a European private equity fund, and BeyondNetZero, the climate-focused fund from General Atlantic. Singapore-based GIC Private Limited and Princeville Capital are also participating.