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Crowley adds Scope 3 ESG transparency with EcoVadis

© Shutterstock / Avigator FortunerContainer ship.

Global maritime and logistics company Crowley is pushing sustainability through its value chain, using sustainability ratings provider EcoVadis’ ratings and collaborative tools. It will help Crowley and its suppliers set, improve and achieve their ESG goals – reflecting the growing importance of Scope 3 emissions management.

Crowley becomes the first US maritime logistics provider to sign up with EcoVadis to help it monitor and improve its supply chain ESG profile.

As a hard-to-abate sector, the transport industry is shifting its focus to supply chain decarbonization to reduce Scope 3 emissions.

ESG ratings service providers like EcoVadis may see increased demand for their services based on the relative complexity of measuring Scope 3 emissions.

While sustainability ratings provider EcoVadis has partnered with over 90,000 companies across 200 industries to date, Crowley is the first US-based maritime industry partner. An increase in EcoVadis’ business coincides with an increasing focus on supply chain decarbonisation amid rising regulatory pressure to assess value chains.

Crowley sets course for supply chain ESG optimisation with EcoVadis

Hard to abate sectors like transportation are under pressure to speed up their decarbonization efforts, and improve social impacts like human rights in their value chains. In order to do that they need greater insight into the performance of their supply chain.  Scope 3 emissions, linked to a company’s wider value chain, often constitute most of a company’s total emissions, averaging 75%. In December 2021 Crowley signed an agreement with Salesforce (US:CRM) and PwC to measure and analyse its carbon emissions across its full value chain.

Crowley issued its first sustainability report in June 2022, setting a goal of reaching net-zero carbon emissions by 2050 using a science-based approach. Specific goals include adopting low- to zero-carbon fuels and supporting new energy development, increasing talent diversity, growth and retention, and supporting people and communities where it operates.

Further supply chain goals for 2030 from Crowley include ensuring 37% of suppliers are diverse, and 27% of purchasing comes from small businesses.

Transport industry stepping up sustainability efforts

While Crowley issued its first sustainability report in June 2022, larger competitors and peers have been more visible in their stating their commitment to sustainability early on. For example, Maersk, the largest shipping company by fleet size, began reporting on sustainability in 2010, and in its 2021 highlights its commitment to improve supplier ESG profiles by 2024, and to prepare for legislation on supply chain due diligence.

In February 2022, the European Commission adopted a proposal for a Directive on corporate sustainability due diligence aimed at fostering sustainable and responsible corporate behaviour and to anchor human rights and environmental considerations in companies’ operations and corporate governance.

The European Coalition for Corporate Justice’s director Claudia Saller said at the time: “Companies are increasingly under pressure to take their social and environmental duties seriously. But many hide behind their complex supply chains to avoid accountability and dodge difficult questions. The Commission’s proposal is the first EU initiative of its kind and that in itself is ground-breaking, but it fails to deliver on the potential.”

Why EcoVadis might gain in the ESG ratings race

EcoVadis has focused on sustainability ratings of company value chains. It assesses their performance using a methodology built on international sustainability standards, like the Global Reporting Initiative (GRI), the United Nations Global Compact, and the ISO 26000, covering over 200 spending categories across more than 160 countries. As a result, it can rank the performance of a company or supplier across 21 indicators in four themes: the Environment, Labour & Human Rights, Ethics, Sustainable Procurement.

Eco Vadis competes directly with many ESG ratings providers, but differs because of the sustainability collaboration tools – it works with its clients across their value chain. Unlike many of its competitors, it generates its data from independent questionnaires and direct contact with companies, rather than from publicly available reports and sources. In that way, it operates similar to CDP, with whom it collaborates, and has a focus beyond the financial services industry.

EcoVadis has been successful in raising a significant amount of funds to pursue its methodology, having raised $500 million in June 2022 to bring its valuation over $1 billion, thereby giving it Unicorn status. CVC Partners, its largest single shareholder, invested $200 million in December 2020.

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