SPLC INSIGHT

Supplier Sustainability Ratings

Does your organization know whether its suppliers are sustainability leaders or laggards?

 

Do you include supplier sustainability scores in purchasing and supplier relationship management decisions?

 

Would you like to know how to identify highly credible rating tools that are suitable for use in a procurement context?

 

SPLC’s supplier ratings assessment project helps purchasers like you make sense of the landscape of supplier ratings tools.

Explore Recommended Raters

Download Assessment Framework Report

Watch the GreenBiz Webcast about this Project

 

Why are organizations using supplier sustainability ratings in their procurement and supply chain programs?

Increasingly, organizations in the public and private sector want to know that their suppliers are responsible corporate citizens. Procurement and supply chain professionals face the challenge of measuring and managing their thousands of suppliers against that expectation. Third-party corporate sustainability rating tools have emerged as one way to do that. 

High quality rating tools provide a shared solution to a number of shared problems:

  • Determining what data is relevant to collect for different types of suppliers
  • Training and supporting suppliers in reporting
  • Verifying data provided by suppliers
  • Converting the data into a simple but fair score for use in purchasing and supplier relationship management contexts
  • Benchmarking suppliers’ sustainability performance against like companies
  • Providing corrective action feedback for gaps

The scores produced by rating tools are useful in a variety of procurement and supply chain contexts, such as: 

  • Risk management screening
  • Pre-qualification criteria
  • Preferred supplier programs 
  • Business reviews with suppliers
  • Category-management strategy
  • Awards programs for suppliers
  • RFP or contract language
  • Bid scoring
  • Balanced scorecards
  • Integration into procurement software, dashboards, metrics
  • Supplier performance improvement plans
  • Corporate sustainability goals

 

What makes for a high quality supplier sustainability rating tool?

Not all ratings are created equal, which is why we conducted this research. Ratings tools vary considerably in their methodologies and scope.

Factors we considered to determine the reliability of the ratings methodology included:

  • The extent of the sustainability issues they cover. (the number of indicators on which they rate and at what level of granularity)
  • Whether the issues they cover are adjusted to be relevant to what is material in the sector, region and/or size of the company
  • How comprehensive is the assessment across various CSR risk areas
  • The extent to which the rating assesses the company’s operational performance and/or also their supply chain sustainability risks.
  • The presence of procedures to make sure ratings methods were being applied systematically and fairly.

In terms of scope, we looked for raters that could evaluate suppliers in many geographies around the world. 

We also looked at transparency, comparability, standardization, and customizability of the rating.

The right ratings tool for a given organization will depend on the organization’s priorities and specific use-case. SPLC does not believe that any one rating system does, could, or should meet the supplier sustainability assessment needs of all procurement or supply chain organizations. That is why we provide the ability to compare the features of high-quality sustainability rating tools. Use our website to find the high quality rating tool that will best meet your needs.

 

Who conducted and advised on this research?

SPLC wishes to thank the following members and partners for advising on this research. The assessment framework developed as part of this research project is maintained by the members of SPLC’s Supplier Assessment Working Group (*). SPLC contracted Industrial Economics, Inc. (IEc), to do the landscape assessment, draft the framework, conduct the assessments, and analyze the results.

  • AMD
  • Baxter International*
  • Brown Flynn
  • Caesars Entertainment*
  • CalTrans*
  • City of Atlanta*
  • City of Portland*
  • County of Los Angeles
  • Create.org*
  • Department of General Services, State of California*
  • FedEx*
  • Global Impact Investing Network (GIIN)
  • Global Initiative for Sustainability Ratings (GISR)
  • IBM
  • Industrial Economics*
  • Ingersoll Rand
  • Intel
  • International Trade Center (ITC)
  • ISEAL Alliance*
  • Lockheed Martin*
  • Michigan State University*
  • Microsoft*
  • MIT*
  • Multnomah County*
  • NASDAQ
  • Nielsen*
  • PG&E*
  • Practice GreenHealth
  • Responsible Business Alliance (formerly EICC)
  • Responsible Sourcing Network
  • Salesforce.com*
  • Social Hotspots Database*
  • Staples
  • State of Washington (Department of Ecology)*
  • SustainAbility
  • T-Mobile
  • TD Bank
  • Transparency International
  • UN Environment*
  • United States Postal Service (USPS)
  • University of California Santa Cruz
  • US Council on Environmental Quality
  • US Department of Defense (DOD)
  • US General Services Administration (GSA)*
  • Walt Disney Company
  • World Resources Institute
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