From ratings to regulations: best practices for EcoVadis and CSRD reporting – Modular Services case study
Environmental, Social, and Governance (ESG) considerations are no longer optional for businesses, as regulatory scrutiny increases, but rather a core aspect of corporate strategy, stakeholder expectations, and regulatory requirements. While some companies report voluntary engaging in ESG reporting through platforms like EcoVadis, other have already started preparations for complying with the European Union’s Corporate Sustainability Reporting Directive (CSRD).
What if I’m doing both?
Aligning voluntary ESG rating with mandatory reporting frameworks can streamline compliance efforts and enhance corporate sustainability performance giving you the best of both worlds.
While the intricacies of the CSRD compliance are not a subject to be covered by a couple bullet points, nor the scope of this article, we are exploring best practices for EcoVadis assessment and CSRD compliance by identifying areas of overlap and strategic integration.
EcoVadis assessment is focused on four core areas: Environment, Labour and Human Rights, Ethics, and Sustainable Procurement.
If it’s your first time conducting an EcoVadis assessment, then you might want to start by understanding what is needed as evidence under each theme, review the methodology and requirements. Collect existing documents such as policies (e.g. Environmental policy, Supplier Code of Conduct, Health and Safety, Grievance and Whistleblower etc.), certifications, employee training records, supplier assessments (due diligence, engagement records, joint initiatives).
If you’re a seasoned practitioner, there’s no complicated secret for success rather than making the best use of the Corrective Actions section on your EcoVadis platform. Just as you would do for any project, make sure you have a plan and an owner for each proposed corrective action, considering that it will be a collective work that engages multiple departments. While I might state the obvious now, can hardly express how important securing executive leadership support for ESG commitment is.
CSRD expands the scope of ESG reporting by requiring companies to disclose sustainability in line with the European Sustainability Reporting Standards (ESRS), mandating auditable ESG disclosures and making preparation essential.
As there’s no CSRD without a Double Materiality Assessment (DMA), assessing ESG risks from two perspectives 1) Financial Materiality: how ESG factors impact company performance and financial stability and 2) Impact Materiality: how the company’s operations affect the environment and the society, should be your first step. To do so, one should:
- Identify sustainability topics by using existing frameworks (ESRS, GRI, SASB), benchmarking industry peers and including regulatory requirements (EU Taxonomy, SFDR) and shortlist ESG topics.
- Identify key internal and external stakeholders and engage them to assess stakeholder concerns and expectations. Use surveys, interviews, and focus groups to capture all perspectives.
- To assess impact materiality, you need to evaluate how company activities impact society and the environment (both positive and negative impact) using qualitative and quantitative data. Then score severity and likelihood of impacts considering scope, scale and irreversibility as well as value chain impacts (upstream and downstream effects).
- Assess financial materiality by identifying ESG risks and opportunities that affect financial performance and consider short-, medium-, and long-term financial impacts. Use risk assessment tolls like scenario analysis (e.g. climate risks from TCFD), revenue impact analysis such as supply chain disruptions and carbon pricing, and regulatory risks (e.g., non-compliance penalties).
- To prioritize key topics and validate findings you would need to map topics on a double materiality matrix (X-axis: Financial Materiality, Y-axis: Impact Materiality) using a 1-5 scale for severity and likelihood scoring system then validate your findings through executive review, board approval and stakeholder validation.
- Report and integrate findings aligned with CSRD and ESRS disclosure requirements, include them in sustainability reports, risk management processes and ESG strategies, and use the results to set your ESG goals.
Where EcoVadis and CSRD overlap
While EcoVadis and CSRD serve different purposes, there are key areas where alignment can enhance efficiency and reporting consistency:
- ESG data standardization as companies already collecting ESG data for EcoVadis can structure reporting to meet CSRD’s ESRS requirements. You should use centralized ESG data management tools to avoid duplication of efforts.
- Supply chain transparency and mitigation as both frameworks emphasize supplier due diligence, ethical sourcing and sustainable procurement. Your focus should be implementing standardized processes for evaluating supplier sustainability practices.
- Risk management and compliance strategy by leverage EcoVadis insights to refine ESG risk assessments for CSRD reporting and develop a roadmap of continuous improvement in sustainability performance and governance.
A summary of EcoVadis criteria and ESRS disclosure requirements with details on key disclosure areas should help understand how to use a voluntary assessment to streamline CSRD compliance or, why not, make use of you DMA process and findings to get rated by EcoVadis.
| EcoVadis criteria | Corresponding ESRS standard | Key disclosure areas |
| Environment | ESRS E1 – Climate change
ESRS E2 – Pollution ESRS E3 – Water and marine resources ESRS E4- Biodiversity ESRS E5 – Resource Use and circular economy |
GHG emissions across Scopes 1, 2 and 3.
Energy consumption and transition plans. Pollution reduction strategies. Water and resource efficiency. Biodiversity impact mitigation. Circular economy initiatives on waste and recycling. |
| Labour and Human Rights | ESRS S1- Own workforce
ESRS S2 – Workers in the value chain ESRS S3 – Affected communities ESRS S4 – Consumers and end users |
Workforce diversity, equity and inclusion (DEI).
Employee working conditions, fair wages and rights. Supply chain labour practices. Workplace safety and wellbeing. Community impact and social responsibility. |
| Ethics | ESRS G1 – Business conduct | Anti-bribery and anticorruption measures.
Whistleblower protection policies. Business ethics and fair competition policies. Transparency in lobbying and political contributions. |
| Sustainable Procurement | ESRS S2 – Workers in the value chain
ESRS S5 – Resource use and circular economy |
Responsible supplier selection and monitoring.
Supplier ESG performance management. Ethical sourcing and sustainable procurement policies. |
Regardless of whether you’re pursuing voluntary ESG ratings or to comply with mandatory reporting, the ultimate goal should be integrating sustainability into the business culture and model and seeing ESG as a strategic advantage for long term value creation. More than that, streamlined ESG reporting serves as a powerful tool to attract new clients by fostering trust, transparency and competitive differentiation and reduces potential due diligence friction as it makes it easier for potential clients to assess a company’s long-term viability and ethical integrity.
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