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In Raising €30 Million, EcoVadis Proves The Real Demand For Supply Chain Stewardship Services

EcoVadis, a firm which provides a cloud-based managed service for supplier sustainability audit and risk management, announced on December 14, 2016 that it had raised an impressive €30 million in funding from Partech Ventures. Founded in 2008 in France, EcoVadis has grown rapidly to achieve revenues estimated by Verdantix at $15-20 million in 2016 which is approximately 5% of the total market. EcoVadis has successfully fine-tuned its business model to generate revenue from large corporate buyers who typically contract for $15,000 to $80,000 on an annual basis as well as from tens of thousands of suppliers around the world who pay a small annual fee.

The fund raising – at a healthy valuation – underpins the growth in the supply chain stewardship market since the rise of supplier sustainability rankings by the CDP and the entry into force of regulations such as the Conflict Minerals rule in the United States and the 2015 Modern Slavery Act in the UK. By undertaking the daunting task of collecting data on environmental, social, human rights and governance issues from more than 30,000 firms around the world, EcoVadis solves a problem which is too messy and complex for the procurement and sourcing teams of even the world’s largest firms. That’s why global firms such as Heineken, Merck and Renault-Nissan use the EcoVadis supplier data collection, analysis, audit and sustainability ranking platform as opposed to undertaking the work in house. By sharing the cost of data gathering and using the same supplier assessment tools, procurement officers get more cost effective insight into supplier risks in a standard format.

Verdantix survey data and market forecasts support the thesis behind the EcoVadis investment. Our 2015 survey of 260 sustainability leaders around the world found that 65% considered it very important (17%) or important (48%) to improve performance on supply chain stewardship. We forecast the market will grow from $369 million in 2016 to $648 million in 2021 at a compound annual growth rate of 12%. This segment is one of the few bright lights in the broader “sustainability” market which has largely failed to provide discrete opportunities for growth. A key success factor for EcoVadis has been selling into the procurement and sourcing function who need sustainability data and have the budget to fund that requirement. A sales focus on the impecunious sustainability team would not have met with such positive results.