Understanding your scope of assessment

The scope refers to the legal entity or entities of the company that will be undergoing an EcoVadis assessment. The three possible assessment scopes are:

• Group;
• Entity;
• Site.

All companies engaged in an EcoVadis assessment will only be classified according to the three above scopes.

• What are the definitions of the different types of scope?
• What types of assessment scopes are allowed?
• What types of assessment scopes are not allowed?
• How do I change the scope of my assessment?

What types of assessment scopes are allowed?

GROUP [Displayed as (GROUP) on the EcoVadis platform]

A GROUP level assessment is considered as a company (legal entity) with subsidiaries or a subsidiary* (legal entity) which has subsidiaries (part of a group) and is part of an ultimate parent company. When the GROUP assessment is done, all its national and foreign subsidiaries will be covered in the EcoVadis assessment. Joint ventures* are also evaluated under a GROUP-level assessment.

ENTITY 

An ENTITY level assessment is considered a company (legal entity) with no subsidiaries. It can be a mono-site company, a standalone company with one or more sites that do not have different Legal Entity Names (LEN), or a subsidiary of a group with no other subsidiaries below it.

SITE

A SITE level assessment assesses a specific geographic site or facility of a legal entity. This site does not have an individual Legal Entity Name (LEN), and the

A site will use the LEN of its “parent” entity, with the (Site of XYZ) suffix in its EcoVadis Legal Entity name. 

*Subsidiary: 

A subsidiary (with Legal Entity Name/ business registration number) belongs to another company, usually the parent or holding company.

*Joint Ventures: 

If a company is a joint venture, the minimum percentage of shareholding to be considered as a subsidiary is at least 50%.

What types of assessment scopes are allowed?

To be considered in an assessment, the criteria for a scope must:

• It must have a legal entity name or operate under the direct parent legal entity name. The legal entity name (LEN) is the name under which a company is legally registered and operates in the country of operation.
• There must be a relevant level of scope of assessment in terms of sustainability risks, and this depends on the company’s activity. 

EcoVadis recommends assessing the most relevant scope to the relationship between your company and your trading partners. This allows for a more targeted sustainability risk management and performance evaluation as many sustainability impacts (Environmental, Labor & Human Rights) are tied operationally to specific sites or a group of sites within a country or region. 

For example, A site-level assessment will be the most fitting if your trading partner is directly responsible for purchasing products from a particular site.

For this reason, assessments done at the entity or site level provide a much better representation of best practices and potential areas of improvement. They also allow for better collaboration between local teams on specific corrective actions when needed. In instances with a group-wide sustainability management program, site-level assessments provide clearer visibility and management of the program's implementation throughout the organization.

What types of assessment scopes are not allowed?

Certain types of organizational and operational structures are NOT allowed:

• Conglomerates (groups offering a variety of divisions that differ in terms of activity). 
• Business Units or Divisions without any legal entity name;
• Purely commercial/sales entities in manufacturing groups (e.g., sales offices, trading agents, marketing entities).*1
• Pure “financial investment” holdings (investment funds with a legal entity name), Cooperatives *2 *4
• Product names, commercial brands, and brand names;
• Non-profits, NGOs *3, academic institutions/universities, or state-owned/governmental organizations (except those with a corresponding legal entity name).

*1 Commercial/sales entities:

A pure commercial entity is a subsidiary involved in non-operational activities, including (but not limited to) trading, merchandising, and sales. Non-operational activities significantly differ from the company's main activities and pose a non-significant sustainability risk.

As per EcoVadis methodology, sales/commercial entities cannot be assessed as standalone entities when part of a larger group of companies whose primary operations lie in manufacturing. This is because the sustainability risks associated with their specific activities are much lower than the actual manufacturing activities of the group. A manufacturing company’s pure commercial entity does not pose a real sustainability risk compared to the risk associated with the manufacturing operations of a group.

EcoVadis has chosen to use this methodology because to do otherwise would exclude all sustainability risks presented by the group’s activities and create a risk of misinterpretation of the performance by customers. 

Please note that the performance of all subsidiaries will be covered in any group assessment. In other words, the site risks of the commercial/sales entity will be covered in the questionnaire related to the manufacturing activity, as these assessments cover a more comprehensive range of questions that reflect both manufacturing and sales activities. This subset of questions would be different if the sites were not commercial/sales entities.

We can assess distributors/wholesalers at the subsidiary level if they procure their goods from a third party (regardless of whether they also sell goods produced within the company group), as this procurement brings new sustainability-related risks.

*2 Holdings:

We can assess holdings when they are the ultimate Legal Entity Name above the group operations.

*3 NGOs and Associations:

When an NGO has a Legal Entity Name (LEN), a commercial activity (having associated sustainability risk), and the company generates profit, we can proceed with the assessment.

*4 Cooperatives:

A cooperative of many individuals or companies with the objectives of participating in an everyday activity or working together to achieve a common goal. The individuals/companies which are members of the cooperative, in the majority of cases, operate independently (with a separate CSR management system) and do not legally report to the cooperative.

How do I change the scope of the assessment?

We recommend you assess the scope that your client has requested. If you disagree with the assigned scope or want to change the scope of the assessment, please contact us before starting the questionnaire.