DATE
28.11.2025
AUTHORS
.webp)
Kevin Möller
TOPICS
Ratings & certifications
Best Practices
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Why ESG ratings vary from year to year and how companies can mitigate risks
Many companies are currently seeing their EcoVadis ratings decline, even though their policies, measures, and metrics have remained largely stable. The reason lies not in poorer performance, but in the underlying logic of modern ESG ratings, stricter benchmarks, and rising expectations regarding governance and data quality. This article explains why ratings are falling, what has changed in the system —and how companies can take structural steps to counteract this trend
ESG ratings are becoming the benchmark
In recent years, EcoVadis, CDP, and similar ESG ratings have evolved from voluntary indicators of corporate reputation into critical tools for market access and corporate governance. For many companies today, they determine
- whether they are eligible to participate in tenders,
- whether supplier relationships will continue,
- how banks and investors assess risks.
The market dynamics are clear:
In 2024, EcoVadis assessed approximately 49,000 companies worldwide—a growth of over 160% since 2020. In the 2023 reporting year, CDP recorded more than 23,000 reporting organizations, more than double the number from three years earlier.
Implication: ESG ratings are now a standard part of market infrastructure —and are constantly evolving.
Why EcoVadis scores are falling despite consistent performance
Many companies are puzzled when their EcoVadis rating declines, even though internally “everything has actually stayed the same.” This is precisely where the mistake lies.
EcoVadis does not evaluate on an absolute basis, but rather on a relative one —and this approach has become even more stringent in recent years.
Three structural reasons for currency devaluations
- Relative valuation instead of self-tracking
- What matters is not whether your own company is improving, but how quickly the peer group is developing. If you stand still, you fall behind.
- Rising Benchmarks & Methodology Updates
- New weightings, stricter requirements for documentation, and a greater focus on results mean that what used to be considered “best practices” are now merely average.
- Governance maturity as a differentiating factor
- Companies with integrated ESG frameworks respond more quickly to new requirements than those with piecemeal, documentation-driven approaches.
👉 Important: A downgrade rarely means that a company has gotten worse—rather, it means that the rating system has evolved.
The Silent Devaluation
EcoVadis measures progress, not just substance
In our consulting practice, we regularly see that companies don’t fail because they do nothing, but because they aren’t moving faster than the market. EcoVadis isn’t a measure of good intentions—it’s a measure of organizational maturity and responsiveness.
Recommended action:
Don’t just “maintain the score”; aim to outperform the peer group structurally every year.
Why ESG ratings are economically relevant
Today, the relevance of ESG ratings extends far beyond sustainability reporting. They have a direct economic impact on three levels:
1. Market Access & Revenue Protection
In many industries (automotive, chemical, manufacturing), minimum EcoVadis scores are de facto prerequisites for participating in tenders.
2. Financing & Cost of Capital
Studies by MSCI ESG Research and Deloitte show a clear link between high ESG ratings and lower costs of equity and debt.
3. Internal Efficiency & Manageability
Ratings require consistent data models, clear lines of responsibility, and robust processes—with positive effects that extend far beyond the rating itself.
ROI of ESG Ratings: Why Investments Pay Off Early
The economic value of ESG ratings often stems not from additional revenue, but from losses avoided.
A typical real-world example:
A medium-sized supplier risks losing approximately €2 million in annual revenue if it fails to achieve the required minimum EcoVadis rating.
➡️ Investments in ESG systems, data quality, and governance are therefore a form of risk management, not an additional burden.
Which ESG ratings are strategically relevant?
Not every rating is equally important for every company. What matters is the stakeholders' perspective.
Strategic mistake: Treating all ratings the same.
Strategic Approach: Prioritize ratings specifically where they have a decisive economic impact.
Setting Up ESG Rating Management the Right Way: Integration Instead of Data Silos
Many poor rating results are not due to technical issues but rather structural ones. ESG data is often stored in isolated files, responsibilities are unclear, and metrics are inconsistent.
Successful companies take a different approach:
They systematically integrate ESG metrics into existing management and data systems—particularly in finance, procurement, and risk management. This creates unified data repositories that support reporting, ratings, and management alike.
A clearly defined governance model is key here:
- Management and the CFO are responsible for ensuring KPI consistency,
- The ESG leadership team guides the framework's logic and priorities,
- Departments provide reliable data and propose measures.
Where this structure is implemented, credit ratings, audit reliability, and efficiency all improve simultaneously.
From Integration to Value Creation
As regulatory harmonization progresses—for example, through the EU Regulation on ESG rating activities and the further development of the ESRS—the focus continues to shift from documentation to manageability.
Companies that proactively integrate ESG data into their management framework today reap twofold benefits:
They reduce future adaptation costs and enhance their ability to respond quickly to new requirements.
ESG ratings thus serve as an indicator of an organization’s adaptability —and that is precisely where their strategic value lies.
Conclusion
When EcoVadis ratings decline, it is rarely due to a lack of commitment—but rather to a lack of structural development. Companies that actively manage their ESG ratings not only secure better scores but also ensure long-term access to markets, capital, and partnerships.
Those who merely react will fall behind.
Those who embrace integration stay ahead.
CTA: Strategically Manage EcoVadis & CDP – Don’t Just Pass the Tests
