Service Provider ESG Maturity Index 2023–2024: Driving Sustainable Sourcing by Engaging with Progressive Partners

The Service Provider ESG Maturity Index 2023–2024 is an expansion of the Service Provider ESG Maturity Index 2022–2023. This year’s report features 42 service providers, expanding on the 17 providers featured last year. There is an increased focus on ESG as investors are incorporating sustainability metrics in their investment decisions, which will resonate more with ESG-concerned companies. Service providers can play a vital role in driving the ESG agenda, reducing Scope 3 emissions, and contributing toward global efforts to combat climate change. They have been assessed based on their sustainability disclosures, strategy, and transparency and have been classified and benchmarked based on more than 50 metrics spread across five topics: environmental, social, governance, ESG disclosure compliance and the UN Sustainable Development Goals (SDGs) coverage, and complexity. The report aims to help enterprise customers choose the right service provider when making procurement decisions for building circular product life cycles and developing road maps and solutions to achieve their sustainability goals. Under mounting pressure from both internal and external stakeholders, service providers are now focusing on sustainability. Consequently, 10 providers have risen as leaders in the Service Provider ESG Maturity Index 2023–2024 as opposed to the three in last year’s report.  

Avasant has also delved deeper into the reporting trends and mandates that have emerged due to an increased focus on streamlining reporting and transparency. These insights, featured in the report, offer a comprehensive overview of the sustainability themes prioritized by service providers, their preferred reporting practices, and how they are navigating the complex landscape of sustainability reporting mandates. 

We have evaluated the service providers across different parameters and metrics: 

• • Environmental: This parameter focuses on the initiatives and data reported by companies to reduce their environmental impact and achieve the environmental goals set by them. It is further expanded into data pertaining to consumption of energy and water, greenhouse gas (GHG) emissions and waste generation, and environmental compliance. Additionally, we also focused their efforts on reducing energy and water consumption, GHG emissions, and waste generation. 
  • Social: This parameter dives into the practices developed or followed by the service providers to become more inclusive and boost diversity within their organization. We have captured different data points pertaining to employment benefits, diversity, health and safety of employees, their training and education, human rights assessments and subsequent results, and social and economic contribution to the local community. 
  • Governance: This parameter focuses on the policies, compliance with regulations, and transparency practices followed by the service providers. Different data points, such as the economic performance of the service provider, procurement practices, anti-corruption practices, practices to ensure anti-competitive behavior, and tax strategies have been captured within this.  
  • ESG disclosure compliance and SDG coverage: This parameter dives into the initiatives and practices followed by the service providers to ensure transparency regarding sustainability among its stakeholders while also tracking their efforts in achieving SDGs.  
  • Complexity: Sustainability initiatives and reporting mandates get progressively challenging and intricate as the company’s scale and complexity, in terms of the number of facilities, applicable jurisdictions, and variety of products and services offered increases. This parameter ensures that sufficient weight is given to the sustainability initiatives of more complex organizations. 

This report recognizes the 42 service providers across four categories: 

• • Leaders: Infosys, TCS, Wipro, Accenture, Genpact, DXC Technology, Tech Mahindra, IBM, Telefonica, and Capgemini 
  • Pioneers: HCLTech, Firstsource Solutions, LTIMindtree, Mphasis, UST, Zensar, Persistent Systems, Happiest Minds, WNS, Virtusa, and EXL 
  • Emerging: CGI, NTT DATA, Fujitsu, Sopra Steria, Cognizant, Deloitte, Atos, Kyndryl, Unisys, Teleperformance, EY, and Foundever 
  • Aspirant: FIS Global, Conduent, Capita, ADP, Computacenter, Concentrix, Alight, SD Worx, and Zalaris 

“As Scope 3 emission tracking becomes critical, service providers are prioritizing sustainability, affecting enterprise sourcing decisions for onboarding providers,” said Anupam Govil, managing partner at Avasant. “Providers are now investing in ESG initiatives and adopting standardized reporting.”   

The full report provides various findings, including the following:  

• • Sixty-two percent of service providers are aligning their sustainability report with  two or more reporting frameworks to cover a range of material sustainability data points important to their stakeholders. 

• • Almost 60% of the providers have hired external assurers to review and verify their ESG data, while approximately 21% have aligned their sustainability reports with region-specific reporting standards. 
  • There is an increased focus on SDGs, as 19% of service providers focus on all 17 SDGs and align their efforts to boost sustainability accordingly. 
  • Almost all the featured service providers have implemented initiatives to reduce GHG emissions and have pledged to become net zero in 2030–2040, in line with the Paris Agreement and the global net-zero movement. 
  • All the featured service providers are actively pursuing diversity and inclusion initiatives, with 48% of them striving to raise the percentage of women in their workforce in support of the UN Women’s Empowerment Principles. 

The full report also provides comprehensive profiles of 42 service providers, covering: 

• • The progress achieved by the service provider in achieving their ESG goals and their subsequent targets. 
  • Key highlights and developments illustrating their initiatives, investments, and current practices to improve important material topics. 
  • Compliance with SDGs showcasing their progress mapped to the respective goals. 

This Research Byte is a brief overview of the Service Provider ESG Maturity Index 2023-2024