A company’s sustainability strategy should go beyond climate change and decarbonisation efforts. A company’s supply chain engagement strategy should be about more than Scope 3 emissions reporting. It should also look at its diversity and aim to improve it.
Ultimately, companies are better off this way. Below, you’ll find a detailed look at the reasons why, and some practical tips to turn supplier diversity into a reality.
REPUTATION & ENGAGEMENT
Due to the rising societal standards around ESG, there’s a strong correlation between a company’s sustainability actions and its reputation.
It’s something that’s even more important now that most investors, customers, and employees prioritise companies that actively promote diversity and social responsibility. So, it can have a major impact on business growth. This can be seen prominently in younger generations, with millennials actively avoiding working for a company that has poor CSR.
Embracing supplier diversity is a clear demonstration of inclusivity, equality and fairness. It strengthens relationships with stakeholders and provides opportunities for historically marginalised groups that have skills not being used within the professional services.
Also, if you’re a B Corp, or hoping to become one, then it’s of even more importance to consider diversifying your suppliers. Since the recent changes to the B Corp standards, there are added requirements around legally responsible purchasing practices and ‘beyond compliance’ monitoring. Going further and considering who your suppliers are will boost your score.
This also extends to the inclusion of local suppliers, creating a more geographical approach to supplier diversity, but one that also decreases your carbon footprint and increases your local economic impact. This can often help suppliers access new markets so they can expand their operations too.
INNOVATION & RESILIENCE
All businesses need a level of innovation and resilience to survive. Having diversity within your supply chain can add to this because it brings diverse perspectives and skills, and therefore a rich pool of ideas that can foster more innovative solutions.
It also offers a wider breadth of customer and community connections. And with these varied perspectives, you can use this knowledge to anticipate and adapt to changes in the market, which increases overall resilience.
To protect your own company, you can use the diversity of your own supply chain to reduce the disruption of things like climate change physically affecting suppliers from impacting your business.
So, not only does it increase the resilience of your business, but when you create opportunities that are equally accessible to diverse suppliers, you are increasing the resilience of the economy and growing communities too.
BETTER PERFORMANCE
There is often a battle between wanting to prioritise business strategy and ESG, but really, they’re the same thing.
The innovation that comes with supplier diversity creates cost-saving opportunities, greater efficiency and increased competition within the market. All of these have a positive impact on revenue.
Following the launch of the new Corporate Sustainability Due Diligence Directive (CSDDD) on July 24th, there is even more reason to consider your supply chain in more detail. It requires large companies to identify and address issues relating to human rights or environmental impacts on not only their own operations, but those of their subsidiaries and value chain.
Part of this due diligence surrounding the value chain can incorporate the representation within. This then allows your company to perform well, without the risk of compliance issues.
HOW CAN YOU ACHIEVE SUPPLIER DIVERSITY?
It’s not always easy to know if you’re achieving supplier diversity – or even how to get started. Information in this area can be difficult to track or awkward to obtain (in some countries, maybe even illegal).
Steps you can take to increase the diversity of your suppliers include:
- Complete a comprehensive assessment of your current supply chain and identify gaps in representation. It should look at the DEI metrics of each of your current suppliers, with the definition of a diverse-owned business as a company that is at least 51% owned by people in an ethnic minority group, women, veterans, the LGBTQ+ community and people with disabilities.
- Create clear goals with measurable targets for supplier diversity initiatives that you regularly evaluate. This can include metrics such as the percentage of diverse-owned businesses that make up your supply chain or updating supplier contracts to make DEI metrics a requirement.
- Participate in outreach programs to engage with minority-owned businesses and build relationships.
- Create a policy that incorporates specific criteria related to minority ownership or underrepresented groups when evaluating bids.
- Provide resources and support to help minority businesses thrive and to help them meet your selection criteria by offering training, mentoring and networking events specifically for them.
- Promote transparency – actively communicate your supplier diversity initiatives to build trust with existing suppliers and attract more diverse ones.
These are just a few of the learnings we’ve encountered on our journey to supplier diversity. And if you’d like to find out more about what we’ve been doing to improve it, or swap some ideas, let’s chap over a cuppa.
