Global enterprises are slowly showing commitment to diversity, equity and inclusion (DE&I) within their supply chains. Yet many are missing the strategic value in enforcing these principles.
Historically, the approach of procurement in DE&I has been to increase spending with diverse suppliers and engage those suppliers in forging deeper partnerships to help them thrive. But the scope of these programs is usually limited to a small proportion of the overall supply base, and primarily relies on the ownership structure of the supplier as its key criteria, rather than on the management practices around anti-discrimination, diversity and equity with their employees.
Now, procurement has a greater opportunity to drive impact on DE&I through a second complementary approach: To engage all their suppliers — regardless of ownership status — in a program to measure and improve the DE&I practices with their workforces. Such programs are usually combined with a broader sustainability assessment focused on measuring and improving management system performance for environmental, social and ethical practices. The social pillar of these assessments should include the criteria on how well all suppliers are integrating anti-discrimination, anti-harassment, diversity and inclusion in their workforce management. Using this approach has the potential to greatly amplify positive impact.
Here are a couple of the most severe examples of particularly vulnerable groups of people in the global supply chain workforce of more than 450 million people:
Procurement can be an influencing force to ensure that suppliers address these issues more systematically through their policies, actions and reporting, regardless of who owns the companies.
DE&I Across the Value Chain
Companies can build meaningful global supplier diversity initiatives, and the brands who want to extend their DE&I values to their value chain will work on assessing and improving those practices with their own suppliers.
Levi’s Strauss & Co. is an example of a company that is making great strides within their DE&I journey with their value chain. The company’s diversity program aims to shift spending to underrepresented groups around the world, and “to give them an opportunity to gain a more equal market share,” says Lisa Spice, director of global strategic sourcing at Levi’s. This is not a light lift as Levi’s currently works with nearly 15,000 suppliers worldwide with many underrepresented suppliers differing depending on geographic focus.
The apparel company also maintains a global supplier assessment program, which tracks “how inclusive our suppliers are as employers and as a business to work with,” Spice says.
“We are trying to echo our own values around inclusion into our entire supply base,” she says.
Levi’s supplier inclusion program is a model worth emulating since inclusive teams perform up to 30% better in high-diversity environments, according to Gartner Inc. And it’s a model that is more attainable than many companies realize.
Organizations can leverage business relationships to identify their suppliers’ capacity to promote diversity while preventing and remediating discrimination. Carrying out actionable ratings that enable procurement organizations to identify, evaluate and collaborate with their trading partners delivers on this vision. And reporting on those actions is key for continuous improvement of the quality of a company’s sustainability management system.
A holistic sustainability rating process should include DE&I criteria and results, and provide a benchmark to show where a supplier organization stands presently, providing a bigger picture to help raise teams’ awareness of DE&I.
Next, a scorecard can be used to identify the areas that are working well and ones where improvement is needed, with an indication of level of severity and urgency. They can then collaborate on improvements in policies, and programs, and participate in any needed training.
Finally, it’s important to reassess and track progress, looking for areas that have improved as well as those that need more attention. By following the rating process to identify changes, organizations can get a fuller look at how their DE&I initiatives have (or haven’t) taken root.
The goal should always be to engage by measuring progress, prioritizing areas needing improvement and instituting the changes that will bring success.
Companies that actively support their supply chain partners in engaging in DE&I, and acknowledge that there is room for everyone, showcase the highest level of productivity and the necessary competitive edge — e.g., diverse and inclusive companies are 60% more likely to outperform their peers where decision-making is concerned. By engaging with suppliers and monitoring DE&I in the workforce — and across the entire supply base — progress will take place that will benefit all sides of the equation.
Emily Rakowski is chief marketing officer at EcoVadis.
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