Businesses around the world are setting targets and KPIs to advance diversity, equity and inclusion (DE&I) throughout their organisations and value chain. Supplier diversity programs can be part of a company’s efforts to reach/or maintain high moral and ethical standards.
The Diversity Council of Australia defines ‘Supplier Diversity’ as “business practice that encourages diversity in the supply marketplace by encouraging the purchase of goods and services from businesses owned by, or that assist, underrepresented groups.”
In Australia, many diversity programs are focused on Aboriginal and Torres Strait Islander Procurement (because of the Commonwealth Government’s Indigenous Procurement Policy) as well as Disability Enterprises.
Supply Nation is the Australian leader in supplier diversity, bringing together the biggest national database of Aboriginal and Torres Strait Islander businesses with the procurement teams of Australia’s leading organisations (more below).
In New Zealand, Amotai connects government, corporate and Iwi organisations to unlock procurement opportunities, including supplier diversity, to enable meaningful connections with Māori and Pasifika businesses.
In the US, other classifications of supplier diversity include small-business, minority-owned enterprises (MBEs), and woman-owned enterprises (WBEs).
But with so many dimensions of DE&I, how can you measure your progress?
PASA spoke with givvable.com, an AI-Powered Supplier Intelligence Platform helping businesses track third-party verified credentials and attributes of suppliers mapped to global sustainability & Environmental, Social and Governance (ESG) targets, frameworks and reporting standards.
Below are the top eight DE&I credentials that advance ‘S – Social’ and ‘G – Governance’ to start tracking among your suppliers. Learn why embedding DE&I beyond your direct workforce, and throughout your organisation’s entire value chain is a game-changer for your business.
Women’s Empowerment Principles (WEP) signatory
The Women’s Empowerment Principles (WEP) are a set of 7 principles offering guidance to business on how to promote gender equality and women’s empowerment in the workplace, marketplace and community. The WEP were established by the UN Global Compact and UN Women and were informed by international labour and human rights standards. The WEP are a vehicle for corporates to deliver on gender equality dimensions of the 2030 agenda and the UN Sustainable Development Goals (UN SDGs).
WEP signatories are companies (private, public, state-owned and cooperatives) that have provided a signed CEO Statement of Support for the WEP. There are no formal requirements to implement the principles in a particular order, specific way or particular timeframe, however, WEP signatories are expected to make efforts to advance gender equality in the workplace, marketplace and community. Signatories are encouraged to monitor and report on their progress.
WEConnect International Certification
WEConnect International is a certifier of women-owned businesses in 46 countries (excluding the U.S.) and a global network that connects women-owned businesses to qualified buyers around the world.
WEConnect International certified businesses are certified by WEConnect as being at least 51% owned, managed and independently controlled by a woman, or a group of women. Certifications must be renewed annually. A certified business can be decertified if it no longer meets the eligibility criteria.
Workplace Gender Equality Agency Agency (WGEA) Pay Equity ambassador
The Workplace Gender Equality Agency (WGEA) is an Australian Government statutory agency that is charged with promoting and improving gender equality in Australian workplaces.
It works with Workplace Gender Equality Agency (WGEA) Pay Equity ambassadors, a network of CEOs, heads of department and directors in the public and private sector, who are committed to pay equity and gender equality. WGEA Pay Equity ambassadors help to create change by:
- playing a leadership role in their business community and to the broader public
- reinforcing their commitment to pay equity within their own organisation
- profiling and promoting their approach to pay equity.
A WGEA Pay Equity ambassador’s organisation is required to have:
- Undertaken a pay gap analysis of its workforce in the last two years and taken action on the results
- reported pay equity metrics to the executive and board
- Communicated the organisation’s pay equity initiatives to employees. Ambassadors sign the pay equity pledge and commit themselves to working with the WGEA to promote and improve gender equality. An ambassador’s commitment to pay equity must be renewed every 2 years.
Femeconomy is a for profit social enterprise that educates consumers, business owners and budget owners on how their purchasing decisions can create gender equity.
Femeconomy approved businesses are members of Femeconomy that have been certified by Femeconomy as having at least 30% women on the Board of Directors or being 50% female owned. Members are verified annually against these criteria.
National Minority Supplier Development Council Corporate Plus Member
Jurisdiction: United States
The NMSDC advances business opportunities for certified minority business enterprises located in the US and connects them to corporate members. Certified minority business enterprises are at least 51% minority-owned, managed and controlled by one or more minority group members. A minority group member is an individual who is at least 25% Asian-Indian, Asian-Pacific, Black, Hispanic or Native American.
Corporate Plus® is a membership program for NMSDC-certified minority businesses that meet higher requirements than other minority business enterprises.
The Corporate Plus® members are recommended by corporate members for this designation, have demonstrated their capacity to execute national contracts for major corporations and have a minimum gross revenue of US$10 million p.a.
Supply Nation Certification
Supply Nation supports the Indigenous business sector, including through facilitating connections between Indigenous businesses and Supply Nation members’ procurement departments through its Indigenous business directory.
Supply Nation certified organisations are for-profit businesses located in Australia that are verified by Supply Nation as being at least 51% Indigenous owned, managed and controlled and have trading evidence of A$50,000 income in the prior 12 months. Supply Nation conducts annual audits to ensure continuing compliance.
The Valuable 500 signatory
The Valuable 500 works with 500 of the world’s most influential global businesses to drive system change and make business more inclusive of people with disabilities.
The Valuable 500 signatories are companies that have committed to putting disability on the business leadership agenda and to making and publicly sharing one firm commitment to action (of their choosing).
BuyAbility Social Enterprises
BuyAbility is an initiative of the National Disability Service (NDS) aimed at growing supported employment to give people with disability the opportunity to participate in the workforce. BuyAbility is committed to increasing employment opportunities of people with disability through socially responsible procurement opportunities for BuyAbility Social Enterprises.
BuyAbility enterprises are National Disability Services members that currently (or previously) had a Disability Employment Assistance Funding Agreement with the Department of Social Services to provide supported employment for people with disability.
BuyAbility enterprises employ people with disability in a supported working environment. BuyAbility enterprises offer a range of roles and employees are supported to work, develop new skills and participate in their communities, thereby enhancing their economic and social participation. All products and services from BuyAbility enterprises are quality assured and Australian made and operated.
Buying from BuyAbility Social Enterprises is a socially responsible choice that contributes to the future of supported employment for people with disability in Australia.
Diversity, Equity & Inclusion – explained
Diversity, Equity & Inclusion, or DE&I, is a term used to describe the policies and programs of an organisation that promote the representation and participation of different groups of individuals.
Diversity includes all ways that people are different from each other, including age, gender, race and ethnicity, abilities and disabilities, language and culture and sexual orientation.
Equity aims to ensure the fair treatment, access, equality or opportunity and advancement of people, while also attempting to identify and remove the barriers that have prevented some groups from fully participating. It promotes justice, fairness and impartiality within the processes, procedures and distribution of resources of an organisation.
Inclusion builds a culture where everyone feels welcome by actively inviting every person or every group to contribute and participate. A work environment that is inclusive is supportive, respectful, and collaborative and aims to get all employees to participate and contribute. It also endeavours to remove all barriers, discrimination and intolerance within an organisation.
Why DE&I is important
The business case for DE&I in your organisation continues to get stronger.
Time has given us more data, and the research is in. It consistently shows that organisations with diverse leadership – by gender (+25%) and ethnic diversity (+36%) – are more likely to outperform financially, with higher ethnic representation placing organisations well ahead of their peers (McKinsey, 2020).
DE&I is a competitive advantage and business differentiator. Inclusion matters to your employees, helping your organisation attract the best talent, which in turn translates into financial outperformance for those organisations making it a priority.
Unfortunately, many companies perform poorly on DE&I. McKinsey data reveals slow growth in diverse representation, with many companies stalling or even slipping backwards.
Companies that implement systematic, business-led approaches to DE&I, lay the foundations for higher, more consistent returns over the long term. In an era of ‘fast everything’, it gives your organisation an edge over competitors that cannot be replicated overnight.
How DE&I relates to ESG
Environmental, Social & Governance (ESG) criteria are a set of standards used by investors to analyse potential investments.
Environmental criteria consider how an organisation performs as a steward of nature.
Social criteria examine how an organisation manages relationships with employees, suppliers, customers and the communities where it operates.
Governance deals with a company’s leadership, executive pay, audits, internal controls, transparency and accountability, and shareholder rights
DE&I falls into the ‘S – Social’ and ‘G – Governance’ criteria of ESG. It is the subject of investment mandates and, increasingly, a KPI in executive remuneration and sustainable finance (e.g. sustainability-linked loans). Stakeholders expect to be informed about how your organisation is performing on these indicators.
Why you should track ESG
Here is the game-changer:
The conversation on DE&I has largely focused on workplace diversity and inclusion. With sustainability & ESG squarely in the spotlight, many companies are recognising that they cannot achieve their sustainability & ESG targets without aligned pools of suppliers.
Just as “diversity wins” for your own organisation, the same applies to your suppliers and trading partners. By engaging suppliers that are owned or led by people from diverse groups, or which have implemented DE&I workplace policies and practices, you multiply the benefits of a long-lasting inclusive culture throughout your entire value chain.
Supplier DE&I is a relevant metric to include in ESG reporting.
How to identify DE&I suppliers
There are numerous dimensions of diversity, including gender or sexual orientation, Indigenous and other ethnic or cultural minorities, people with disability, veteran and refugee – all bringing rich perspectives and experiences to help you deliver better customer and client experiences.
Certification and membership bodies exist to help companies identify diverse business owners and actively seek to improve the ratio of suppliers considered in a company’s discovery and tender processes.
DE&I bodies usually focus on a particular dimension of diversity and can have global coverage or defined jurisdictional coverage – with country or even locally administered schemes. They can also differ in type (e.g., certification, registration and membership) measurement (e.g., 50% vs. >51% owned), and scope or depth of enquiry.
There are also other third-party maintained credentials, including indexes, recognising workplace inclusive practices or measuring the relative inclusiveness of an organisation based on employee surveys and questionnaires, for example Great Place to Work’s Australia’s Best Workplaces 2021, Refinitiv’s diversity and inclusion top 100 and Financial Times Diversity Leaders 2021.
Add to this the dynamic nature of DE&I attributes. Businesses are bought and sold. Employee changes occur constantly. Policies & practices are updated and modified. Tracking this information internally is a difficult data management task and, captured point-in-time, will quickly date.
Externally managed DE&I certification & membership programs provide organisations with an effective way to screen suppliers for DE&I criteria linked to ESG objectives. The challenge faced by ESG, Sustainability & Procurement professionals is the multi-variate and highly fragmented nature of this data. It makes getting a complete and accurate picture on the DE&I profile of your suppliers difficult.
It is no secret that the ESG data task is huge. ESG on your direct or internal operations is complex enough. Multiply that by your suppliers – where the opportunity to achieve even greater performance on sustainability lies – and it can seem like an impossible task.
Looking ahead, givvable.com says suppliers will increasingly need to get formal, third party validated recognition of their DE&I (and other sustainability/ESG) credentials and attributes, and organisations will require digital solutions to continuously track them for internal and external reporting to stakeholders, particularly where KPIs and target spend requirements are in place.
Note: Information on credentials has been sourced from the credential issuer’s website.