By Ralph G. Moore, president, Ralph G. Moore & Associates Inc.
Visionary corporate leaders have valued supplier diversity for decades as they understand the correlation between healthy economies within the communities they work, live and play along with valuable corporate earnings reports.
In addition, savvy CEOs have prioritized developing advanced and world-class supplier diversity strategies, as defined by the RGMA 5-Levels of Supplier Diversity Maturity Model™ (see RGMA 5-Levels Chart). These leaders view these investments as assets that will pay dividends to shareholders now and in the future rather than an unnecessary expense that negatively impacts earnings and the ability to hit saving targets.
Now, the advent of Environmental, Social and Governance, or ESG, is driving senior leaders and board members of corporations with the Maturity Model’s Early-Stage and Traditional Supplier Diversity Programs to revisit their approach to supplier diversity. Historically, corporations at these levels have failed to embrace the strategic value of supplier diversity, but external factors are now driving a transformation.
Reginald K. Layton, retired vice president of supplier diversity and supply chain sustainability for Johnson Controls International, does an excellent job of foreshadowing this transformation in his insightful 2021 article, Sustainability, Social Responsibility and Ethics for The Supplier Diversity Profession:
“More corporations are now linking supplier diversity and sustainability in the supply chain practitioners’ job descriptions because of needed process efficiencies or external stakeholders’ expectations. While understanding each function was necessary to progress in the past, supply chain professions can significantly contribute and enhance their organizational value when they exert an integrated understanding and approach toward these disciplines. Therefore, supply chain professionals should use critical success factors and best practices in supplier diversity to advance sustainability in their corporation’s supply chain by recognizing process similarities between the two disciplines.”
Since publishing his article, ESG has hit corporate America like a tsunami and, in the process, has placed a spotlight on the contributions supplier diversity makes to not just the “S” (Social) but also the “E” (Environmental) and “G” (Governance).
Two milestones created ultimate intersection of value and values
Two milestones have set the stage for the current supplier diversity transformation within corporate America. The first was the Statement of the Purpose of a Corporation signed by 181 CEO members of the Business Roundtable (BR) in August of 2019, which highlighted their commitment to the following five stakeholder groups:
• Deliver value to customers
• Invest in employees
• Deal fairly and ethically with suppliers
• Support the communities in which they work
• Generate long-term value for shareholders
The inclusion of the community as a corporate stakeholder contributed to the plethora of commitments to increase supplier diversity by BR members, as other corporations followed their lead.
The second milestone was Wall Street’s recognition that a corporation’s ability to manage ESG tenets is a risk management barometer and is the ultimate intersection of value and values. The following statement captures the posture of the investment community:
“It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers and communities your company relies on to prosper. This is the power of capitalism.”
Larry Fink, CEO, BlackRock Inc.
How RGMA is responding to this transformation
ESG will require every supplier diversity stakeholder to update their playbook and redesign their 2023 strategies. RGMA has established a collaboration with Strategetics, a cutting-edge strategy and training consultancy led by Layton, the author of the article mentioned above. We have updated and digitized the RGMA playbook, enabling scaling of the assessments and benchmarking of corporate supplier diversity programs that RGMA has performed for years. We have also leveraged the digital platform to assess and benchmark diverse corporate suppliers. In addition, RGMA has added SCORM-compliant supplier diversity training for corporate e-learning platforms.
RGMA is also collaborating with Don McKneely, founder and CEO of Minority Business News USA, the leading media brand in supplier diversity, to serve as our media partner. The focus of this collaboration is to share insights and best practices on navigating this watershed moment in the evolution of supplier diversity on all MBN USA platforms.
What strategies are required by supplier diversity stakeholders to succeed during this period of transformation?
As this is the legacy chapter of my life, we are placing the RGMA playbook on full display. Stay tuned to MBN USA as Ralph and Reggie engage with other subject matter experts on supplier diversity and sustainability. We will provide corporate leaders, supplier diversity practitioners, chief diversity officers and sustainability leaders with a framework for managing this supplier diversity transformation while delivering winning outcomes for ESG stakeholders, including:
• Buying organizations
• Diverse supplier advocacy organizations
• Diverse suppliers
• The environment
We will also share insights into how emerging diverse suppliers, service providers, contractors and business partners can thrive during this period of transformation.
Supplier diversity is finally getting A SEAT AT THE TABLE! Let’s use it wisely!
Ralph G. Moore Ralph G. Moore & Associates Inc. supplier diversity corporate earnings reports supplier diversity strategies RGMA 5-Levels of Supplier Diversity Maturity Model™ Environmental Social and Governance ESG Maturity Model’s Early-Stage and Traditional Supplier Diversity Programs Reginald K. Layton Johnson Controls International Statement of the Purpose of a Corporation Business Roundtable BR Larry Fink BlackRock Inc. RGMA playbook SCORM-compliant Don McKneely Minority Business News USA MBN USA