Equity, diversity and inclusion in supply chains – private sector and third sector

Expectations are increasing and there is mounting pressure from investors and consumers for private and public sector organisations and charities to be seen to be doing something about ESG factors, including equality, diversity and inclusion.

Diversity and inclusion are increasingly recognised as crucial factors in building sustainable and successful supply chains in the private, public and charity sectors. Expectations are increasing and there is mounting pressure from investors and consumers for private and public sector organisations and charities to be seen to be doing something about environmental, social and governance (ESG) factors, including equality, diversity and inclusion (EDI). There is a growing expectation that businesses engender positive impacts in relation to EDI through their policies, processes and behaviours, both within the organisation and throughout their supply chains. In fact, it is becoming increasingly common for suppliers to be required to show their efforts in this space to even be considered during the tender process.

A diverse and inclusive supply chain should actively promote equal opportunities, fairness and respect for all individuals involved in the supply chain ecosystem. Organisations can seek to ensure EDI in various ways.

Supplier diversity

Aims to increase the participation of underrepresented groups, such as minority-owned, female-owned and small businesses, in the supply chain. By consciously seeking out and partnering with diverse suppliers, organisations can foster economic growth and create a more inclusive business environment.

Ethical sourcing

EDI in the supply chain also encompasses ethical considerations, such as fair labour practices, human rights, and environmental sustainability. Organisations should strive to work with suppliers that adhere to ethical standards, treating workers fairly and promoting sustainable practices throughout the supply chain.

Collaboration and Partnerships

Building diverse and inclusive supply chains requires collaboration among all stakeholders. Organisations can engage in partnerships with diverse suppliers, industry organisations, community groups and advocacy organisations to drive positive change, share best practice, and foster innovation.

Education and Training

Promoting EDI in the supply chain requires ongoing education and training programs. Organisations should provide resources and training opportunities to suppliers and employees to enhance awareness, understanding and cultural competence regarding EDI.

Performance metrics and evaluation

To ensure progress and accountability, organisations should establish key performance indicators related to EDI in their supply chains. Regular evaluations and reporting on supplier diversity metrics, workforce diversity, and inclusion initiatives can provide insights and drive continuous improvement.

Technology and data analytics

Leveraging technology and data analytics can enhance EDI efforts in supply chains. Organisations can use data to track supplier diversity, identify potential biases or disparities and make informed decisions to promote equal opportunities.

Continuous improvement

Building an inclusive supply chain is an ongoing process. Organisations should commit to continuously assessing and refining their strategies, policies, and practices to foster EDI at all levels of the supply chain.

Notable benefits of seeking diversity within an organisation’s supply chain include:

• Promotion of innovation through the introduction of new products, services, and solutions
• Multiple channels from which to procure goods and services
• Competition between the company’s existing and potential suppliers
• Helping to attract new talent when recruiting for a company.

In a 2019 study by Hootology for Coca-Cola, it was found that individuals who were aware of Coca-Cola’s supplier diversity initiatives were 45% more likely to perceive the brand as valuing diversity, 25% were more likely to think favourably about the brand and 49% were more likely to use Coca-Cola products[18].

However, according to the Gartner Survey[19] only 40% of businesses surveyed[20] are working on specific supply chain EDI initiatives.

According to InterEngineering and EDF Energy[21], some of the common barriers include:

• Lack of senior leadership support and understanding
• Lack of understanding about why the organisation is incorporating EDI into its supply chain
• Different importance placed on EDI within the group
• Getting EDI included in new projects
• Measuring EDI efforts
• Different standards in EDI practice
• Reputation damage.

So how does this compare to what we are seeing in the charity sector?

The fundamental duty of charity trustees is to do what they (and no one else) decide will best enable their charity to carry out its purposes. But for organisations which enjoy significant tax advantages, access to funding, and high levels of public trust and confidence, the ends do not justify the means and the “how” is important, as well as the “what”: charities are expected to do the right thing.

Many follow the Charity Governance Code, which consists of seven key principles, including EDI – The board has a clear, agreed and effective approach to supporting equality, diversity and inclusion throughout the organisation and in its own practice. This approach supports good governance and the delivery of the organisation’s charitable purposes[22].

The inexorable rise of ESG – of which EDI is a key component – applies to charities as much as it does to businesses. It enables them to demonstrate value and responsibilities to funders; to provide partnership opportunities with businesses which want to engage with sustainable and responsible charities; and to drive improvements in operational efficiencies[23].

EDI will be embedded into the purpose of some charities, for example, Shape Arts is a disability-led arts organisation which works to improve access to culture for disabled people by providing opportunities

for disabled artists, training cultural institutions to be more open to disabled people, and through running participatory arts and development programmes[24].

In early 2021 Cancer Research UK (CRUK) launched its EDI Strategy[25]. This charity exists to beat cancer, and beating cancer means beating it for everyone. CRUK believes that by putting EDI at the heart of everything it does, and setting itself ambitious targets, it will make the greatest progress in beating cancer. It strives to address cancer inequalities, by publishing the best evidence and through the research that it funds, making sure that grant applicants, whatever their background, can be equally successful.

And even where the equality, diversity and inclusivity of a supply chain may not directly advance a charity’s purposes, many charities seek to embed EDI in their culture and the way in which they operate. Charity trustees must act responsibly, reasonably and honestly and of course secure value for money – the more money a charity has, the more capacity it has to do good. This is reflected in a key Barnardo’s Value, which is to exercise responsible stewardship.

At the same time, Barnardos’ procurement policy[26] states that it shall carry out its procurement in an open, transparent and competitive manner and buy goods and services from supply sources which maintain ethical standards throughout their supply chains and applies best practices – and its procurement policy specifically incorporates other corporate policies and codes of conduct, including Barnardo’s policy on Equality and Diversity. This reflects the other values of that charity – Respecting the unique worth of every person, Encouraging people to fulfil their potential, and Working with hope

Ultimately, a diverse and inclusive supply chain not only creates social and economic benefits but also enhances business performance, innovation, and reputation. In the supplier space, embedding EDI is becoming a requirement to remain in supply chains. By embracing EDI, organisations in the public, private and charity sectors can build resilient and sustainable supply chains that thrive in an increasingly interconnected and diverse global marketplace.

Resources

18 - https://hbr.org/2020/08/why-you-need-a-supplier-diversity-program

19 - 2022 Gartner-ASCM Supply Chain DEI Survey – https://www.gartner. com/en/supply-chain/trends/supply-chain-diversity-equity-inclusion- ascm

20 - Gartner and ASCM surveyed 384 participants at large supply chain organizations primarily in the U.S., Canada and Europe from 1 December 2021 through 31 December 2021

21 - Microsoft Word – Inclusion and Diversity in Supply Chain – Rev4  (interengineeringlgbt.com)

22 - 6. Equality, diversity and inclusion – Charity Governance Code

23 - Shoosmiths has developed a free of charge high-level compliance audit tool to help all organisations – including charities – understand their ESG performance and which addresses supply chain management: ESG 360 |  Shoosmiths lawyers

24 - Commissions and Collaborations | Shape Arts

25 - Cancer Research UK EDI Strategy 2021-23

26 - Barnardos_Procurement_Policy_(June_2018)_1.pdf