Study shows that only 15% of companies have programs to favor diverse suppliers

A study by Fundação Getulio Vargas, which investigated how companies consider diversity factors when hiring suppliers, found that among the 109 companies analyzed, only 15% have programs aimed at hiring suppliers from socially underrepresented groups, such as women, people of African descent and members of the LGBT community.

Conducted by the Center for Excellence in Logistics and Supply Chain (FGVcelog) in partnership with the Center for Organization and People Studies (FGVneop), the study set out to identify the participation of businesses led by women and other underrepresented groups in the supply chains of large companies in Brazil. The study also mapped the main barriers faced by these companies in engaging in affirmative purchasing.

The study’s leader, researcher Priscila Miguel, points out that nowadays the corporate world talks a lot about environmental, social and governance (ESG) issues, but purchasing departments often do not understand and internalize this concept as much as other company areas.

“Both here in Brazil and in other countries, we see the ESG agenda growing among organizations, closely associated with diversity, equity and inclusion, so we wanted to understand if this growth is also occurring in the purchasing area of these organizations. We realized that there is a long way to go,” says the researcher, who reiterates the need for companies to review their purchasing processes and add some flexibility to their purchasing policies, which are usually designed for large companies, prioritizing only profits to the detriment of the social context.

Inclusive purchasing and diverse suppliers

Inclusive purchasing means the ability of an organization to develop and implement metrics that include social inclusion criteria in its purchasing decisions. For a company’s procurement sector to be considered inclusive, underrepresented social or minority groups must own 51% or more of its supplier companies.

“These are usually small companies with difficult access to compete on an equal footing with larger companies,” says Miguel. According to her, these suppliers are also able to highlight these minorities as consumers.

“When a company hires women and other minority suppliers, it can learn in a more particular way about the specific demands of society, compared to other broader and more homogenized suppliers. These suppliers represented by minorities can also be a source of innovation and flexibility, generating socioeconomic development for communities, as well as combating social inequality,” she adds.

Understanding the study

Miguel, who carried out the study together with researchers Maria José Tonelli of the Sao Paulo School of Business Administration (FGV EAESP) and Andrea Lago da Silva of São Carlos Federal University, explains that the interest in doing this research arose from a concern expressed by UN Women, which has many signatory companies committed to the principles of female empowerment. These companies are working to ensure that they buy more from suppliers led by women, given that among the signatories themselves, less than 1% of their suppliers are led by women.

It was in this context that FGVneop, FGVcelog and the UN came together to talk to companies and suppliers in order to understand which factors can help them implement programs and what stage companies are at, among other issues. Based on analysis of 21 interviews conducted, some relevant points were highlighted to promote this inclusion, such as the importance of certification for organizations that carry out inclusive purchasing as a way of encouraging this practice, and the need for Brazil to have a specific inclusion policy for purchasing departments.

“Most of the time, when minorities are included among suppliers, it usually happens on a voluntary basis among companies that are pursuing ESG goals,” Miguel says.

The researcher also points out that there are similar inclusion programs in countries such as the US, UK, Canada and Australia, also aimed at other social minority groups such as immigrants, black people and indigenous people.

The study received an honorable mention in the FGV EAESP Impact Projects Awards.

To find out more about FGVcelog, click here.