A recent report indicates increasing supplier diversity can also enhance the bottom line.
The report from Supplier.io titled The 2024 State of Supplier Diversity surveyed over 350 supplier diversity stakeholders to examine how they implemented executive visibility, data accuracy and co-ordinating with environmental, social and corporate governance issues (ESG), as well as navigate economic and political pressures.
Supplier diversity is defined as a business strategy of incorporating diverse-owned business, suppliers and vendors into a company’s supply chain and vendor practices.
“Responsible sourcing is no longer niche — it drives innovation, strengthens global supply chains, and shapes the future of corporate sustainability,” Supplier.io CEO Aylin Basom said.
“Our research underscores that companies are not just investing in these programs, they’re using them as strategic levers to quantify impact, secure executive buy-in, and unlock new growth opportunities. This shift is about building businesses that are not only competitive and sustainable but also deeply committed to creating long-term value for all stakeholders.”
The report found supplier diversity has become tied with executive engagement and business results and that those results are reported 56 per cent of the time to a company’s CEO, a significant rise from 2021 when the report said only 26 per cent of CEOs reviewed supplier diversity results.
It added many corporate leaders also report results at the business unit level and that “partnership with ESG teams has continued to grow with over one-third of supplier diversity leaders reporting results to their ESG counterparts.”
Basom said the construction industry has been “one of the key sectors to embrace supplier diversity, particularly when it comes to working with small, local and minority-owned businesses.”
“Many construction projects, particularly large-scale ones, must navigate complex approval processes, often requiring companies to demonstrate their economic impact on local communities. By working with local, diverse suppliers, construction firms can show tangible benefits, such as job creation and investment in underserved areas,” she said.
“Compared to other industries, construction companies are unique in their ability to tie supplier diversity directly to community engagement and project approvals, which amplifies the importance of these programs.”
Creation of an annual supplier diversity plan declined to 61 per cent down from 67 per cent and only 42 per cent of respondents included supplier diversity metrics in management performance objectives, down from 48 per cent in 2023.
Data was also found to affect strategic outcomes, with over 92 per cent of organizations monitoring their spend with small and diverse suppliers and 60 per cent leveraging third-party data, an increase from 47 per cent in 2021.
“As a result of this intelligence, business leaders can measure the success of their supplier diversity programs through additional factors including cost savings (28 per cent), economic impact on communities (37 per cent), and innovations (18 per cent),” the report said.
Globally, the report noted planned supplier diversity programs are on the rise. When asked where they planned to have a supplier diversity program in the next one to two years, 27 per cent named Europe (up from 16 per cent). Canada was also named by 27 per cent of respondents, up from 19 per cent last year. Asia came in at 12 per cent, Africa and Latin America were at 11 per cent and Australia was last at eight per cent.
“Internationally, we see a growing emphasis on supplier diversity as a business imperative, driven not only by regulatory changes like the EU’s Corporate Sustainability Reporting Directive (CSRD) and Canada’s climate-related Financial Disclosures (TCFD), but also by consumer expectations and global supply chain dynamics,” Basom said. “While the U.S. may have led the charge, other nations are quickly advancing their supplier diversity strategies.
“In Canada, there’s a growing focus on integrating diverse suppliers, mirroring trends in the U.S., but with a unique emphasis on First Nations (Indigenous) suppliers, reflecting the country’s unique historical and cultural considerations,” she added.
Basom added the COVID-19 pandemic in 2020 was a turning point for supplier diversity due to unprecedented disruption on both an economic and social level.
“This combination of supply chain risk and the increased business and consumer focus on social accountability brought supplier diversity programs to the forefront of corporate strategy,” she said.
“Companies recognized that a diverse supplier base could provide deeper insights into these markets, transforming supplier diversity from a mere ethical choice to a fundamental business imperative.”
The full report is available here.
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