Procurement and Supplier Diversity in Corporate Sustainability
A large number of corporate governance standards internationally
At the end of 2021, the CareER Association, which focuses on serving the employment of highly educated people with disabilities, announced the results of their first "Diversity Inclusion Index (DII)" questionnaire survey on Hong Kong companies. The survey is about the trend of inclusive employment. With reference to the international survey classification, 8 major classifications are set according to Hong Kong's situation, including:
S1 Organisation Policies and Structure
S2 Civic and Community Engagement
S3 Products and Services
S4 Supply Chain and Procurement
S5 Recruitment
S6 Staff Engagement and Retention
S7 Accommodation and Adjustment
S8 Accessibility
S1 belongs to the overall environment, S2 to S4 to external activities, and S5 to S8 to internal activities. The survey will be conducted regularly and the results will be published in the form of an index with a full score of 100.
Last year was the first year of the survey, and the Diversity and Inclusion Index (DII) was as follows:
S1 is 58 points; S2 is 37 points; S3 is 32 points; S4 is 25 points; S5 is 64 points; S6 is 60 points; S7 is 70 points; and S8 is 52 points.
S7 received the highest score of 70 points, while S4's supply chain and procurement received the lowest score of 25 points. S2 to S4 scored an average of 31 points for external activities, while S5 to S8 scored an average of 62 points for internal activities.
In addition to the index, they also ask the reasons. Generally speaking, companies lack inclusive guidance for external stakeholders, workplace support tools, detailed action plans and measurable performance targets.
＊ ＊ ＊
In May 2022, McKinsey published an article titled "Expand diversity among your suppliers–and add value to your organization", which puts forward the view that diversity among suppliers is beneficial to the economy and that value can be created by working with minority and women-owned businesses (MWBEs).
"Increasing the diversity of suppliers has become more urgent at a time when social issues strongly influence business growth. Sixty-four per cent of millennials say they won’t work for companies that perform poorly on corporate social responsibility..." ~ McKinsey's Insights in Operations
In 2020, Accenture published a document titled "Five reasons why You should prioritize supplier diversity as part of your sourcing strategy". The five reasons are: to improve supplier competitiveness, boost innovation, heighten perception of impact, attract and retain top talent, and provide positive social impact.
"But many companies with Supplier Diversity Programs historically have treated them like 'check the box' or non-essential programs, which are often deprioritized when things get tough..." ~ Accenture
In August 2020, Harvard Business Review published an article titled "Why you need a supplier diversity program", in which the article interviewed multiple companies and diverse organizations, analyzed media reports and corporate reports, and discussed how diverse supply chains and procurement programs can contribute to socio-economic and corporate benefits.
"The 'feel-good' factor associated with diversity programs can also burnish a brand. In a 2019 study for Coca-Cola, Hootology, itself a diverse supplier, found that the 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..." ~ Harvard Business Review
＊ ＊ ＊
WeConnect International published the 2021 ranking of the top ten global companies that value "diversified supply chain and procurement" policies:
Merck: Their social procurement policy promotes economic inclusion and sustainability by sourcing from diverse suppliers, including minority and women-owned businesses. It integrates environmental and social standards into procurement practices, supporting equitable supply chains and reducing environmental impact.
Kelly Services: Their social procurement policy emphasises supplier diversity, equity, and inclusion by supporting underrepresented businesses, including minority, women, veterans, and LGBTQ+ suppliers. Through mentorship, resources, and networking opportunities, Kelly fosters socioeconomic growth, creates jobs, and strengthens communities. Its commitment to sustainability and ethical practices ensures long-term value and innovation in its supply chain.
IBM: Their social procurement policy emphasises supplier diversity, sustainability, and ethical practices. It requires suppliers to comply with the Responsible Business Alliance Code of Conduct, promoting labour rights, environmental protection, and ethical standards. IBM invests in diverse suppliers globally, fostering innovation and economic development while advancing transparency and accountability throughout its supply chain.
Accenture: Their social procurement policy emphasises supplier diversity, inclusion, and sustainability. Through its Global Supplier Inclusion & Sustainability Program, it partners with diverse suppliers, fosters economic growth, and promotes responsible buying. Accenture also supports suppliers' ESG improvements and innovation while embedding sustainability principles into its supply chain for long-term value creation.
Johnson & Johnson: Their social procurement policy emphasises supplier diversity and economic inclusion through its Global Supplier Diversity & Inclusion program. It partners with small businesses, social enterprises, and diverse suppliers to foster community impact, job creation, and innovation. The company also integrates sustainability and ethical practices into its supply chain strategy.
Procter and Gamble: Their social procurement policy prioritises supplier diversity and inclusion, fostering partnerships with minority-, women-, veteran-, LGBTQ+-, and disability-owned businesses. With a global spending target of $5 billion annually by 2030, P&G integrates sustainability, innovation, and economic empowerment into its supply chain to create value for communities and consumers.
Intel: Their social procurement policy prioritises supplier diversity and inclusion, achieving $2.2 billion in diverse supplier spending by 2022, eight years ahead of its 2030 goal. It incentivises suppliers to adopt diversity programs, fosters innovation through partnerships, and integrates sustainability and ethical practices, advancing equity within the semiconductor supply chain.
Ford: Their social procurement policy focuses on supplier diversity, inclusion, and sustainability. It supports minority-, women-, LGBTQ+-, veteran-, and disability-owned businesses through programs like Widening the Inclusion Network (WIN). With a goal of 10% diverse supplier spending annually, Ford fosters economic growth, job creation, and community impact across its global supply chain.
Randstad: Their social procurement policy emphasises responsible sourcing, supplier diversity, and sustainability. It ensures suppliers respect human rights, labour standards, and ecological principles through a Supplier Code. Randstad actively supports diverse-owned businesses, fosters mentorship programs, and engages suppliers to reduce emissions, promoting equity, innovation, and environmental responsibility across its global supply chain.
EY: Their social procurement policy emphasises supplier diversity, sustainability, and ethical practices. Through its Environmental Social Governance Services (ESGS), EY collaborates with diverse suppliers to foster inclusion and innovation while minimising environmental impact. Suppliers must adhere to EY's Global Supplier Code of Conduct, ensuring compliance with ethical, social, and environmental standards.
In addition, we can easily find the diversified supply chains and procurement policies of other large international companies:
Google: Their social procurement policy, driven by its Supplier Diversity Program, emphasises inclusion, equity, and global economic impact. It invests in diverse-owned businesses through mentorship, certification support, and accelerated payments. Google has pledged billions in procurement spending with underrepresented suppliers, fostering innovation and sustainable growth while building an inclusive economy.
JP Morgan Chase & Co.: Their social procurement policy, led by its Global Supplier Diversity Program, promotes equity by supporting diverse-owned businesses, including women, minorities, veterans, and LGBTQ+ entrepreneurs. Spending over $2 billion annually, it provides resources like the Supplier Diversity Network and Diverse Supplier Grant Initiative to foster growth, inclusion, and economic impact.
Chevron: Their social procurement policy, anchored in its Supplier Diversity/Small Business Program, promotes inclusion by partnering with diverse and local businesses. It focuses on fostering economic development, environmental sustainability, and equity. Chevron invests in supplier relationships to create value, drive innovation, and support communities where it operates.
Wells Fargo: Their social procurement policy integrates supplier diversity into strategic sourcing processes, fostering relationships with minority, women, LGBTQ+, veteran, and disability-owned businesses. Through initiatives like the Diverse Supplier Development Program, it invests in supplier growth, promotes equity, and drives innovation while supporting sustainable practices and community economic development.
Target: Their social procurement policy, previously part of its Supplier Diversity Program, aimed to increase procurement from minority, women, and veteran-owned businesses. Recently rebranded as "supplier engagement," it now focuses on inclusive global procurement processes, emphasizing small businesses while adapting to evolving external landscapes and reducing public DEI initiatives.
Microsoft: Their social procurement policy emphasises supplier diversity and responsible sourcing. Through its Supplier Diversity Program, Microsoft partners with minority, women, veterans, LGBTQ+, and disability-owned businesses, investing billions annually. The policy fosters innovation, equity, and sustainability while requiring suppliers to meet strict ethical, environmental, and human rights standards outlined in its Supplier Code of Conduct.
The Hershey Company: Their social procurement policy emphasises supplier diversity as part of its broader ESG and DEI strategies. Through programs like Supplier Diversity, Hershey partners with minority, women, veterans, LGBTQ+, and disability-owned businesses, aiming to quadruple diverse supplier spending to $400 million by 2030 while fostering innovation, equity, and community growth.
Unilever: Their social procurement policy promotes supplier diversity and sustainability through initiatives like the Supplier Diversity Program and Climate Promise. It aims to spend €2 billion annually with diverse suppliers by 2025, fostering inclusion, equity, and environmental responsibility while addressing social inequality and supporting underrepresented businesses globally.
Pfizer: Their social procurement policy emphasises supplier diversity and sustainability. Through its Supplier Diversity Program, Pfizer partners with underrepresented businesses, fostering innovation, equity, and community impact. It aims to increase diverse supplier spending by 50% by 2025, supporting mentorship, development, and responsible sourcing to enhance patient care and global economic growth.
Dupont: Their social procurement policy emphasises supplier diversity and sustainability through its Supplier Diversity Program, TEMPO initiative, and Supplier Code of Conduct. It partners with small and diverse businesses, fostering innovation, equity, and economic growth while integrating diversity into sourcing strategies to reflect its commitment to inclusion and community development globally.
Volvo: Their social procurement policy emphasises sustainability, supplier diversity, and ethical sourcing. It integrates environmental, social, and governance (ESG) standards into procurement processes, fostering partnerships with diverse suppliers and promoting responsible practices. Volvo prioritises traceability, particularly in raw materials like cobalt, using blockchain technology to ensure transparency and mitigate ESG risks.
＊ ＊ ＊
Many of the international companies listed above have their Asia-Pacific headquarters or branches in Hong Kong. International companies will inevitably set global policies, but of course, they will also allow for adaptation to the local environment and culture. In any case, they should continue to gradually implement the "diversified supply chain and procurement" policy. Therefore, the CareER research results show that Hong Kong companies have an extremely low diversified supply chain and procurement index, making it difficult to retain foreign and local talent. This makes us even more worried about the decline in Hong Kong’s overall competitiveness and the difficulty in predicting future economic development.
Sources: CareER Association、McKinsey、 Accenture、Harvard Business Review and WeConnect
＊ ＊ ＊ ＊ ＊
Design Studio MZ+MM makes Social Procurement conveyable.
Design Studio MZ+MM is a social enterprise (SEE Mark No. SEE 0114) based in Hong Kong, providing various types of graphic design services. Currently, the team is composed of hearing-impaired and hearing designers who practice disability inclusion, which is the primary reason for promoting "diversity, equity and inclusion" in corporate organizations. We support the United Nations Sustainable Development Goals SDGs: 10 “Reduced Inequalities” and 17 “Promote Partnerships for the Goals”.
In addition to providing job opportunities for diverse talents, this social enterprise also helps corporate clients implement advanced governance concepts. We also firmly believe that Design Studio MZ+MM is still the only social procurement solution practitioner and provider in Hong Kong, providing professional design services in the true sense of social procurement and adding multiple levels of added social value. To learn more about the vision and mission of this social enterprise, please click this link to jump to the Social Impact page.
