Diversity + Sustainability = Competitive Advantage for Suppliers

by Anthony Gilbreath

The market for diverse suppliers is becoming more and more competitive.  Sustainability can help suppliers stand out from the crowd.

Many companies pride themselves on having a diverse workforce, one that is made up of individuals with a wide range of characteristics and experiences. Some of the key characteristics of workforce diversity include race, ethnicity, gender, age, religion, ability, and sexual orientation.

What is a Diverse Business?

There are several different categories used to define diverse businesses. Some of these include Small Business Enterprise (SBE), Minority owned business enterprise (MBE), LGBT Business Enterprise and Women Business Enterprise (WBE).  In order for a company to be recognized as ‘diverse’, they need to be certified by a diversity organization. Diversity certification confirms that a business is owned, managed, and managed by a qualifying diverse group.

What are the Benefits of a Diverse Supply Chain?

So what are the benefits of a diverse supply chain?  Here are two of the most important benefits:

• Greater Return on Investments – An article from The Wall Street Journal sites research by the Hackett Group that showed a real financial upside for business that have diverse suppliers. The Atlanta-based company demonstrated that companies focusing “heavily on supplier diversity” generated a 133% greater return on procurement investments than the typical business. 
• Improved Reputation – Reputation risk is only behind financial and compliance risks as the largest threats to long-term success.  Supplier diversity programs can provide corporations with evidence that they are acting as good corporate citizens.  It gives companies real stories with real people to show the benefits diversity is having on small businesses.  Consumers react positively to companies and products that demonstrate a commitment to society.

How does Sustainability give Suppliers a Competitive Advantage?

As the pool of diversity certified businesses grow, how does a company stand out?  One of the most important things for a diverse company to understand are the pressures that are being put on purchasing companies.  Purchasing companies are not only facing increased compliance demands from governmental and regulatory bodies, they are also being asked to account for the behavior of the companies that make up their supply chain.  Many of them are turning to voluntary sustainability standards such as the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP).  These standards require participation by a percentage of their suppliers to report performance and operational data.  Suppliers ready to provide this information will be much more attractive partners and will have a competitive advantage over other businesses.

“A large percentage of our consulting clients are companies that are being asked to provide CDP and GRI information,” says Anthony Gilbreath, Principal at Caelus and SME at CRG Sustainable Solutions (a WBENC certified company). “The most frequent question we get from clients is ‘We got a letter from our biggest client. What do we do?’. 

How to become a more Sustainable Supplier?

There are a several things suppliers can do in order to become more sustainable – here are some of the most important ones:

• Become aware of and/or participate in Sustainability Standards – Sustainability standards and certifications are usually third party-assessed, norms and standards relating to environmental, social, ethical and food safety issues, adopted by companies to demonstrate the performance of their organizations or products in specific areas.  Some of the most popular certifications are Leadership in Energy and Environmental Design (LEED) and the ISO 24000 (Social Responsibility) and ISO 14000 (Environmental Management Systems).  Some of the most popular voluntary standards are the Dow Jones Sustainability Index, Sustainability Accounting Standards Board (SASB),  Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP)and  By far, the most important standards suppliers are being asked to participate in are the voluntary CDP and GRI.  Either hire a consultant or assign some staff to becoming more familiar with the requirement of the standards.  Once you are familiar with the type of information and calculations these standards require, make a plan how much time and effort they would take. Given the level of detail and expertise this may require, consider a reputable sustainability consulting firm.
• Get a Sustainability Audit – The quickest way for an organization to become more sustainable is to get a sustainability audit.  A sustainability audit takes an inventory of current sustainability policies, procedures and practices and compares these to industry best practices.  Once completed, an organization will know exactly what steps it needs to take in order to improve its sustainability performance.  Some of the most important benefits to expect from a Sustainability Audit are:
  • Lower Costs
  • Lower Risks
  • Improved Innovation
  • Creates Competitive Advantages
  • Compares practices to Industry Best Practices
  • Improves Planning, Structure and Accountability
  • Identifies now Sustainability Initiatives
  • Expands Tracking
• Begin or Expand your Sustainability Program – Whether your organization has an existing sustainability program or if you are just beginning, prioritize your most important sustainability objective and get down to work.  If you have conducted an audit, you will have a comprehensive list of initiatives to consider.  If you already have initiatives in place, consider developing goals to achieve and track and document your progress.  A sustainable act that goes undocumented is a lost opportunity to tell your green story.

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Anthony Gilbreath has over 15 years experience in oil & gas, alternative energy and sustainability consulting. He authored the CurrentState Sustainability Audit for Caelus as well as many sustainability consulting services for Computer Sciences Corporation (CSC).  He has managed CaelusGreenRoom.com and been a Principal at Caelus Sustainability Consulting since 2011.