Adopting procurement practices that favour businesses run by women, minorities and lesbian and gay entrepreneurs is not just the socially responsible thing to do, it can also promote innovation and cost savings, according to Canadian companies that are adopting diversity supplier policies.
"There's certainly the clearer corporate responsibility aspect to it, but I think if you are partnering with a provider that is more flexible, that is providing a unique service, then I think there's a business benefit to it as well," said Uros Karadzic, national leader for EY's (formerly Ernst & Young) talent and reward practice and the firm's bEYond network, which supports and promotes LGBT (lesbian, gay, bisexual, and transgender) inclusiveness.
"I don't think the only financial advantage is in getting the product cheaper. You may be paying the same price, but getting a better product, or you may be able to get a product you weren't able to get before. If you were getting a better product, or a product that's more suited to you, then I think there's a benefit to that."
Canadian companies are still playing catch-up with the United States, where diverse supplier policies are required by law.
In Canada, companies like EY – a founding sponsor of the Canadian Gay and Lesbian Chamber of Commerce's (CGLCC) supplier diversity program – have adapted their policies from their operations in the U.S.
B.C.-based Women's Enterprise Centre works with WEConnect Canada to certify businesses run by women as diverse suppliers. Ironically, because Canada lags behind the U.S., many of the women-owned businesses certified by WEConnect win supply contracts in the U.S., not Canada, said Cecilia Mkondiwa, program delivery manager for the Women's Enterprise Centre.
"This certification is for the U.S. mainly," Mkondiwa said, adding that contracts that are won within Canada tend to be between the female-run business owners themselves.
Many large corporations in Canada have policies that encourage diversity and inclusiveness within their workplace. But only a handful have adopted policies that also try to promote diversity in their procurement.
Telus (TSX:T), TD Bank and EY are among the large corporations in Canada that are trying to correct that by adopting supplier diversity policies designed to spread some of their supply chain dollars among a greater cross-section of Canadian society.
"In Canada, it's not legislated, but there's a lot of large corporations that strongly believe in the value of supplier diversity," said Indy Sian, director of business strategy development, procurement and supply chain management for Telus.
Telus, which spends $6 billion annually on goods and services, adopted a diversity supply policy in 2011 and is now working to get the word out.
This month, Telus held a workshop with six small Canadian businesses that have been certified as diverse suppliers to help them learn how to win supply contracts with large companies.
They might not win a contract, Sian said, but they will learn how to work with companies like Telus, TD Bank and EY that have supplier diversity policies.
"It has to be totally competitive. They have to win on their own merits. But really what we're helping them with is to compete globally, within Canada, so they can compete with any corporation."
Although one of the main objectives of supplier diversity programs is to more accurately reflect Canadian society, Sian said it has the added benefit of introducing innovation.
"They might be even cheaper to deal with."
"Working with smaller business enterprises, you have maybe new creative ideas that you'd never considered before," said Dean Nelson, CEO of Alpenglow Productions – one of only five Canadian companies to be certified under the CGLCC's LGBT Supplier Diversity Program.
Nelson's business works with large companies that want to target the LGBT community by arranging for them to sponsor special events. Clients have included Air New Zealand.
Corporate Canada has lagged behind the U.S. in adopting supplier diversity programs, according to Justin Lafontaine, the CGLCC's project manager of supplier diversity, largely because there isn't the same kind of scrutiny here.
In the U.S., the Human Rights Campaign, an LGBT advocacy group, produces an annual report card to inform consumers about large corporations' diversity policies.
"We don't really have that in Canada, so the Canadian companies aren't – at this stage – so anxious to jump on board because they don't have that report card," Nelson said.
In the U.S, according to Lafontaine, "it's a full-on industry. There are hundreds and hundreds of certified businesses within the LGBT sector alone, let alone the minority and the women-owned businesses.
"A lot of Canadian-based companies, like the banks, are now adopting these supplier diversity programs because they see the benefits for them."