Although the history of supplier diversity legislation can be traced back to the United States during the civil rights movement, diverse procurement initiatives have since been adopted by a variety of Western nations. Building on the framework established by the U.S., European countries have made impressive strides with regard to diverse procurement practices. On its most recent list of the top 15 companies for supplier diversity, DiversityInc named two U.K.-based companies: Ernst & Young (EY) and PricewaterhouseCoopers (PwC). Below, we’ve outlined the brief history of supplier diversity in Europe and where these initiatives stand today.
The History of Supplier Diversity Legislation in Europe
In the U.K., supplier diversity legislation was first introduced in 2000 under the Local Government Act. This early directive outlined the responsibility that local authorities have to promote the social, economic, and environmental “well-being” of their communities through diverse procurement practices.
In France, similar legislation was adopted in 2006 with regard to Socially Responsible Public Procurement (SRPP) practices. The following year, Sweden followed suit by passing a public procurement act that prohibits discrimination based on nationality. This act also demands full process transparency to ensure equality in the procurement process.
Despite these huge legislative strides, European businesses have been slow to take advantage of social procurement directives. As a result, the European Union formally published Buying Social: A Guide to Taking Account of Social Considerations in Public Procurement in 2010. This document outlines SRPP actions that are protected under EU law and provides case studies to better illustrate how those actions look in practice. Within the European community, the U.K. and France have been quicker to enact their own legislative framework for supplier diversity. Other large European nations such as Germany and Spain still lag behind.
In 2014, the EU also passed a directive on the disclosure of nonfinancial and diversity information, requiring EU companies with more than 500 employees to report on environmental-, social-, and employee-related information with regard to their business and supply chain partnerships. This mandated corporate transparency has caused many EU companies to devote more attention to issues such as sustainability, social and community impact, and diverse procurement practices.
Influential Supplier Diversity Organizations
European nonprofit organizations have been instrumental in accelerating EU supplier diversity legislation and educating businesses from all sectors on the benefits of creating supplier diversity programs. Many of these companies are active beyond the EU, promoting supplier diversity and economic inclusion in the global supply chain.
In the U.K., studies conducted by the Centre for Research in Ethnic Minority Entrepreneurship (CREME) on supplier diversity, immigration, and social inclusion helped influence corporate procurement policies. In addition to working with policy-makers, CREME seminars have helped educate businesses on supplier diversity and facilitated discussions on how best to adapt programs to different industries.
MSDUK has also been instrumental in drawing European attention to inclusive procurement practices. The nonprofit organization focuses on ethnic minority-owned businesses (EMBs; synonymous to the U.S.’s MBEs) and has established a vast international network of EMBs and multinational corporations. Since 2006, it has hosted 78 supplier diversity events, including the European Supplier Diversity Conference, aimed at connecting EMBs and big businesses. Like CREME, MSDUK also works to educate both private and public sector corporations on the many benefits of supplier diversity programs.
When it comes to implementing supplier diversity programs, there is no one-size-fits-all solution. Many early European supplier diversity programs, processes, and policies were modeled after those in the United States. Although these programs provided a solid working model, it’s become clear that supplier diversity initiatives must be customized to the culture and regions in which they’re active.
In the U.S., the majority of public sector supplier diversity programs are structured around legislative mandates. These mandates have been instrumental in diversifying the national supply chain and encouraging businesses to build out their diverse supplier networks abroad. That said, social procurement laws and compliance standards must be determined on a local and national level in order to be effective in each individual country.
As more businesses expand into diverse, international marketplaces, the idea of corporate social responsibility (CSR) has grown in popularity. Now more than ever, multinational corporations are recognizing the impact that supplier diversity initiatives have on their brand perception and international growth opportunities. One such example is the global bank Barclays, which highlights its commitment to supplier diversity on its website. As big-name companies bring these initiatives into the public consciousness, more European businesses will realize the benefits of supplier diversity and follow suit.
Read a similar article on the State of Supplier Diversity in Canada.