Karima-Catherine Goundiam is founder and chief executive officer of digital strategy firm Red Dot Digital and business matchmaking platform B2BeeMatch
In the midst of our cultural reckoning over anti-Black racism, companies are taking a hard look at their diversity and inclusion practices and many are making much-needed internal changes. But how many are looking outside their own corporations where they can use their power – decision-making power, financial power, political power – to facilitate real, far-reaching change?
What Black businesses lack is not talent, knowledge, expertise or skill. It’s opportunity. And other businesses wield tremendous power to provide those opportunities.
In September, Prime Minister Justin Trudeau announced investments of nearly $221-million in partnership with Canadian financial institutions to launch Canada’s first Black Entrepreneurship Program, offering loans worth between $25,000 and $250,000. I was glad to see Black-owned businesses getting support, but I was immediately concerned about the bigger picture. If companies don’t work to diversify their supply chains, the Black businesses supported by this loan program will not become better integrated into the business world at large, and won’t see the success the program is meant to stimulate.
Opportunity is a puzzle with multiple pieces, all of which must come together to create the bigger picture needed to enable change.
The first piece of the opportunity puzzle is funding. Black business founders, and Black women founders in particular, receive a vanishingly small fraction of venture capital funding in Canada. As well, government data on businesses owned by underrepresented groups is scarce, which makes it difficult to quantify the funding problem and therefore hard to solve it. The Black Entrepreneurship Program, which also includes funding for data collection to identify barriers to success, may begin to address this funding issue.
The second piece is diversity and inclusion (D&I). Most companies see diversity and inclusion as an internal matter – something to work on within their corporate structure, their hiring practices and the makeup of their boards. And it is! It’s important that businesses take seriously the project of changing their own composition, because not only is it a better and fairer way to operate, it’s proven to bring companies greater success.
But when corporations prioritize internal change, they often fail to recognize that they are part of a larger equation. One of the ways companies try to “do good” is through their corporate social responsibility (CSR) initiatives. Some of those CSR initiatives may involve making donations to community organizations that help underrepresented groups. This is great, but companies also need to start seeing these same underrepresented communities as potential players in the business world.
Donations can sometimes serve the psychological function of keeping underrepresented communities at a distance, maintaining the company’s internal perception that underrepresented groups are “other” – always the recipients of charity, and not potential employees, leaders or trade partners.
Supply-chain diversification, however, is the piece of the puzzle that is missing most often. If a corporation wants to make a positive contribution to the diversity of the business world, diversifying their supply chain is at least as important as diversifying their staff. Companies often engage in D&I initiatives internally, and CSR initiatives externally, and think they’re checking all the boxes. But companies wield so much more power than just these two elements. To use that power meaningfully, they need to come up with directives, set priorities and establish key performance indicators not just for internal D&I, but for D&I more broadly, including within procurement processes.
While comprehensive data isn’t available in Canada, a 2016 study by the Canadian Centre for Diversity and Inclusion (CCDI) found that 39 per cent of 242 organizations surveyed had supplier diversity initiatives, and they were more common among larger companies. That’s far fewer than in the United States, where the initiatives have been supported by law for decades, according to the CCDI report.
Unlike with internal D&I, Canada has no disclosure requirements regarding supply-chain diversification. But companies that want to change the business world shouldn’t need to be motivated only by disclosure requirements. They can take action regardless of disclosure mandates, and they can also disclose on their own initiative without being asked.
This brings me back to the Canadian government’s new loan program. Think about it: If Black-owned businesses receive loans, those loans need to be repaid. To repay them, these businesses need to have sufficient sales. To have sufficient sales, they need to be integrated into supply chains and procurement processes – one of the areas where opportunities remain harder to access. As such, loans alone may end up creating a cycle of failure for Black businesses. Black businesses need better access to the full range of opportunities in the business world, and this is an issue that can’t be fixed by a government loan program alone – no matter how generous.
As December draws to an end, businesses are planning next year’s projects, setting budgets and preparing to award contracts in the New Year. So, I’ll take this opportunity to ask my fellow business owners a question: Has your company thought about how to integrate businesses owned and operated by Black people and other underrepresented groups into its procurement chain? Is this question even on your company’s radar?
If not, now’s a great time to bring it up. There’s a strong business case for supplier diversity and now is a time for action.
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