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Study finds GTA companies lag in supplier diversity programs

A diverse work group.

Jacob Wackerhausen/iStockphoto

The Toronto-based Maytree Foundation is trying to coax the region's biggest corporations towards policies favouring suppliers owned and run by visible minorities. It has its work cut out for it.

A study by University of Manitoba Professor Paul Larson found that Toronto's corporations lagged far behind their American counterparts in making minority-owned business partners a priority: While more than 77 per cent of Chicago's biggest businesses had supplier diversity programs in place, about 23 per cent of their Toronto counterparts had similar initiatives in place.

Prof. Larson and Maytree Foundation advocates argue that companies' suppliers should be as representative of their customer base as the employees they hire. To this end, they say it's worth corporations' while to make a priority of doing business with suppliers owned and operated by a minority majority.

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Growing numbers of visible minorities "are the future customers, employees, investors and taxpayers of the Greater Toronto Area," Prof. Larson's report reads. "They will also be the future owners and operators of businesses that will supply commercial, not-for-profit and governmental organizations. Now is the time to prepare for this future, the time to embrace supplier diversity."

Prof. Larson's report argued that sourcing from diverse suppliers should be motivated by more than a desire for a better social corporate image: Minority-controlled business partners inject innovation into an enterprise, he argued.

"Diversity in the supply chain can help organizations access new markets, enhance their reputations and improve their bottom lines."

The supply-chain examination looked at 138 Toronto-area companies that make up about a third of the region's economic activity – $100-billion annually. It found that the bigger a company was, the more likely it was to have concerted efforts to do business with minority-owned suppliers. The same goes for Toronto-based corporations with American parent companies, 20 per cent of whom had supplier-diversity programs, and companies with American subsidiaries, almost half of whom had those kinds of programs in place.

These differences are likely due to longer-standing practices in place in the U.S. that encourage companies to seek out supplier diversity, the report notes.

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