NEW YORK. February 18, 2025 (Reuters) — As U.S. corporates from Amazon to Meta, Ford to Walmart have cut back on diversity, equity and inclusion (DEI) programs over the past year, under assault from conservative pressure groups and Republican attorneys general, one big victim has been programs to include minority- and women-owned businesses in their supply chains. Some programs date back to the civil rights movement of the 1960s, but they gained traction after George Floyd was killed in 2020, spawning the Black Lives Matter movement.
Google, Meta, Walmart, Ford and Amazon, for example, were among 39 signatories to the Billion Dollar Roundtable, a 24-year-old initiative whose members commit to spend at least $1 billion annually with minority- and woman-owned suppliers. At the time of writing the Roundtable’s website was “under construction”, but according to its 2023 impact report, members spent a combined $123 billion with diverse suppliers and contractors, with an estimated economic impact of $321 billion.
The spend supported an estimated 1.76 million jobs, and generated $171.17 billion of value added in terms of business profits and taxes. “The imperative of supplier diversity is a mutually beneficial two-way street: diverse suppliers give back to the communities where they operate, and corporations benefit from the eagerness and innovation that these suppliers bring to their supply chains,” the report said.
Although not a member of the Billion Dollar Roundtable, retailer Target, which has nearly 2,000 U.S. stores, had pledged in 2022 to invest over $2 billion with Black-owned businesses by the end of 2025, and had said it was on track to meet its goals.
The pullback from supplier diversity programs over the past year has hit Black female entrepreneurs particularly hard. A 2021 study found that Black women are the fastest-growing demographic of entrepreneurs in the U.S., but face disproportionate financial headwinds, including lack of access to capital, with a rejection rate that is three times higher than that of white business owners.
When labour advocacy groups called for a consumer boycott after Target announced in January that it was pulling out of its DEI initiatives, some Black-owned businesses argued against a boycott, saying they would lose revenue and consumer exposure, Reuters reported. The pressure companies have been under from shareholders and in the courts has been fierce, and many more companies have ditched DEI initiatives after Trump’s executive orders jacked up the heat.
After Target announced it had dropped its DEI programmes, shareholders in Florida launched a class action saying that the company had defrauded them into paying inflated prices for its stock and unknowingly supporting management’s “misuse of investor funds to serve political and social goals”. Some companies in the Billion Dollar Roundtable have stood firm.
At the World Economic Forum in Davos, Jamie Dimon, CEO of JPMorgan & Chase, told CNBC News that JP Morgan had no intention of changing its supplier diversity program, which is expected to spend $6.2 billion with Black, Hispanic and Latino firms over the next three years, despite shareholder proposals from conservative groups such as the National Legal and Policy Center and the National Center for Public Policy Research to remove links between diversity initiatives and executive pay, and examine DEI initiatives for legal and reputational risks.
In Europe, meanwhile, organizations with supplier diversity programs have been trying to assess what kind of damage developments in the U.S. could have on their own programs. Mayank Shah founded Minority Supplier Development UK (MSDUK) in 2006, European Supplier Diversity Programme in 2022, and co-founded Global Supplier Diversity Alliance (GDSA), an umbrella group for global advocacy groups, last year.
In an interview he said he has spoken to supplier diversity leaders and advocacy groups around the world about the impacts of Trump’s changes. “We don’t yet know how it will impact us, we are still trying to absorb all the information,” he says. While supplier diversity programs have taken root in the UK, Europe, Canada, South Africa and Australia, they are in the main still driven by U.S.-based organisations.
For example, Facebook owner Meta, which announced in early January that it is abandoning its DEI initiatives, has already been in touch with global supplier diversity advocacy groups to tell them that it will no longer engage with them, he says. “The resourcing, the budgeting, the strategy – everything is formed and driven from there,” says Shah. It is likely that budgets for sponsoring events and conferences will be cut, however Shah hopes organizations that are strategically committed to inclusive sourcing will continue.
“Maybe the messaging will change, but with ESG still on top of the corporate agenda, this is still relevant,” he says. There is now far more awareness in Europe about the importance of an inclusive workforce and supplier base, and acceptance that diversity is good for business. “It’s just very basic common sense that if your customer base is diverse, your supply chain has to be diverse,” he says.
Pavel Subrt, is director of supplier diversity and board member of the European LGBTIQ Chamber of Commerce. (LGBTIQ is the acronym for persons who identify as lesbian, gay, bisexual, trans, intersex or queer.) While he hopes that European corporates will stand firm, “we do not yet know to what extent the corporates who are active in Europe will defend European values, and to what extent they will have to unfortunately follow what their U.S. headquarters say,” he says.
Claire Bosch Zuazo, social impact and human rights director at consultancy Anthesis, is more optimistic that large corporates will maintain their programs, having seen how they create more resilient and innovative supply chains. “We might not see an increase in corporates publicly setting targets but you’re still going to see the work,” she says. “We’ll have to wait and see how they talk about it to shareholders, to their board and in ESG reports,” she says.
The word “diversity” may be used less, in favour of terms such as “inclusive” or “inclusion”, Bosch Zuazo believes. She has seen this happen in international development, where changes in terminology due to a new administration were common, but did not significantly affect the type of work undertaken. “As sustainability leaders and advisors, it’s important for us to be clear about the work and the business imperative, and the performance that it can drive.
If they want to talk about it in a certain way in order to be more palatable, it’s still going to be the work that they’re doing,” she says. Shah says he has believed for several years that “inclusion” is a better way to talk about procurement. The term “supplier diversity” has become a barrier to change by implying that initiatives are just for procurement teams, and that suppliers are being chosen as a form of positive discrimination rather than on business merit.
“Supply chain inclusion”, on the other hand, recognises the potential for suppliers to drive innovation and growth through entire value chains. Business leaders should set a culture where diverse suppliers are consciously considered at every stage of procurement, he says. The barriers faced by European minority-owned suppliers can be very different to those in the U.S. In particular, LGBTIQ rights differ across the continent.
“There is still a fear of disclosing sexual orientation or gender identity the further you go into central, and especially eastern or even southern Europe,” says Shah. People fear that they will lose customers or business partners. This has often led LGBTIQ suppliers to fear being specifically listed, says Subrt. “They tend to think about it in terms of risk, compared to those in the U.S., who typically have the mindset of it being an opportunity,” he says.
The European LGBTIQ movement is lacking both businesses who want to be included in corporate procurement programs, and corporates who are targeting business with them, he admits. However, the broader supplier diversity movement in Europe has had more traction with corporates, according to Shah. When he founded MSDUK in 2006, 90-95% of corporate partners were U.S. companies, but UK and European-based companies now comprise around 30% of partners, he says.
Pharmaceutical companies, facilities management and technology companies have been particularly engaged. An unexpected positive consequence of Trump’s actions could be that management and resourcing of global corporate supplier diversity programs shift to in-country teams, which tend to achieve better outcomes, Shah says.
“In the supplier diversity industry, big teams in the U.S. manage the programs, then when they are expanded to Europe, there’s only someone very junior managing them, and they don’t have internal influence, budgets and training. This hasn’t helped the movement outside the U.S.,” he says. Subrt echoes this, saying European companies need to “cut the leash” from the U.S. when it comes to DEI.
“We need to be more self-sufficient. There are tools in the EU for environment, social and governance (ESG), such as the Corporate Sustainability Reporting Directive that ask businesses to take action to support minorities,” he says. Overall, the global trend has been for increasing engagement from corporates, often driven by governments mandates for doing business with minority groups, including in New Zealand, Australia, India and South Africa.
The reaction of global companies to changes in the U.S. will definitely have an impact elsewhere, but at the same time, the overall situation is improving, Shah concludes. “These initiatives are driving positive change and uplifting those socially and economically disadvantaged groups,” he says. Bosch Zuazo agrees: “People want to see themselves reflected in who they work with, and who they do business with, they want to work in places that have shared values. And I think that is here to stay,” she says.
