Analysis: How Damaging are Supply Chain Diversity Lawsuits?

We have reported widely here on Supply Chain on the subject of diversity, equity and inclusion (DE&I) initiatives, which are intended to promote supply chains that are representative of the societies they serve. 

But now, it seems, this drive to redress societal imbalances in supply chain might be facing a problem. 

In the US, multiple lawsuits have been filed against companies whose DE&I policy sees them hiring minority-run business as supply chain vendors. Such minorities include women, those with disabilities, ethnic minorities and military veterans.

The Wall Street Journal (WSJ) has reported on the growing number of legal activists in the US who are seeking to roll-back diversity programs.

Companies including Comcast and Starbucks are among a dozen organisations the WSJ says are facing lawsuits relating to vendor-recruitment programmes, which provide financial support, business opportunities or other services to small businesses owned by minority entrepreneurs. 

The newspaper reports that plaintiffs in the cases claim that such inclusion programmes promote reverse-discrimination, because they limit participation in the supply chain to certain ethnicities or other groups considered to have minority status. 

Much of the litigation is still in its early stages but the challenges, or threat of them, are beginning to reshape corporate and government assistance aimed at specific groups of entrepreneurs.

DE&I programmes 'reverse discrimination' - critics

These legal challenges to DE&I initiatives in supply chain and elsewhere in business have their roots in a US Supreme Court ruling last summer that found it unconstitutional for universities to consider race as a factor in admissions.

The threat of legal action undoubtedly muddies the water for businesses seeking to do business with a spread of supply chain vendors more representative of society at large.   

Now, organisations are having to decide which side of the DE&I fence they are going to come down on.

Most are choosing to follow DE&I initiatives regardless of potential legal problems – a position that is aligned to public opinion on ESG issues.  

For example a significant PwC report – Beyond compliance: Consumers and employees want business to do more on ESG – found that:

• 83% of consumers think companies should be actively shaping ESG best practices
• 91% of business leaders believe their company has a responsibility to act on ESG issues
• 86% of employees prefer to support or work for companies that care about the same issues they do

DE&I supply chain lawsuits 'out of step with public opinion'

These findings strongly suggest the DE&I lawsuits are out of step with the views of the American public, with supporters stressing the positive impact of these programs in driving economic growth for everyone.

Among those in the vanguard of driving diversity in the supply chain is Accenture’s Nedra Dickson, who is Global Supplier Inclusion & Sustainability Lead.

Dickson leads Accenture’s global supplier inclusion and sustainability programmes across 22 countries, and has elevated Accenture’s supplier diversity spend to approximately $1bn globally. She is also credited with expanding Accenture’s award-winning Diverse Supplier Development Program. 

The programme is currently running in the US, Canada, UK, Ireland, South Africa, India and Australia, and there are plans to further expand its reach.

In an interview last year with Supply Chain Digital, Dickson explained that the supplier diversity programme “is designed to grow and develop diverse businesses and to support their integration into Accenture’s global supply chain”. 

She added: “By innovating with this diverse supplier, you're helping them grow their business, which means they begin to employ more people in their community. Then you're seeing an economic impact.”

A few litigants in the US aside, it seems the overwhelming majority of people agree with Dickson, Accenture and the welter of businesses who are blazing their own trail on DE&I in supply chain.

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