Supplier Diversity Report: Banks Still Struggle to Contract With Diverse Businesses

Supplier diversity is a powerful tool for economic development in communities of color. Minority Business Enterprises (MBEs) are more likely to operate as small businesses and employ locals, making them a pillar for communities of color. Contract opportunities from larger corporations allow MBEs to generate wealth, create jobs, and grow their businesses. Unfortunately, MBEs are still less likely than their white counterparts to break through the “old boy network” and obtain these contracts. Supplier diversity initiatives require neither quotas nor mandates for contracting with diverse businesses. Instead, they consist of intentional practices meant to improve access and opportunities for MBEs and level the playing field. From accounting to paperclips, banks annually spend trillions of dollars contracting with businesses for goods and services. These contract dollars create economic ripples that promote business growth, job creation, anddrive market innovation. In short, how banks spend money matters to the community. This contract spending is especially important to diverse communities and their local minority business enterprises. Even in the volatile economy of 2002 to 2010, MBEs consistently outpaced the growth of their white counterparts by total number of businesses and gross receipts. Nonetheless, MBEs experience barriers to winning contracts and generally do less business with banks. This report analyzes 2012-2014 supplier diversity spending at California’s eight largest banks.