Gender Equality in Supply Chains: An Opportunity to Increase Positive Impacts

It’s well known that inequalities between men and women still exist in the workplace. Women are less likely to fill senior leadership positions (29% in North America)[1], earn less (81 cents per dollar in the US)[2] and own fewer businesses (39% of businesses in the US)[3] than men. Additionally, in light of the COVID-19 pandemic, women have taken on a larger burden compared to their male counterparts, with many more losing their jobs, leaving the workforce, or taking on additional work at home.[4] This year, International Women’s Day is a moment to celebrate the improvements we’ve seen to date and to recognize the need for organizations to continue to challenge the status quo and improve gender diversity within their operational footprint.

Sustainalytics' Corporate Solutions can help companies understand and assess the social and economic impacts of activities occurring within their organizations and supply chains. Often, limited visibility into supply chain activities is looked at as a source of operational and ESG risk for organizations. However, it can also be seen as a center for increasing positive impacts. Studies have shown that a large portion (up to 90%) of an organization’s impact on the environment and social factors is located within its supply chain activities.[5] This means that the largest opportunity for organizations to increase their positive impacts is to look within their supply chain’s activities.

Many organizations have committed to increasing female employment, the proportion of women in managerial positions and the number of woman-owned businesses in their supply chain, in line with the Sustainable Development Goal to increase gender equality. Although, due to limited understanding of their suppliers’ activities, they are often missing a large piece of the puzzle by spending with organizations that don’t share the same values. Recently, I’ve seen companies from various industries become very keen to develop this understanding and work with their supply chain partners to improve. From this experience, often the easiest place to start is by understanding and working with the largest suppliers by spend as they will be most incentivized to take on commitments.

Why Does Understanding your Gender Impacts Matter?

Public Interest – Following the social movements of the past five years, consumers and the public are much more interested in “voting with their dollar” in favor of organizations that support a more sustainable and diverse future. Specifically, this concept is increasingly important to millennials which represent future purchasing power.

Develop a Baseline Understanding - Sustainalytics will often work with corporate clients that have never been involved in tracking their social and economic impacts to help them understand where they stand now, identify gaps, and establish policies to improve impacts. A few examples include organizations that were interested in developing social procurement policies but didn’t know where to start, or companies looking to report on additional unknown benefits resulting from their procurements.

Support Data-driven Decision-making - Whether your organization is just getting started or has already developed sophisticated programs to track and increase diversity, having increased insight into where you are creating the most impact is beneficial. Primarily, it allows you to better form strategies and policies to address issues. For instance, one of our clients had already developed diversity policies and was interested in seeing which portions of the polices were most impactful, or in other words, which generated the greatest return on investment in terms of positive impact.

Stakeholder Reporting - Once you have developed an understanding of your organization's impact, you are able to report on the impacts of your efforts, taking a policy from being a symbolic gesture to a transparent metric on how your organization is doing against its goals.  Inclusion of the data in annual reports, public relations, and government reporting allows organizations to demonstrate improvements over time.

Sustainalytics has found that organizations with programs to address workforce and procurement diversity are significantly more likely to employ higher levels of women and spend with woman-owned businesses. Using procurement as a tool to work with suppliers to develop awareness and implement policies can drive increased impacts to benefit the female workforce.

Please reach out to our Corporate Solutions team for more information.

[1] Catalyst, “Women in Management: Quick Take” (2020). Accessed at https://www.catalyst.org/research/women-in-management/

[2] Payscale, “The State of the Gender Pay Gap” (2020). Accessed at https://www.payscale.com/data/gender-pay-gap

[3] National Association of Women Business Owners, “Women Business Owner Statistics”, (2019). Accessed at https://www.nawbo.org/resources/women-business-owner-statistics.

[4]Anu Madgavkar, Olivia White, MekalaKrishnan, Deepa Mahajan and Xavier Azcue, COVID-19 and gender equality: Countering the regressive effects, (2020). Accessed at https://www.mckinsey.com/featured-insights/future-of-work/covid-19-and-gender-equality-countering-the-regressive-effects

[5] Anne-Titia Bové and Steven Swartz, “Starting at the source: Sustainability in supply chains” (2016). Accessed at
https://www.mckinsey.com/business-functions/sustainability/our-insights/starting-at-the-source-sustainability-in-supply-chains#