Are Corporations Pulling A Billion Dollar Diversity Supply Chain Bait & Switch?

By Brooke Sinclair 

  • Intel plans to spend $250M with U.S. Black-owned suppliers by the end of 2023
  • Corporations spend 58 cents of every dollar in revenue on payments to suppliers and could benefit by increasing their diversity

Intel’s (INTC +5.84%) commitment to a diverse supply chain was supposed to leverage the purchasing power of the small business owner and address social gaps in pursuit of fair and equitable business practices. The company claims that its $2.2 billion in diverse supplier spending represents nearly 15 times the annual total from when the program launched in 2015. Are diverse organizations within the supply chain link actually benefiting from these programs?

Why This Matters: Intel’s 2022-23 Corporate Responsibility Report revealed the corporation set three major milestones for spending $2 billion with diverse suppliers by 2030. Specifically, they are focused on women-owned suppliers outside of the U.S., minority suppliers globally, and U.S. Black-owned suppliers. In a classic bait and switch Intel is celebrating exceeding its goal before the end of 2022, however, upon further inspection, it only exceeded its 10% commitment to diverse minorities.

Here is where the confusion lies, Intel’s website states diversity is not extra work, though it is work they opted out of. The company selected the “diverse” Gilbane Building Company and its partners McDaniel’s Construction, Northstar Contracting, and GTSA Construction Consulting to manage the excavation work in Ohio. Gilbane is targeting 20% diverse business enterprises and 50% State of Ohio residency for construction. They are targeting 10% minority, female, or veteran workforce, and 60% State of Ohio residency to work inside the factory. 

In the end Intel didn’t actually exceed its $2 billion dollars in diverse spending by awarding a contract with a Tier 1 diverse supplier (a business 51% owned and operated by a U.S. veteran/disabled veteran, woman, minority, LGBT, or disabled person). Instead it was with Tier 2 suppliers, hired or awarded by the tier 1 supplier

Situational Awareness: One thing Intel did get correct was earmarking $250 million for U..S Black-owned suppliers. If we want to stimulate wealth creation and improve generational wealth Mckinsey & Company believes we could generate an additional $280 billion and four million jobs if we doubled minority spending with Black Americans to $2 trillion.

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