Diversity and inclusion (D&I) touches every aspect of your business’ operations.
Why should you think about investing time to develop D&I into your business? Sandra Kerr from Business in the Community explains why this is key to helping us recover from the pandemic.
The impact of D&I on economic growth
Small business and enterprise have a vital role to play in creating new jobs and employment opportunities. With these sectors thriving, it will contribute to sustainable economic growth and recovery in the UK. When Business in the Community’s race campaign launched 25 years ago one of the key foundational pillars of the campaign was including ethnic minority owned businesses and entrepreneurs to access supply chain opportunities. Other key priorities for organisations large and small, is to ensure they’re embedding D&I in all areas of their business, from recruitment and hiring, marketing and investing in communities.
Access to finance
Over the years, we’ve seen a significant amount of traction on access to finance and relative performance of female founders which later led to the Government’s Rose Review.† While it is great to see progress in this area, the diversity picture is incomplete until we address the challenges faced by black and minority ethnic founders as well. Access to capital among ethnically diverse founders is a pressing challenge that needs to be addressed by government and big business. A recent report, ‘Impact of Covid-19 on Black and Ethnic Minority-led Businesses’ found that only 0.9% of founders in Europe are black and a staggering 48% of ethnic minority business owners don’t plan to access or expect to qualify for any government support schemes in the UK. At a time where black, Asian and ethnic minority people have been hit harder by job losses due to COVID-19 than the population as a whole, we risk widening the inequalities faced by diverse entrepreneurs, and wasting their potential to boost jobs and income as the UK “bounces back”.
Anti-racism, allyship and role models
A great place for employers to start would be to initiate a conversation about race. Whilst this is only one aspect of a diverse workforce, the disproportionate impact of the COVID-19 pandemic and the brutal killing of George Floyd mean that there is a new sense of urgency in the fight against racism, as highlighted in our Anti Racism and Allyship Guide. By encouraging open discussion among employees and other key business stakeholders, businesses can help foster a culture of allyship and attract and retain talent as a result. Our Let’s Talk About Race booklet is another great resource to help kickstart these conversations.
Our recently published Race at Work Black Voices Report spotlighted that a growing number of black people, 47%, look for role models inside and outside the workplace. A thriving marketplace which includes black, Asian and ethnic minority business leaders will effectively contribute to helping the UK achieve its goals for economic recovery. In the future it is likely that many people may be now opting for self-employment either by desire or necessity as a route to employment.
Diversity in supply chains
A key recommendation we made in the landmark Race at Work 2015 report was that ‘the Government must use its procurement spending power to ensure that businesses who tender for public contracts can demonstrate a commitment to race diversity within their supply chain’. And we have added a call for action in the Race at Work Black Voices Report for employers to include black enterprise in their supply chains. This principle applies to all businesses led by leaders covered by the Equality Act 2010.
We are also calling on private sector employers committed to Responsible Business practice to actively explore how they can increase their engagement with diverse business owners who deliver goods or services locally.
We know from The McGregor-Smith Review that tackling the labour market disparities for ethnic minorities and employment is worth £24bn annually to the UK economy. Increased numbers of large and small businesses creating inclusive employment opportunities will contribute to this boost. The report ‘Diversity wins: how inclusion matters’ found that employers with greater ethnic diversity in their senior team have 36% better financial returns and the uplift is 25% for those with greater gender diversity.
Support for ethnic minority-led businesses
Responsible business action is not just about engaging with more diverse service and goods suppliers. Members of procurement teams can also act as mentors and coaches to women-led and ethnic minority-led small businesses to share advice and information on their procurement practices. This kind of collaboration and support will better enable small organisations to successfully compete for public and private sector contracts in the future.
It is important that we recognise that thriving ethnic minority-led businesses - owned by both men and women - will contribute to increased employment and greater opportunities to utilise skills and talents.
Additional benefits to communities will include increased and raised aspirations, an increase in the volume of local job opportunities which in turn must result in more vibrant and economically empowered communities overall.
The call to action
Investors, government, and employers have a unique opportunity to rethink how they can drive sustainable impact in their communities by supporting diverse businesses. Our recent Black Voices report calls on the Government to mandate ethnicity and pay gap reporting. This drive for more data can also be extended to reporting on who has access to government supported programmes and funding and to promote transparency among Venture Capital firms. The Future Fund is a great first step towards this. We have also seen a push towards supporting smaller local business and responsible procurement during this pandemic. That is why the report also calls on businesses to engage their supply chains and support their local community. Together we can build back better and build back responsibly.
Article written by Sandra Kerr CBE, Race Director at Business in the Community
† Santander is a signatory member to the UK Government-led Investing in Women Code which was launched in 2019 and founded from the Alison Rose Review of Female Entrepreneurship.
As a signatory to the Code Santander commits to supporting the advancement of female entrepreneurship in the UK by improving access to the tools and resources they need to access finance. We also contribute data to industry level tracking of how female entrepreneurs access finance.