Jul 08, 2023 · 8 min read

The Active Attempts to Eliminate DEI: How the Affirmative Action Ruling Affects Underrepresented Individuals and Their Businesses…

BY: Tiffanie Stanard, CEO/Founder — Stimulus Inc.

Do you remember the first time you applied for a job? Maybe you didn’t get hired because you lacked experience or educational background, or because of plain discrimination. But remember you can’t obtain experience if you don’t get hired.

That’s where Affirmative Action is supposed to come in — someone at a university or employer had to be the first to actively admit and source underrepresented individuals with a strategic marketing/outreach effort to create equal opportunities for all to obtain a college education and employment.

The same paradox is true for vendors and suppliers. Without experience, there’s little chance that big companies want to initially contract with your business (especially diverse i.e., black companies) — it’s a catch-22. But someone (a company) must be the first to contract with that potential supplier. Then someone must be the 2nd, 3rd — you get my point.

On Thursday (June 29, 2023), the Supreme Court struck down affirmative action in college admissions, declaring race cannot be a factor and forcing institutions of higher education to look for new ways to achieve diverse student bodies.

The court’s conservative majority effectively overturned cases reaching back 45 years in invalidating admissions plans at Harvard and the University of North Carolina, the nation’s oldest private and public colleges, respectively.

The decision, like last year’s momentous abortion ruling that overturned Roe v. Wade, marked the realization of a long-sought conservative legal goal, this time finding that race-conscious admissions plans violate the Constitution and a law that applies to colleges that receive federal funding, as almost all do.

What is Affirmative Action? A set of policies or programs designed to address historical and systemic discrimination, particularly in the context of employment and education. It aims to promote equal opportunities and increase representation of underrepresented groups, such as women, racial minorities, and individuals with disabilities.

The above description only mentions employment and education, but the Affirmative Action policies and programs were also adopted across organizations with the goal of working with underrepresented businesses called Supplier Diversity. Decades later “we” (meaning diverse companies) would like to change the term to ‘Business Diversity.’ Supplier diversity is focused on low-margin businesses like construction and cleaning services; Business Diversity branches out to include high-margin businesses like technology and professional services and other fast-growing sectors that have a larger community impact.

Supplier Diversity is a business strategy that encourages organizations to proactively seek out and do business with suppliers that are owned by individuals from underrepresented groups. The focus is on engaging diverse suppliers, including minority-owned, women-owned, veteran-owned, LGBTQ+-owned, and other disadvantaged businesses. By diversifying their supplier base, companies should foster economic growth within marginalized communities, create jobs, and enhance their overall competitiveness.

Now the above description of Supplier Diversity says it is a business strategy, not a law or requirement. But the federal government, state government agencies, and various local governments do require companies that work with them to implement supplier diversity programs. Also, most government contracts impose levels of contracting with diverse businesses as a requirement. A growing number of corporations have mandated diverse supplier participation in their projects, but the goals and rules are at their discretion.

Below are 6 ways eliminating affirmative action could and will affect Supplier Diversity:

1. Reduction in Incentives: Affirmative action served as a motivation for corporations and government agencies to establish and maintain supplier diversity programs. Now that affirmative action has been overturned, the sense of obligation to prioritize diversity and inclusion may diminish, leading to reduced efforts in supporting diverse suppliers. We have already seen reports prior to the affirmative action ruling that included layoffs within already small diversity teams and now post the ruling — POCIT and other outlets have reported “The media industry has lost DEI leaders over the last two weeks with layoffs and resignations at Disney, Warner Bros. Discovery, Netflix, and the Academy of Motion Picture Arts and Sciences.”

2. Decreased Funding and Support: Affirmative action policies helped to allocate resources specifically to promote supplier diversity. Now, the funding and support for these initiatives may decline, impacting the growth and sustainability of diverse businesses.

3. Limited Market Access for Diverse Suppliers: There may be less emphasis on considering diversity as a criterion for supplier selection. This will result in the exclusion of diverse suppliers from contracting opportunities, limiting their market access, and reducing their revenue streams.

4. Impact on Business Growth: Supplier diversity programs can be crucial for the growth and development of small and minority-owned businesses. Overturning affirmative action will make it more challenging for these businesses to secure contracts, hindering their growth and economic advancement.

5. Reputational Impact: Corporations and government agencies will face reputational consequences if they appear less committed to DEI. This will (and should) lead to public backlash and affect their relationships with customers, stakeholders, and the public.

6. Continued Disparities: Without implementing alternative strategies to address systemic inequalities this setback will perpetuate disparities in economic opportunities for historically disadvantaged groups.

The affects of the ruling will vary across industries and regions. Some entities may continue to support diversity voluntarily, recognizing its benefits for innovation, creativity, and access to a broader talent pool, while others will reduce their efforts (as we have seen post the 2020 DEI wave) without the presence of legal mandates.

More thoughts to come…