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Reaching $750 Million and Moving Ahead: Building Economic Equity Through Business Diversity
Two years ahead of schedule, JPMorgan Chase surpasses its five-year goal of spending an additional $750 million with Black-, Hispanic- and Latino-owned businesses.
As part of JPMorgan Chase’s $30 billion Racial Equity Commitment, which launched in 2020 to help close the racial wealth gap, the company pledged to spend an additional $750 million with Black-, Hispanic- and Latino-owned businesses by 2025.
JPMorgan Chase has been committed to maintaining an inclusive supplier base and a global supplier diversity program for three decades. The company has an annual procurement budget of over $23 billion and spends more than $2 billion with historically underrepresented businesses, including companies owned and operated by ethnic minorities, women, military veterans, disabled veterans, service-disabled veterans, people with disabilities and members of the LGBT+ community.
Advancing supplier equity in corporate supply chains is not a philanthropic exercise. It can lead to real economic benefits. According to McKinsey, if the racial wealth gap between Black- and white-owned businesses were to close, the U.S. GDP could experience growth of up to 6 percent by 2028, equating to an injection of more than $1 trillion into the economy. In 2022 alone, JPMorgan Chase spent $2.1 billion with Tier 1 diverse suppliers, which provide essential products and services directly to a company. This generated over 9,700 jobs, $856 million in employee income and $430 million in federal, state and local taxes.
JPMorgan Chase reached its five-year goal of spending an additional $750 million with Black-, Hispanic- and Latino-owned businesses in 2023, two years ahead of schedule. At the current pace, the company is on a trajectory to potentially double its original spending goal by 2025.
Lowering the Barriers
JPMorgan Chase’s Global Supplier Diversity team, in collaboration with its sourcing and procurement organization, has deployed a holistic strategy to amplify the impact of supplier diversity. The strategy includes working with corporate partners, investing in supplier development and capacity, and identifying new ways for company decision-makers to learn about capabilities and explore opportunities to spend with underrepresented businesses.
“If we want to have a major impact on the communities we serve, we cannot just continue business as usual; we need to confront barriers to entry,” said Jim Connell, JPMorgan Chase’s chief procurement officer. “Our focus is sustainable, structural and industry-wide impact.”
By leveraging its ecosystem of suppliers, corporate partners and community organizations, JPMorgan Chase is lowering the barriers that diverse businesses often face. It provides access to information and resources to help these companies learn about and meet minimum corporate requirements, as well as access to professional cyber-readiness assessments to ensure they have a secure infrastructure to serve financial industry clients if selected for engagement.
Additionally, by sharing its commitment and best practices in supplier diversity, JPMorgan Chase has helped over 100 of its top suppliers spend more with diverse businesses. Since 2021, these suppliers have generated an additional $10 billion in new spending with diverse suppliers.
What We’ve Learned
- Supplier diversity is a powerful way for JPMorgan Chase to directly impact underserved communities but it requires support and commitment from across the company to really move the needle. Organizing a dedicated cross-functional team around supplier diversity ensures that all interested parties are paying attention and thinking creatively to maximize opportunities.
- Accountability is key. While everyone across an organization might agree that having an inclusive supply chain is vital, if results aren’t being measured, the effort can become unfocused which can lead to less impactful outcomes.
- Many of JPMorgan Chase’s biggest suppliers are influential leaders in their respective industries. By tapping into their collective strength, the company can achieve supplier diversity growth on a scale that is not achievable individually.
- Supplier development is an important component of JPMorgan Chase’s strategy. We recognize that businesses are not all the same; a one-size-fits-all approach won’t work. Getting direct feedback from suppliers to learn who they are and what they need leads to better outcomes. Working closely with suppliers through business development and capacity-building programs can help them to be competitive, win contracts and grow their companies. Being close to the supplier also enables JPMorgan Chase’s Global Supplier Diversity team to identify road blocks and help clear them away.
As Ted Archer, head of Business Partner Diversity at JPMorgan Chase, said: “Surpassing this $750 million spending goal underscores the power and potential of comprehensive supplier diversity efforts. By cultivating deeper relationships with our suppliers, we not only provide opportunities for them to boost their revenues but also empower businesses to make a meaningful impact on their communities and contribute to wealth creation.
“Moving forward, we aim to ensure the sustainability of these efforts beyond the five-year Racial Equity Commitment. We plan to industrialize the operating models we’ve developed to foster greater equity and opportunity within our global supply chain.”