Facebook, Alphabet Urged by NYC Pension to Disclose on Diversity

Facebook, Alphabet Urged by NYC Pension to Disclose on Diversity

Companies are being encouraged to do more business with minorities and women as diversity gains traction as a business imperative.

(Bloomberg) -- New York City Comptroller Scott Stringer is asking Facebook Inc., Dow Chemical Co., Goldman Sachs Group Inc. and 13 more big U.S. companies to disclose data on the diversity of their suppliers and increase spending with firms owned by minorities and women.

The letter campaign, which also targets Starbucks Corp., Google parent Alphabet Inc. and Alcoa Inc., extends a 2014 initiative that asked for similar details from 20 more of the $163 billion city pension funds’ largest investments. Eight of those companies, including Apple Inc and Qualcomm Inc., have since agreed to release the value and percentage of total spending they do with minority vendors, the comptroller’s office said Thursday in a statement.

“While more and more companies are making supplier diversity part of their business plan, shareowners deserve real transparency about these initiatives,” Stringer said in a statement. “Disclosure should be a market standard, so investors can see which programs are the most effective and push companies they own to do better.”

Companies are being encouraged to do more business with minorities and women -- and quantify the spending -- as those groups account for most U.S. population growth and diversity gains traction as a business imperative. Multicultural purchasing power has grown at twice the rate of overall U.S. buying power since 1990, researcher Nielsen found.

The almost 12,000 certified minority-owned business in the U.S. produce more than $400 billion in annual revenue and employ about 2.2 million people, according to a study released last month by the National Minority Supplier Development Council and the Institute for Thought Diversity.

New York’s letter, which was the same for all recipients, asks companies to disclose the number of their diverse suppliers and their goals for increasing such contracts. Stringer also asks for senior management and board oversight of the process, and suggests compensation-related incentives for employees and managers.

Stringer, a Democrat elected in 2013, singled out Microsoft Corp.’s $2.3 billion in spending with minority suppliers in 2015 as an example of a successful initiative. Nielsen, Comcast Corp. and Pacific Gas & Electric Co. now provide stand-alone reports on supplier diversity, he said. 

Competitive Advantage

“A more diverse supply base helps our portfolio companies to create sustainable competitive advantage and long-term shareowner value,” he wrote. The comptroller’s office increased funds managed by minority and women business enterprises to $14.4 billion this year from $5.5 billion in 2010.

At least 10 Standard & Poor’s 500 companies, including Bank of New York Mellon Corp. and Ford Motor Co., recently began providing quantitative data on minority supplier spending on their own, the comptroller said in the statement.

Institutional investors also seek boardroom and employee diversity. This year, nine companies in the S&P 500 -- the most ever -- faced demands from shareholders that they adopt new diversity plans, according to ISS Corporate Solutions, a corporate-governance consultancy. Only 12.8 percent of companies currently giving specific details about directors named in their annual filings, according to a report released last month by researcher Equilar Inc.

“The pace of change is too slow,” Stringer said. “Diversity isn’t just a buzzword –- it’s a business necessity, and we need real disclosure today.”

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