This week is NAIDOC week which celebrates the history, culture and achievements of Aboriginal and Torres Strait Islander peoples. The theme of this years’ NAIDOC week is Always Was, Always Will Be which recognises the care Indigenous Australians have shown for this continent for over 65,000 years and celebrates the valuable contribution Indigenous Australians continue to provide to Australia’s economy, culture and overall progression.
This value was demonstrated in a recent report released by Design and Build’s partner Supply Nation, which - through a number of case studies with their Certified Suppliers – demonstrated the significant and measurable benefits of supplier diversity, including greater sustainability, flexibility and a higher social return on investment.
Founded in 2009, Supply Nation provides Australia’s largest database of verified Indigenous businesses and supports the integration of Indigenous-owned businesses into the supply chains of Australian companies, like Design & Build.
What Is Supplier Diversity?
A diverse supplier is classed as a business that is at least 51% owned and operated by a marginalised or minority group within the community, such as women-owned enterprises, LGBT + -owned enterprises or Indigenous-owned enterprises. A Supplier Diversity program therefore, is when an organisation commits itself to purchasing a significant proportion of their procurements from smaller suppliers which are owned/run by these traditionally under-represented and minority groups. The concept of supplier diversity first emerged in the United States during the civil rights movement of the 1950s and 1960s, where General Motors in Detroit set up what is regarded as one of the first supplier diversity programs after the incredibly violent race riots of 1967, and the rest of the American auto industry gradually followed suit.
Since then, corporate organisations globally have included supplier diversity programs as part of their overall diversity and inclusion policy. In Australia, supplier diversity is now driven by governance and performance requirements, with many leading mining, financial and construction companies actively procuring and engaging with indigenous owned enterprises. Supply Nation alone, has a membership base of over 400 of Australia’s top corporate organisations and state and federal government agencies.
What is Social Value?
One of the major benefits of engaging in supplier diversity is that it opens the door to additional markets. Indigenous businesses can grow and prosper, which then increases economic activity, employment and channels greater social value back to indigenous communities.
For the purpose of this article, social value is considered as the quantification of the relative importance that people place on the changes they experience in their lives. For example, social value might be the value we experience from increasing our confidence or from living next to a community park. These things can be important to the individual, but are not commonly expressed or measured the same way financial value is.
This idea of social value was a big focus in one of Supply Nation’s biggest research reports, ‘The Sleeping Giant’ which delves into the impact Supply Nation’s Certified Suppliers (suppliers who are at least 51% Indigenous owned, managed and controlled) had on their key stakeholders. The results were derived from interviewing five of their certified suppliers and demonstrated the changes and value the key stakeholders experienced, because of their existence.
When Supply Nation interviewed key stakeholders on the impact being connected to Certified Suppliers had on their lives, the answers were diverse depending on their specific connection. For business owners a common impact was that it provided the opportunity to build resilience and pride in their communities and allowed them to become role models. Dean Jarret, owner and principal of GPS International - a cultural business consulting firm, voices this in his own interview: “[Owning my own business] means that I have the ability to determine my own future. It means to me, that through example, that I can make a difference in my community. Aboriginal communities are different. Our connection doesn’t go away. We may not be in those communities, but those communities are in us.”
A common change employees experienced when working for a certified supplier was that they could sustain a connection to their culture, as well as having a work environment in which to learn and progress. For Noel Terrick, a volunteer at BNYM Indigenous Designs, working for the certified supplier was essential for developing his education into his own culture: “I wasn’t very interested in my culture growing up, but when I had a choice to be here, and my Aunty Sam started teaching me, learning designs and the meaning behind them, it makes more sense. So now when I’m looking at Aboriginal art I know the story behind it. I feel very proud to be Aboriginal.”
These businesses also become are a proving ground for the local community and the families connected to the businesses; they allow young Indigenous people develop their capacity to pursue their desired careers and grow into leaders themselves. Zack Haddock, a former employee at BNYM Indigenous Designs said he wouldn’t have developed a love of writing and communication without working with his mother: “Without this business, I would be a labourer or a mechanic. Here, I went to meetings with mum, to listen and then write documents that were well received. That’s what really sparked my interest and made me want to hone those skills, to become more articulate.”
A Social Return On Investment
When Supply Nation first embarked on this research, they underestimated how far-reaching the social value derived from the existence of these Certified Suppliers would be; these businesses didn’t just significantly impact the owners and employees but also the owners and employee’s families and the wider community. To put a financial value against this impact, or demonstrate the social return on an organisation’s investment (SROI), Supply Nation had to first select the key stakeholders of each organisation they wanted to profile, map the outcomes or change experienced by each stakeholder as a result of their interaction with the Certified Supplier, and then put a financial value against each outcome/change. Once these impacts were identified and valued, they were adjusted for deadweight and attribution. Deadweight estimates the change that would have happened anyway (e.g. how much confidence would the employee have experienced in any other job?) while attribution asks what proportion of the change is due to other influences in the person’s life. For each business, the social value created for each stakeholder was then aggregated, subtracting deadweight and attribution, to get an estimate of the annual social value created by each business. The value of goods and services was assumed to be equal to the money paid for them. The ‘revenue’ for the businesses was the ‘investment’ and the value of goods and services sold was added to the social value to create the ‘return’. For example, the Certified Supplier Global Professional Services International (GPSI) was found to have an SROI ratio of $3.11:$1. This means that every dollar of revenue, created a dollar’s worth of services and an additional $2.11 of social value.
Ultimately, Supply Nation found that across the five profiled businesses, the SROI averaged $4.41 for every dollar of revenue for a Certified Supplier. This means that for every dollar of revenue they generate, in addition to goods and services, Certified Suppliers create an average of $3.41 social value. This demonstrates the significance Indigenous businesses have on the community; proving that not only do they provide a means for economic independence but positive futures for the wider community. Which is why supporting these businesses through initiatives like Supply Nation is so important. They provide a vehicle for change and help Australia in fostering a prosperous, vibrant and diverse business sector that celebrates its rich culture and heritage.
To read the full Sleeping Giants report on the SROI on Supply Nation Certified Suppliers, click here
To find out more about how your business can get involved with Supply Nation, click here:
*the information in this article was derived from Supply Nation’s Sleeping Giants Report