“We have a real opportunity through procurement to impact our global communities by generating revenue, creating jobs and driving inclusive growth,” says Eric Smith, Global Head of Supplier Assurance Services at JPMorgan Chase. “And an important component of procurement is supplier diversity, one of the most direct ways to address economic inequality.” For almost three decades, the firm has been committed to engaging with diverse suppliers. But with JPMorgan’s recent US$30bn commitment to help close the racial wealth gap, the firm is focusing on key drivers of wealth that help drive equity, and inclusion — providing additional small business loans, improving access to low-cost savings accounts, financing affordable housing units, and supporting diverse suppliers, including spending US$750mn more with Black, Hispanic and Latino-owned businesses by 2025.
Increasing Diverse Supplier Spend by US$6bn
Above and beyond its US$30bn commitment, JPMorgan Chase is developing creative approaches to scaling its support for supplier diversity. First, the firm is working with its top suppliers to drive a combined increase in spend with diverse businesses by more than US$6bn, with US$1.2bn going to Black, Hispanic and Latino-owned companies. While the goal is to reach these spend increases over the next three years, the larger purpose is to have other corporations develop sustainable diversity programmes that will generate new revenue for diverse businesses for decades into the future.
Meeting a mission to support diversity, equity and inclusion will involve forging new paths and encouraging shifts in the overall culture of the business community. But Smith and his team understand that one company can’t drive impact alone. It takes a commitment from large and small companies across all industries.
Today, if a supplier wants to do business with JPMorgan Chase, it must demonstrate that it has established a diversity, equity and inclusion infrastructure and culture. According to Smith, that means engaging in active conversations with existing suppliers and building diversity, equity and inclusion into the firm’s minimum control requirements. For example, JPMorgan Chase now asks its suppliers annual diversity, equity, and inclusion questions to ensure that their diversity programmes align with the firm’s values.
Diversity is now a finding on the firm’s overall annual assessment that may require remediation and conversation. “Our suppliers need to embrace the need for diversity,” Smith says. “We conduct business with suppliers that have similar values, that have a similar culture, that have a similar drive for inclusion.”
Cyber-Readiness for Black and Hispanic Suppliers
Supplier spend isn’t the only aspect of JPMorgan Chase’s push for greater inclusion. Diverse business owners often need other forms of support. For instance, they may not have a clear picture of gaps in their technology infrastructure, which could potentially disqualify them for work with financial institutions.
Additionally, the coronavirus pandemic highlighted new vulnerabilities that emerged from suppliers having to work remotely. “The pandemic revealed new cybersecurity risks to the firm,” Smith explains. “We realised that many of our suppliers, when forced to send their employees home, weren’t ready to execute their resiliency plans. We saw suppliers being impacted by ransomware. And that reshaped the minimum control requirements we have around cybersecurity.”
To assist diverse suppliers in getting their businesses secure and cyber-ready for financial industry clients, JPMorgan Chase recently partnered with TruSight, a risk management utility co-founded by JPMorgan Chase, American Express, Bank of America, Bank of New York Mellon, and Wells Fargo. The firm is using this utility to provide Black-and-Hispanic-owned companies with a detailed view of their cybersecurity status. TruSight reviews several best-practice areas across a company’s operations, collects observations about their control environment and generates a report or assessment of their level of security.
JPMorgan Chase’s TruSight partnership programme aims to eliminate a common barrier to opportunity with financial industry firms, by making cyber-readiness more accessible for diverse suppliers. So far, TruSight has provided 25 diverse suppliers in JPMorgan Chase’s pilot programme with complimentary assessments. These assessments provide each diverse supplier with direct feedback on which cybersecurity controls they must increase to improve their industry positioning.
After these suppliers receive their TruSight assessment results, they have an opportunity to work with several consulting organisations, including Deloitte, Ernst & Young, and Protiviti — to navigate steps towards remediation. This is a service they can receive free-of-charge. Remediation complete, diverse suppliers are more prepared to take contract opportunities with JPMorgan Chase as well as other financial institutions.
However, this programme provides additional benefits to participants that go beyond generating reports and remediation plans. It surrounds the supplier with a network of new relationships — both with other diverse business owners, and also with all of TruSight’s founding banks. Throughout the programme, cohort members are given the opportunity to present their capabilities to several financial institutions they can potentially work with.
Though JPMorgan Chase’s TruSight cybersecurity programme may expand in the future, Eric’s division is currently set on championing its initial cohort of 25 Black and Hispanic suppliers. 60% of the way through the first set of assessments, JPMorgan Chase is seeing the results it expected: some suppliers are well-positioned to start working with financial institutions; others may benefit from working with a top consulting firm.
Breaking Down Barriers to Inclusion
Access to capital is a common challenge faced by diverse businesses, so meeting industry requirements like cybersecurity, insurance, and bonding is often cost-prohibitive. Satisfying these requirements can cost a typical small business over US$100,000, creating another barrier to entry into the financial services industry.
To address this issue, the firm is launching a grant programme for Black, Hispanic and Latino-owned companies to provide financial assistance in meeting minimum requirements for doing business with large corporations.
At the start of this new year, Smith will be focused on supporting the initial supplier cohort as they complete the assessment and consulting process. The TruSight programme aims to act as a stepping stone for diverse suppliers to gain more contracting options within the financial services industry. “The programme is about opening doors for diverse suppliers,” Smith explains. “About eliminating barriers to opportunity.”
The Future of DEI in Finance
Smith’s division aims to lead the path forward. “We all know that we need to do better in diversity, equity, and inclusion,” he says. Financial institutions have realised that they need to expand their view of services and contractors, companies and businesses — and that the old ways will need to change for them to thrive in the future.
“Diversity should be ingrained in the culture of not just the procurement organisation, but the company as a whole,” Smith says. “When we are focused and intentional, the procurement organisation can serve as a very effective tool in furthering diversity, equity and inclusion throughout the firm and the wider business community. When it comes to supplier diversity, the best practice is to prioritise it”.