Entrepreneurship is a key element of the American Dream. For millions of Americans, starting and owning a business has been the route to success and security. According to the U.S. Small Business Administration, people of color own 4.1 million firms that generate $694 billion in revenues and employ 4.8 million people, but communities of color continue to lag behind whites in terms of small business ownership and profit.
Recognizing the difficulty that diverse small businesses faced in trying to break through “old boy networks” to obtain contracting opportunities with major corporations, the state of California has created a landmark supplier diversity program for utilities and telecommunications companies regulated by the California Public Utilities Commission (CPUC). Under the leadership of the CPUC’s General Order 156, these companies have developed robust supplier diversity programs that have developed over the past two decades into the national gold standard.
Adopted as a result of legislation passed in 1988, GO 156 has made it state policy to promote the interests of diverse businesses to “maintain and strengthen the overall economy of the state.” It requires the state’s regulated utilities and telecommunications companies to annually report their percentages of contracts given to businesses owned by women, disabled veterans and people of color (collectively, “diverse business enterprises”).
By creating economic opportunities in communities most in need of them, supplier diversity helps to stimulate the entire state economy. And by encouraging diverse businesses to compete with entrenched suppliers, it also helps the utility and telecom companies to obtain better products and services at lower prices.
The Greenlining Institute plays a key role in facilitating this program by analyzing the supplier diversity data reported annually by the companies. We compile this analysis into our annual Supplier Diversity Report Card, issued in late spring each year. The report card grades the firms on their performance and breaks down spending by ethnic categories and industrial categories for each company. The only analysis of its kind in California, Greenlining’s annual report card plays an important part in facilitating progress and holding companies accountable for their performance.
Greenlining believes that GO 156 is a model that can be adapted to a wide variety of industries and circumstances, and that doing so will help diverse small businesses and increase the vibrancy of America’s economy.
We are actively working in select areas to promote the model.