Sustaining Clean Mobility Equity Programs

Executive Summary

Establishing long-term financial sustainability for clean mobility equity programs represents one of the largest challenges that these programs face. In Clean Mobility Equity: A Playbook, The Greenlining Institute conducted an equity evaluation of a selection of California’s clean mobility equity programs, which include electric vehicle carsharing, shared mobility hubs, community-driven mobility pilots and more. Some are still in the pilot project phase and others operate more as full-fledged programs. In this evaluation, a common theme that emerged was that uncertain financial sustainability and stability limits the ability of these programs and pilots to grow and serve more low-income, disadvantaged communities, and communities of color. While the Low Carbon Transportation Program and other state funding sources provided seed funding for many of the clean mobility equity pilot projects that we evaluated, we need strategies to maintain these services after the initial grant runs out.

Therefore, we used Greenlining’s Six Standards for Equitable Investment and the Making Equity Real Framework, to explore several ways that these programs may be able to generate and sustain the funding needed to continue the operation of clean mobility equity programs.

Six Standards for Equitable Investment

Our Greenlined Economy Guidebook introduces six standards for equitable investment that are intended to address the failures of equity in our current models of investment. Without clear standards, we end up reinforcing the structures that caused problems in the first place.

  1. Emphasize Anti-Racist Solutions

  2. Prioritize Multi-Sector Approaches

  3. Deliver Intentional Benefits

  4. Build Community Capacity

  5. Be Community-Driven At Every Stage

  6. Establish Paths Toward Wealth-Building

Making Equity Real Framework

Greenlining’s Making Equity Real Framework can be overlaid with Six Standards for Equitable Investment to ensure that they are applied in a comprehensive manner every step of the way.

1. Vision and Values

  • How will equity be described as a core component in the context of the overall mission/goal?

2. Process

  • How will equity be embedded into the process of how the effort will be developed?
  • How will equity be embedded into its implementation?
  • How will decisions be made or influenced by communities that have less political power or voice?

3. Outcomes

  • How will implementation lead to equity outcomes?
  • What explicit equity outcomes will be described?

2. Measurement and Analysis

  • How will equity progress be measured?
  • How will we know that equity goals and community benefits will be achieved?

This report outlines a variety of concepts that still need much more exploration, development and experimentation. As that unfolds, Greenlining’s Six Standards for Equitable Investment and the Making Equity Real Framework should be applied across the development and implementation of the Four Components of Sustaining Clean Mobility Equity Programs that are laid out below.

Four Components of Sustaining Clean Mobility Equity Programs

The analysis outlined above helped identify four central components of a funding sustainability strategy that we will describe in more detail below:

1. Secure Reliable, Equitable Funding

2. Cultivate Community Partnerships

3. Improve Cash Flow

4. Augment Revenue Sources

Together, these four components aim to support the long-term sustainability both of the overarching clean mobility equity programs and of the specific mobility services and projects that they fund. However, bolstering each of these components will require policy and structural fixes from the top down and from the bottom up. To foster long-term sustainability of both programs and communities, we first need to prioritize the development of community vision, priorities and partnerships.

While many of these examples are California-focused, the recommendations included can also apply to other states and the federal government as they develop their own clean mobility equity programs.

Solving the Medical Debt Crisis

Executive Summary

Medical debt is the number one cause of bankruptcy in the United States, with 62% of bankruptcies caused by medical bills. In 2016, one in six Americans had past due medical bills, resulting in $81 billion in debt. In a 2015 survey by the Kaiser Family Foundation, 26% of Americans aged 18 to 64—52 million— said that they struggled to pay medical bills. Medical expenses were the largest factor increasing the number of people in poverty last year.

Medical debt is not distributed equally across communities:

  • Nationally, about a third of Black adults have past-due medical debt, compared to just under a quarter of White adults.
  • In California, 31% of people of color have some type of past-due debt in collections, compared to only 19% of White residents.
  • Twelve percent of people from communities of color in California owe medical debt.

The COVID-19 pandemic threatens to worsen health disparities and the burden of medical debt on communities of color. Health care costs due to COVID-19 have already left people in severe debt, and layoffs due to COVID leave historical numbers of people unemployed and uninsured. Communities of color have been especially devastated by the pandemic, leaving them especially vulnerable.

Recommendations

  • Expand comprehensive financial assistance policies for all large, for-profit health care facilities, including ambulatory surgical centers and outpatient clinics.
  • End the practice of turning over medical debt to third-party collection agencies and prohibit such agencies from reporting medical debt to credit reporting bureaus.
  • Mandate public reporting of debt collection practices by healthcare providers.
  • Center medical debt elimination as a part of the state’s COVID-19 recovery package via measures such as the proposed COVID-19 Medical Debt
  • Collection Relief Act, which would suspend the collection of medical debt retroactively from February 1, 2020 until the “end of the public health emergency” and ban wage garnishment and bank account seizure.
  • Cancel medical debt outright. The government can purchase medical debt from debt collectors and health care providers at discounted rates, aiding consumers while avoiding a financial windfall for debt collectors.
  • Incorporate debt cancellation into California’s larger strategy toward reparations for racial injustice. Closing the racial wealth gap by addressing debt (including medical debt) in California requires a reparations package for the Black community.

Clean Mobility Equity: A Playbook
Lessons from California’s Clean Transportation Programs

Executive Summary

California is a world leader in climate change policy and programs—and a key cornerstone of the state’s strategy has been decarbonizing the transportation sector. California’s investments in clean transportation programs have ballooned in a relatively short time, and include financial incentives for electric vehicle purchases, electric vehicle carsharing mobility hubs and community-driven clean mobility pilots. These programs range widely to meet various needs across urban, suburban and rural communities. Over time these programs have intentionally centered equity, prioritizing the needs of low-income communities of color. Clean mobility programs can not only help fight climate change and clean the air, they can improve mobility for residents of underserved communities, reduce traffic and dependence on cars, and be engines of economic empowerment that help reduce the racial wealth gap.

We need to better understand whether and how clean transportation programs truly address equity in a comprehensive and effective way and make use of knowledge gained in recent years. This report reviews California’s clean mobility equity programs, noting successes, pitfalls and areas for improvement.

This report serves as both a guide for California as we continue evolving our clean mobility programs to more meaningfully center equity and as a guide for other states and the federal government as they move to develop and implement clean transportation equity programs.

Best Practices that Make Equity Real in Clean Mobility Programs

Over the past three decades, The Greenlining Institute has helped to redirect billions of dollars into the communities we represent, but these programs have always operated within the confines of an extractive and exclusionary economic system. To greenline community investment, we have developed a set of rules to govern funds and programs intended to address poverty and inequity. Without standards, we end up reinforcing the structures that caused these problems in the first place. These standards are meant to address failures of equity in our current community investment model.

In this report we identified 10 ways that California clean mobility programs uphold our equity standards and present them here as best practices that should be replicated and scaled in all clean mobility programs.

  1. Emphasize Anti-Racist Solutions

  2. Prioritize Multi-Sector Approaches

  3. Deliver Intentional Benefits

  4. Build Community Capacity

  5. Be Community-Driven At Every Stage

  6. Establish Paths Toward Wealth-Building

Recommendations

1. Immediately increase funding in California and nationally scale programs that comprehensively approach mobility equity and are led by communities, such as the Sustainable Transportation Equity Project.

  • California has developed community-driven clean mobility equity programs in which residents decide which transportation modes work best for them. Yet compared to other programs, these are insufficiently funded and cannot meet demand. State and federal funds must support mobility programs that holistically reduce greenhouse gases, air pollution and vehicle miles traveled while prioritizing the needs of low-income communities and communities of color. We must prioritize, replicate and scale community-driven clean mobility equity programs.

2. Institute structural reforms to interagency coordination and funding to maximize available resources for clean mobility investments and to target them to the people with the most barriers.

  • California has multiple state agencies pushing forward their own clean mobility programs and investments—all with varying approaches to equity. For example, California’s Air Resources Board and Energy Commission both offer electric vehicle incentives and electric school bus replacement programs. This has led to duplication and inefficiencies. We need a coordinated federal and state strategy that ties together all of these efforts and maximizes available resources and efficiencies.
  • Our limited available electric vehicle incentives should solely be targeted to the people who face the most barriers to access. The Clean Vehicle Rebate Project has been allocated hundreds of millions of dollars over the years, yet it disproportionately benefits middle and higher-income White people. Our limited federal and state funds should instead be designated for more equitable programs like Clean Cars 4 All and the Clean Vehicle Assistance Program that are designed to reduce transportation disparities, not widen them.

3. Phase out programs that continue to entrench our dependency on single-occupancy vehicles.

  • California has disproportionately funneled dollars into the programs that subsidize electric vehicle purchases—yet this is not sufficient to solve the climate crisis. Governments at all levels should still continue to facilitate a transition to vehicle electrification focusing on the people who face the most barriers to access, but in the long run must foster policies that reduce congestion, vehicle trips and unsustainable land use patterns. While some regions are indeed inherently more car dependent, in these areas state and federal funds should fund programs that reduce the need for costly car ownership, such as Our Community CarShare, Green Raiteros, Ecosystem of Shared Mobility, the Agricultural Workers Vanpool Project, the Rural School Bus Pilot and more.

Algorithmic Bias Explained: How Automated Decision-Making Becomes Automated Discrimination

Introduction

Over the last decade, algorithms have replaced decision-makers at all levels of society. Judges, doctors and hiring managers are shifting their responsibilities onto powerful algorithms that promise more data-driven, efficient, accurate and fairer decision-making. However, poorly designed algorithms threaten to amplify systemic racism by reproducing patterns of discrimination and bias that are found in the data algorithms use to learn and make decisions.

The goal of this report is to help advocates and policymakers develop a baseline understanding of algorithmic bias and its impact as it relates to socioeconomic opportunity across multiple sectors. To this end, the report examines biased algorithms in healthcare, at the workplace, within government, in the housing market, in finance, education and in the pricing of goods and services. The report ends by discussing solutions to algorithmic bias, explores the concept of algorithmic greenlining and provides recommendations on how to update our laws to address this growing problem.

What is Algorithmic Bias and Why Does it Matter?

Algorithmic bias occurs when an algorithmic decision creates unfair outcomes that unjustifiably and arbitrarily privilege certain groups over others. This matters because algorithms act as gatekeepers to economic opportunity. Companies and our public institutions use algorithms to decide who gets access to affordable credit, jobs, education, government resources, health care and investment. Addressing algorithmic bias, particularly in critical areas like employment, education, housing and credit, is critical to closing the racial wealth gap.

Recommendations for Fixing Algorithmic Bias

There is a growing body of research outlining the solutions we need to end algorithmic discrimination and build more equitable automated decision systems. This report will provide recommendations on three types of solutions as a starting point:

  1. Algorithmic transparency and accountability
  2. Race-aware algorithms
  3. Algorithmic Greenlining

Investing In Climate Equity

Lesson and Opportunities for Increasing Green Bank Investments in Communities of Color

By Irene Farnsworth & Rawan Elhalaby

Racial and Economic Inequity is the Root of the Problem

The Greenlining Institute’s mission is to advance economic opportunity and empowerment for people of color. Redlining and other manifestations of racism have excluded people of color from homeownership, banking and other forms of wealth building. The disinvestment and disenfranchisement that resulted from redlining locked in poverty and pollution in communities of color.

New, more subtly racist policies persist today, and the effects of this historic and current discrimination are reflected in racial disparities across homeownership rates, income, wealth, access to banking and more. Indeed, people of color are experiencing the lowest levels of wealth in decades, while White communities achieve record wealth. Our recommendations focus on how climate change adaptation and mitigation investments can be tools for wealth-building in communities of color and LMI communities, and how these investments can simultaneously help make communities more resilient to the present and future threat of climate change.

“Energy efficiency isn’t just about the energy aspect – we need to focus more on the impact side. What is it doing for our people? Our communities?”

Duanne Andrade, Solar Energy Fund

Introduction

Investments in green technology, clean energy and climate adaptation are growing rapidly in the United States. In a first, the country is expected to use more renewable energy than coal in 2020, and many banks are starting to expand their loan products and philanthropic investments in “green” products and technologies. While these gains are cause for celebration, the economic benefits of these green investments are not distributed equitably, and the status quo does not serve the needs of communities of color and low- and moderate-income communities (LMI). LMI communities and communities of color bear the brunt of climate change and environmental degradation around the world. The racial wealth gap and larger social and racial inequality in the United. States exacerbate environmental disparities and make it more difficult for communities of color and LMI communities to benefit from green technologies, climate adaptation and clean energy.

Private, green investments have the potential to achieve the dual goals of mitigating climate change and closing the racial wealth gap, but they must be intentional to do so.

The need for banks and financial institutions to increase their sustainable and climate-friendly investments is well known, particularly in communities of color and low-income communities. Currently, these types of investments are funded through a patchwork of grants and loans provided by cities and states, foundations, small and large banks, and community development financial institutions. The private sector lags behind in funding clean energy, and we need its robust participation to reach our climate goals.

This report seeks to learn from existing examples of green investing and offer recommendations for furthering green investments by financial institutions. To that end, this report focuses on the following questions:

  • What are banks and financial institutions currently doing to support green investments in LMI communities and communities of color, and what opportunities exist to expand the amount and scope of investment by incorporating green investments into the Community Reinvestment Act which already obligates banks to meet the credit needs of low-income communities?
  • How have local and state governments incentivized investments by financial institutions in LMI communities and communities of color to participate in green technologies, and what lessons can be learned from these examples?
  • How can these investments translate into wealth and asset building opportunities for communities of color?

We also offer recommendations for how the financial sector, nonprofit organizations and advocates can work together to direct banks’ community investments in a racially equitable and environmentally responsible way.

Building a Diverse, Equitable, and Inclusive Cleantech Industry

Introduction:

The Greenlining Institute has advocated for racial and economic justice since our inception in the early 1990’s,1 and we believe that diversity, equity and inclusion should be used as tools for racial justice to benefit low-income communities of color. This report focuses on the need for DEI in the cleantech industry, and particularly on startup companies in this growing field. California’s clean energy economy, powered in part by the cleantech sector, is creating good jobs and simultaneously helping the state meet its climate goals. This projected economic growth is ripe for policies, strategies and programs to promote DEI. Throughout this report, we will explore the challenges and opportunities of how small, emerging cleantech companies and their collective industry can advance DEI in their products, services and companies with the ultimate goal of bringing underserved communities to the forefront of the clean energy future.

Purpose of This Report and the Intended Audience

This resource guide is a compilation of the key recommendations we have provided to the early stage CalSEED cleantech companies. It is intended for very early stage cleantech startup companies that are working to advance “technology that places an emphasis on environmentally friendly products, services or practices.”4 We acknowledge that many early stage companies may not have a large number of employees or significant financial resources to, for instance, staff a team of DEI experts. However, we believe that there are several DEI strategies that early stage companies can implement from a company’s inception, and the recommendations we offer are meant to serve as a starting point to building robust DEI practices in a company. This guide is not intended for utilities, energy service providers, state and local agencies, government or other regulators of energy services.

At Greenlining, we understand that DEI must be a long-term and continual effort that is meaningfully embedded into all aspects of a company, internally and externally. Internally, DEI must show up in the workplace culture, policies and processes inside the company in order to ensure employee and employer well-being. Externally, DEI can be used as a tool to create social impact in cleantech products and services that can help create equitable outcomes for underserved communities. Part I of this guide provides foundational information about DEI in small, early stage cleantech companies by defining key terms and explaining the vital importance of incorporating DEI values and policies at the early stages of those companies’ inception. Part II reflects on the challenges currently present for small, early stage cleantech companies and offers strategies for how to advance DEI in startup companies that provide cleantech products and services.

2020 Bank Board Diversity

Communities of color have historically been and continue to be excluded from powerful positions in government, corporations and financial institutions. For three decades, The Greenlining Institute has advocated for racial inclusion in spaces of power, including corporate boards of directors. These institutions broker power and negotiate racial equity, ultimately deciding who gets access to capital, what resources a child inherits, who can own a home and who can start a business. The COVID-19 pandemic has compounded inequities in communities of color:

Black and Brown communities have disproportionately suffered, with deaths at a rate at least two times higher than other racial groups. Forty-one percent of Black business owners are experiencing significant decreases in revenue, and job losses are higher for all communities of color.1 The compounding inequities exacerbated by COVID-19 remind us that representation in decision-making positions matters, as we again examine the executive boards of California’s top financial institutions.

Why Diverse Bank Boards Matter:

Increased diversity and inclusion in the executive boards of financial institutions is not enough to make financial services and access to capital available to women and people of color. However, boards set the culture at banks. Greenlining’s Diversity, Equity and Inclusion Framework8 shows that when companies intentionally create diverse, equitable and inclusive work environments, they help to correct income disparities that then inform broader economic conditions in marginalized communities. For financial institutions especially, leadership and senior management should reflect the communities they serve in order to create inclusive decision-making bodies and promote a system of shared prosperity that ensures accessible capital and financial services.

Banks doing business in California should reflect a state population of more than 64% people of color. In order to fight redlining and promote economic development in communities of color, boards need to reflect the diversity of the population they serve and consider equity when recruiting board members.

Additionally, research shows that companies in the top quartile for ethnic diversity are 30% more likely to have financial returns above their industry’s national average.9 And companies with greater gender diversity are 15% more likely to achieve the same. Diverse businesses outperform homogenous companies, keep top talent, maintain employee satisfaction, improve customer relationships, and create a cycle of increasing returns.

Report Findings:

Bank Boards are Still Not Diverse

While California's top banks have made some strides in increasing board diversity over the years, progress largely stalled this year. There still remains a pressing need to include more people of color, especially women of color. In most cases where we were able to compare 2020 figures with 2019, diversity remained the same or decreased.

  • Racial Diversity: East West Bank ranked highest, with people of color making up 63% of the board (five of eight board members).
  • Gender Diversity: Citibank ranked highest, with women making up 44% of the board (seven of 16 board members).
  • Women of Color: East West Bank ranked highest, with women of color making up 25% of their board (two of 8 board members).

Home Lending to Communities of Color in California

Home Lending to Communities of Color in California

Owning a home is the primary way most Americans build wealth for their families, yet what is a modest goal in most parts of the country is being pushed further and further out of reach for most people of color in California. While the homeownership gap is an issue throughout the country, the rate of Black and Latino homeownership is significantly worse in California compared to other states. At the national level, the Black and Latino homeownership rates are 42 percent and 47 percent, respectively, compared to 35 percent and 42 percent in California.

Home lenders, including both traditional banks and non-bank lenders, have an important role to play in ensuring that all communities have access to affordable, safe home loans that increase family wealth and reduce the racial wealth gap.

The Greenlining Institute assessed Home Mortgage Disclosure Act lending data from six metropolitan areas of California: Sacramento, San Francisco, Oakland, Fresno, Los Angeles and San Diego. This report evaluates the lending overall in those regions and the top 15 lenders in each region for 2019. Although there are slight variations among the largest lenders for each region, the findings across the regions were consistent.

Report Findings:

  • Communities of color do not access home purchase loans at rates comparable to White communities. Specifically, Latino households access 22 percent of the state’s home purchase loans, despite making up over 39 percent of the population, and Black households access three percent of home loans, while making up over five percent of the population. White households are especially overrepresented in home purchase originations relative to their share of the population.
  • Women of color receive seven percent of home purchase loans by the top lenders in California, while making up 30 percent of the state's population. Women of color are underrepresented in their share of home purchase loans and are more likely to access a loan from a non-bank lender than from a mainstream bank. The disproportionate caretaking burdens and responsibilities of women of color are compounded with a wage gap and wealth gap that widen with an inability to access home loans.
  • Low-income White borrowers are more likely than low-income borrowers of color to receive a home loan. In several regional markets, some lenders do not make any loans to low-income borrowers from communities of color. When Black, Asian and Latino low-income households do access home purchase loans, it is more likely to be from a non- bank lenders.
  • Non-bank lenders are more likely to make home loans to low-income borrowers than traditional banks. In several regional markets, non-bank lenders make twice as many home purchase loans to low-income borrowers as mainstream banks.
  • Non-bank lenders dominate several regional markets in California and play an increasing role in home lending across the state. In California, nine of the top 15 home purchase lenders are unregulated non-bank lenders that do not offer traditional banking services, operate largely online, and are not subject to the Community Reinvestment Act, so their lending is not regularly assessed to determine whether they meet the credit and borrowing needs of the communities where they operate. In our analysis, Black and Latino households were more likely than other racial groups to access home purchase loans from non-bank lenders.

Report Recommendations

Homeownership is the bedrock of wealth building. It is critical that home lending increases to communities of color in order to establish financial stability for future generations. This will require a comprehensive effort by non-bank lenders, traditional banks, financial regulators and state and federal policymakers to ensure that a continuous practice of racial equity and transparency is applied to the deployment of products, services and investments.

In light of our research, The Greenlining Institute recommends the following steps be taken:

  1. More loan products and outreach tailored to low and moderate income families. These targeted investments in communities are not only the right thing to do, they will lead to increased business for lenders and improve a lender’s bottom line.
  2. More funding to nonprofits led by people of color to support homeownership counseling. It is important that first-time homeowners, especially those from communities which are often targeted by predatory lending, have as much information and training as possible to help them make important financial decisions during the home buying process.
  3. Increase branch presence in rural communities as well as support for broadband deployment. Rural communities, especially communities of color, are often left out of most traditional banks’ footprint. Increased attention must be paid to both bank branches as well as philanthropic support for broadband deployment in underserved communities, which becomes absolutely vital as more and more banking services shift online.
  4. Increase cultural competency in both products and marketing. Lenders should invest heavily in ethnic media for their marketing efforts, which will help them both ensure that they reach consumers not well served by mainstream media as well as help to support businesses owned by people of color. Further, lenders should prioritize delivering their products and services in the languages spoken by California’s diverse communities and ensure that all communities, regardless of English proficiency, are protected against predatory practices and treated fairly.
  5. Stronger, win-win community partnerships. Lenders, regardless of whether they are traditional banks, FinTech firms or non-bank mortgage institutions, should meet with California community groups annually to hear from those most impacted by their lending practices.
  6. More targeted support from federal and state regulators. At the federal level, the Home Mortgage Disclosure Act should be made stronger, more accessible, with easier to access data that is disaggregated by different racial and ethnic communities. At the state level, California regulators should help to lead the discussion around the evolving, technology-oriented mortgage market with the goal of incentivizing innovation and lower costs while protecting consumers and underserved communities.

Californians Deserve To Breathe Clean Air — Indoors and Out

CALIFORNIANS DESERVE TO BREATHE CLEAN AIR - INDOORS AND OUT

WE NEED HEALTHY, AFfordable, FOSSIL FUEL-FREE HOMES NOW!

The Greenlining Institute | California Environmental Justice Alliance

GOV. NEWSOM CAN CREATE JOBS & PROTECT GROWING LUNGS BY UPGRADING HOMES to run on clean Energy

Want to do more?

Tell the Newsom Administration that racial equity can't wait! Call (279) 202-3099 to tell Gov. Gavin Newsom that he needs to support healthy, affordable, fossil fuel-free homes now!

Amid unprecedented and compounding crises, Californians of all walks of life are coming together to demand transformative action to combat the climate crisis by protecting communities from fossil fuel pollution—and Governor Newsom is listening. 

One of the next steps to creating resilient, secure and healthy neighborhoods for all is to replace fossil fuels with clean electricity in our homes and buildings. Because the costs and burdens of climate change and California’s fossil fuel system disproportionately fall on Black, Indigenous and people of color (BIPOC) and disadvantaged communities due to a legacy of historic disinvestment, the movement for all-electric homes must start in these communities and center equity. 

We’re calling on the Newsom Administration to take four key steps to create jobs and improve the health and well-being for those who have been hardest hit by the COVID-19 pandemic: 

  • PHASE DIRTY FOSSIL FUELS OUT OF 20% OF HOMES BY 2030 STARTING WITH LOW-INCOME & ENVIRONMENTAL JUSTICE COMMUNITIES
  • CREATE HIGH QUALITY JOBS RETROFITTING BUILDINGS WITH CLEAN ENERGY
  • ENSURE NEW HOMES ARE NOT POWERED BY FOSSIL FUELS
  • ENSURE THAT ENVIRONMENTAL JUSTICE AND LOW INCOME COMMUNITIES ARE BENEFITING FROM, NOT BURDENED BY,  THE TRANSITION

Many Californians do not have the opportunity to avoid air pollution - because even as wildfire smoke and polluting industries threaten our health outdoors, gas appliances indoors fill our homes with much of the same dangerous pollution found in car exhaust. This is why, today, our most vulnerable residents across the state are sheltering in place in unhealthy homes. We know we must move off gas to combat climate change and improve public health, yet California continues to expand this fossil fuel network -- which locks us into decades of pollution, risks significantly increasing already high energy bills for low-income gas customers as time goes on, and drives up the cost of housing.

Please join The Greenlining Institute, California Environmental Justice Alliance and other partners to call on Gov. Newsom to deliver clean energy, healthy homes to ALL Californians. 

IMPORTANT NOTICE: Your message is delivered to a public agency, and all information submitted may be placed in the public record. Do not submit confidential information.

2020 Supplier Diversity Report Card

Uneven Progress in Challenging Times

America’s racial wealth gap was created by deliberate policy choices based on race, and solutions that don’t consider race and ethnicity simply won’t work. As our country tackles problems that disproportionately affect communities of color, from income and wealth inequality to climate change, we must face the origins of these challenges head-on. Historically, when public utilities contracted with outside suppliers, they did so using an “old-boy” network, which denied economic opportunity to businesses owned by people of color and by other historically marginalized groups.

Always on the cutting edge, California and many of the companies that operate here have long recognized that diversity is integral to good business, and that a diverse workforce and diverse procurement investment can help companies venture into new markets and increase shareholder value. Nowhere is this culture more apparent than in the groundbreaking supplier diversity efforts taken on by utility companies under the guiding principles of the California Public Utilities Commission’s General Order 156. The CPUC’s model for promoting supplier diversity in the industries it regulates has withstood the test of time and, when the policy is made a priority by the sitting commissioners, it has generated unprecedented results.

Greenlining’s Supplier Diversity Report Card grades California’s energy, communications and water companies based on the supplier diversity reports the companies file with the California Public Utilities Commission. Our rankings are based on performance and improvement: Grades are primarily determined by the companies’ percentage spending, with adjustments made for significant increases or decreases compared to the previous year.

We break down spending by ethnic categories, as well as minority women-, disabled veteran-, and LGBTQ-owned suppliers. We make recommendations based on what we see in the numbers and what we hear from the companies themselves about their programs and practices. We advocate for supplier diversity because it creates economic gains on all sides: It promotes economic development in diverse communities, and by increasing competition and diversity in the supply chain, generates a better return on investment for companies that meaningfully engage in it.

Summary of Findings

California’s energy, telecommunications and water companies remain at the forefront of supplier diversity achievements, with a “class average” well above their peers nationwide. However, companies could still do more to increase their contracting with diverse suppliers. In 2019, figures reported by the companies to the California Public Utilities Commission show that:

  • Only eight of the 22 companies included in our report improved their percentage of procurement dollars spent with Minority Business Enterprises in 2018. A broad gap remains between high performers and low performers—eight companies’ combined $593 million increase in dollar spending with MBEs offset the combined $372 million decrease by the other 14 companies.
  • With the exception of AT&T California, AT&T Wireless and California American Water, the companies’ spending with Black- Owned Business Enterprises continued to be a challenge. The companies’ combined spending with Black-owned suppliers fell almost 10 percent, while the companies’ combined dollar spending with Black women-owned suppliers dropped almost 37 percent.
  • While the companies’ spending on Asian American/Pacific Islander suppliers remained steady, just half of the companies showed improvement in this category.
  • Less than half of the companies increased their spending with Latino suppliers. Overall dollar spending in this category declined by over $32 million and remains unacceptably low.
  • The companies’ spending with Native American suppliers continued to see improvement, with 50 percent of companies reporting increased spending.
  • The companies’ spending with women-owned suppliers stayed relatively flat in 2019, dropping by almost $13 million. Promisingly, dollar spending with minority women-owned suppliers increased by almost $201 million.
  • The companies’ spending on LGBTQ-owned suppliers remained flat and still has a long way to go.
  • The companies’ spending with disabled veteran-owned suppliers continued to slip.

This year, only two companies (Verizon/MCI and Verizon Wireless) exceeded 30 percent procurement with minority-owned businesses. While their results were inconsistent, the companies spent a combined $9.4 billion with businesses owned by people of color, a $220 million increase over 2018. For the past several years, the water companies have engaged in a joint effort to create data-driven best practices that are showing measurable results. The water companies’ grades reflect this increased commitment.

Report Recommendations

1. Companies must focus on all categories. The companies’ overall performance in 2019 was for the most part adequate, but some categories still need improvement. Companies need to focus specifically on increasing their spending with Latino/Latina- and Black-owned suppliers, particularly Black women-owned suppliers.
2. Companies must address the marketplace availability of suppliers. The companies often report challenges with diverse spending in specific categories of work—for example, line construction and maintenance. This is especially challenging when a category of work with a lack of diverse suppliers constitutes a major portion of a company’s spending. For example, wireless companies often complain that there are no diverse suppliers of telephone handsets, and that they spend more on telephone handsets than any other company. Some companies have implemented successful short- and long-term solutions for this challenge. In the short term, they compensate for low diverse
spending in one category by increasing diverse spending in other categories. To address the problem in the long-term, they need to work with community-based organizations and national certifying organizations to identify diverse suppliers, technical assistance and capacity building for subcontractors, and speaking to investors about investing in diverse companies. All of the companies should be engaging in these best practices.
The contracting needs of specific companies can vary wildly, particularly from sector to sector. For example, a large part of electric utilities’ contracting involves electric line construction and maintenance work. There are, apparently, only two Black-owned contractors in the United States that do this work. While both of them are located in California, only one of them is certified as an MBE. This, of course, makes it difficult for electric utilities to contract with Black-owned suppliers for line construction work. In these instances, it is important for companies to identify, and help build the capacity of, companies that could potentially do the work.
3. Companies must include supplier diversity requirements when issuing Requests for Proposal (RFPs). Some companies reported including supplier diversity requirements in their RFP process (an RFP is, essentially, an invitation to bid on a specific contract). For example, Southern California Edison set a goal that at least 50 percent of bids on outside contracts come from diverse companies (according to the company, it not only achieved, but exceeded that goal, with an impressive 60 percent
of bids coming from diverse companies). Other companies reported imposing supplier diversity requirements on their direct contractors, requiring those direct contractors to identify and work with diverse subcontractors. Unfortunately, some companies do not appear to have implemented these best practices. We encourage them to do so.
4. Companies must plan ahead for supplier diversity spending. Some companies reported large drops in a category as a result of losing a contract with only one supplier, either as a result of a special project ending, a supplier’s closing down, or a supplier’s being acquired by a non-diverse company. Companies must plan early to identify diverse suppliers well in advance of these situations.
5. Supplier diversity programs must evolve to respond to the COVID-19 pandemic. The COVID-19 pandemic has severely disrupted companies’ plans—every single company we spoke with described the changes they would have to make in response to the pandemic. We commend the companies for taking steps to ensure that
their employees are healthy and safe and that their customers are not disconnected, and we encourage the companies to take action to provide the same security to their suppliers. Some companies reported planning to reduce or slow their spending in 2020 in response to the pandemic, and some reported having already done so.
Other companies reported plans to increase their spending, especially on contracts for strengthening and resiliency measures for their infrastructure in anticipation of wildfire season. Companies that reduce their spending in 2020 must ensure that diverse businesses do not bear the brunt of those spending reductions. Similarly, companies that increase their spending in 2020 must be vigilant about identifying and working with diverse suppliers.

The COVID-19 pandemic created a surge of demand for personal protective equipment for the companies’ employees, many of whom are essential workers. Many of the companies identified the need for PPE as a supplier diversity opportunity and sought out diverse suppliers that could pivot to making, storing and distributing PPE. The companies' response to the need for PPE is a shining example of supplier diversity done right, and we thank them for recognizing the importance of contracting with diverse businesses, especially in times of crisis.

Many of the companies also reported increased efforts to ensure that their contractors can weather the pandemic, including streamlining the invoicing process, accelerating payment, and in some instances, even making advance payments for work.