CPG Companies Push for Greater Diversity, Inclusion

CPG Companies Push for Greater Diversity, Inclusion

Denis Storey
April 5, 2021

April 28 Webinar: “Build a Better Business with a More Inclusive Supply Chain”

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April 28 Webinar: “Build a Better Business with a More Inclusive Supply Chain”

Join us for a webinar to learn how to build a more inclusive supply chain. Our panel of experts includes Archer-Daniel-Mills Supplier Inclusion Manager Veronica Johnson and Barilla Supplier Diversity Program Manager, Angenetta Frison.

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Historically, doing good in business was the exception, not the rule. Today, though, consumers want more than just affordable or top-quality products – or both. They want food made by workers who earn a living wage. They want drinks produced sustainably. And they want dietary supplements with a label they can read – and understand.

Today, doing good is just good business.

Shaking Off Stereotypes

Significant changes rippled through the CPG business after protestors took to the streets following George Floyd’s death in May 2020. Brands such as Aunt Jemima, Cream of Wheat, Mrs. Butterworth, and Uncle Ben’s all announced plans to either review their packaging or retire it altogether because of their association with racist stereotypes.

“It’s certainly an unusual marketplace moment when so many brands are rebranding all at once for the exact same reason,” J. Walker Smith, chief knowledge officer of brand and marketing at Kantar, a British market research firm, told Marketing Dive. “There’s no historical precedent for anything like this that I can think of.”

This surge in rebranding follows the high-profile retirement of the Land o’Lakes Native-American mascot earlier in the year.

But perhaps the two most significant changes took place outside of the CPG business, with two major sports franchises – the NFL’s Washington Football Team and the Cleveland MLB team – retiring their racist nicknames.

Wholesale Changes

Rebranding is one thing. While mostly symbolic, it does little to support diversity and inclusion at the companies themselves. CPG giant Unilever plans to do just that.

In January, Unilever announced a three-part strategy to fundamentally change the way it does business. The conglomerate unveiled a plan to boost wages, increase the diversity of its suppliers, and train more skilled younger workers.

By 2030, according to the company’s press release, companies that directly provide goods and services to Unilever must pay their workers a living wage. Additionally, by 2025, Unilever plans to spend $2.44 billion annually with suppliers owned and managed by people from under-represented groups. Finally, by 2030, Unilever expects to equip 10 million young people with essential skills to prepare them for job opportunities.

“The two biggest threats the world faces are climate change and social inequality,” Unilever CEO Alan Jope told Food Business News. “The past year has undoubtedly widened the social divide, and decisive and collective action is needed to build a society that helps to improve livelihoods, embraces diversity, nurtures talent, and offers opportunities for everyone.”

Unilever identifies “under-represented groups” as small- and medium-sized suppliers owned and managed by women, under-represented racial and ethnic groups, people with disabilities, and LGBTQI+ (lesbian, gay, bisexual, transgender, queer, intersex). Unilever also plans to increase the number of advertisements that include people from diverse groups, both on-screen and behind the camera.

Other companies are tackling diversity from the c-suite, with retail giants such as Ferrero and McDonald’s hiring diversity and inclusion directors.

Making a Business Case

Pursuing greater diversity and inclusion is more than embracing a good cause for the sake of optics. There’s ample research that suggests promoting diversity can be as profitable as it is noble. 

The latest McKinsey and Co. research, “Diversity Wins: How Inclusion Matters,” published in May 2020, is the third in a series of studies charting the progress of diversity in American business – and how it’s reflected on the balance sheets. The numbers are impressive:

  • Companies in the top quartile of gender diversity on executive teams were 25% more likely to experience above-average profitability than peer companies in the fourth quartile. This is up from 21% in 2017 and 15% in 2014.

  • Companies with more than 30% women on their executive teams are significantly more likely to outperform those with between 10% and 30% women. These companies, in turn, are more likely to outperform those with fewer or no female executives. As a result, there’s a substantial performance differential — 48% — between the most and least gender-diverse companies.

  • The numbers are remarkably similar for companies with greater ethnic and cultural diversity. McKinsey found that companies in the top quartile outperformed those in the fourth by 36% in terms of profitability. “And, as we have previously found, there continues to be a higher likelihood of outperformance difference with ethnicity than with gender,” the report revealed.

The case for greater diversity and inclusion is a simple one. A greater mix of voices in the boardroom leads to better-informed business decisions. And more diverse marketing efforts reach a broader swath of potential customers. 

Google CEO Sundar Pichai summed it up best when he said, “A diverse mix of voices leads to better discussions, decisions, and outcomes for everyone.”

An inclusive procurement strategy doesn’t just expand the supplier pool. It encourages healthy competition, advances product quality, and cuts costs. Built on a foundation of diverse sourcing opportunities, supply chains emerge more robust and agile.

Creating a supplier diversity program is not without challenges, and even established programs face an uphill battle. Connecting with minority-owned vendors that comply with a buyer’s procurement requirements is another reoccurring obstacle. To reach economic equality, companies must make inclusion programs a priority and find ways to remain accountable.

Join TraceGains for our April 28 webinar, “Build a Better Business with a More Inclusive Supply Chain,” where we reveal established tactics to build a more inclusive supply chain. Our panel of supplier diversity and inclusion experts includes Archer-Daniel-Mills Supplier Inclusion Manager Veronica Johnson and Barilla Supplier Diversity Program Manager Angenetta Frison. Register here.

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