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Mark P. Lagon – Centennial Fellow: Global Justice Blog


mark-lagonAmbassador Mark P. Lagon is a SFS Centennial Fellow and Distinguished Senior Scholar. Lagon most recently served as President of Freedom House, an international nonprofit devoted to research and programs advancing human rights and democratic governance.

The Global Justice Blog addresses ethics, international law, and human rights in today’s fractured world. Centennial Fellow Mark P. Lagon and guest bloggers will grapple will raise key issues and dilemmas among these priorities and strengths of the Walsh School of Foreign Service. A parallel Global Justice Lecture Series will interest readers.

 


Empowering Women Entrepreneurs in Corporate Supply Chains: Aspirations and Reality

Posted: May 19, 2017, 1:49 pm

By Mahveen Azam, MSFS’11

Photo: This was taken on March 31st, 2017 in Islamabad at the Supply Chain Diversity Expo organized by USPWC and WECREATE  The Expo brought together USPWC corporate members and women owned businesses to facilitate information exchange which can lead to potentially more women in corporate supply chains. Here is the owner of a business showing the products and interacting with a corporate representative.

[Mahveen Azam works for the U.S.-Pakistan Women’s Council. The Council is a partnership between the U.S. State Department and American University to promote women’s participation in Pakistani workforce.]

The linkages between women’s empowerment and corporate sector and the background behind this relationship are more complicated than meets the eye.

A growing body of research identifies women as the “world’s most underutilized resource,” and proves that women empowerment and participation in the workforce bears enduring social, economic and health benefits. Over the years, gender-specific economic growth programs have continued to be a major focus of most of the bilateral and multilateral donors.  However, such efforts remain isolated and limited in impact – underscoring the need for a more comprehensive, integrated and multi-actor approach.

Out of all actors, the corporate sector is increasingly seen as the most well-positioned to leverage lasting women empowerment through an integrated approach. A report commissioned by Oak Foundation defines this integrated approach as the one which

addresses the underlying structural barriers to women’s economic empowerment. It utilizes all of a company’s potential levers to create impact: people, investments, brand, customers, purchasing power and partnerships.

Partners of the corporate sector may include industry peers, non-profit organizations, government policymakers, investors, and social entrepreneurs. This approach aims to impact women along the complete supply chain as suppliers/distributors, employees, customers, and members of the community.

In their report, “The Business of Empowering Women,” McKinsey & Company researchers note, “64 percent of companies surveyed in the United States stated investments in women had or would increase employee productivity and retention in emerging market.” The Oak Foundation report also argues in support of women-focused impact investment, calling it a smart business strategy paying off in enhanced productivity, reduced employee turnover, and creation of sustainable consumer markets. An Ernst & Young (EY) study titled “The State of Sustainable Supply Chains: Building Responsible and Resilient Supply Chains,” explores “how companies are embedding sustainability in their supply chains by managing risks and adopting corporate commitments to human rights, ethics, the environment and the communities from which they source goods and services.”  The report recommends diversity in supply chains by emphasizing the competitive edge the practice generates through more innovation; efficiency; growth of products and services serving multicultural and female consumers; and global market penetration. Brand recognition, enhanced reputation, and appeal to value-driven stakeholders are a few more of the benefits stemming from such initiatives.

Business leaders like Sir Ronald Cohen – also the Chairman of the Global Social Impact Investment Steering Group – are stepping forward saying “Investors in the 19th century talked about return, in the 20th about risk and return, and in 21st century, it is risk, return and impact.”

While we may have to wait for a few more decades to witness the full manifestation of this statement across the board, emerging trends in that direction have certainly been positive. “Impact”-oriented investments have begun to take place in the corporate sector or the newly emerging “fourth sector,” defined as “for-benefit organizations that primarily pursue social or environmental aims, while raising a substantial proportion of their revenue through earned income or commercial activities.”

The Reality:

In terms of gender-focused impact investment, the bulk of the work has occurred on the fringes of business operations, usually carried out by corporate foundations or the corporate entities themselves through small-scale programs primarily concentrated on bringing women into the supply chains. The aforementioned EY/UN Compact report, though supportive of supply chain diversity, does caution that such programs are “not easy.”

Companies like Coca-Cola, PepsiCo, and Walmart have taken the lead in rolling-out large programs geared towards advancing employment and entrepreneurship. Coca Cola’s “5by20” initiative launched in 2010 seeks to empower 5 million women entrepreneurs across the company’s value chain by 2020 in more than 200 countries around the world by offering business skills training courses, financial services, and connections with peers or mentors. PepsiCo has been running a strong, inclusive supply chain program for decades, and so far has spent USD 20 billion on minority and women-owned entrepreneurs (MWBEs). In 2011, Walmart kicked off programs to train 200,000 women in retail, start an e-commerce outlet to feature products created by women, and provide grants amounting to US $ 100 million to boost women-led enterprises.

One of the major initiatives of the US Pakistan Women’s Council (USPWC) called the Supply Chain Diversity Initiative focuses on women-owned enterprises in Pakistan and facilitating their growth through linking them up with academic and training institutions, local and multinational corporations, and capacity building organizations.

Let’s explore some of the insights that USPWC has captured through its work in Pakistan, whose small and medium enterprise (SME) environment for women more or less mirrors the same characteristics as the majority of the developing world. In Pakistan, growth of SMEs is constrained by the country’s limited technology base, access to finance, market information, skill development opportunities, and value addition—plus many regulatory hurdles. Making matters more complicated are the added layers of gender-based cultural and religious biases that women-led SMEs face. Some of the biggest gaps identified by women-owned businesses participating in USPWC’s Supply Chain Diversity Initiative include limited networking opportunities with the private sector, access to finance, family backing, self-confidence, and role models and mentors, as well as competing household obligations including childcare. The British Journal of Education, Society & Behavioral Science in its report on the gender-specific barriers adds lack of mobility, discrimination, and men’s grip on the market to this list of barriers. With these challenges at hand, it comes as no surprise when World Economic Forum’s Global Gender Gap Report 2016 ranks Pakistan 143th of 144 nations ranked on women’s economic participation and opportunity index.  

Given this general situation, there are a number of key lessons learned by USPWC through its Supply Chain Initiative. First, consistent engagement with corporates to cultivate relations with them and informing and educating them about the benefits of having women entrepreneurs in their supply chain is critical. For the last two years, USPWC has been providing shared value platforms to identify and close capacity- and information-gaps between women entrepreneurs and the private sector. Even though the road ahead is clearly long and bumpy, the Council’s grassroots-level coordination work with the local and Pakistan-based multinationals has engendered promising interest followed by suggestions by corporations themselves and concrete initial steps to absorb women entrepreneurs into their supply chains.

USPWC’s engagement with the leaders of the companies has always paid off in more support for its initiatives. If a company is to graduate from a single corporate social responsibility department overseeing a few efforts on the sidelines of its operations to embedding inclusive diversity at the institutional level, buy-in from the leadership of the company is imperative. As the EY/UN Global Compact report notes, “executive ownership” is critical to adopting the change. Walmart, Pepsi,and Coca Cola launched their prodigious gender inclusive commitments with the active blessing and stewardship of their leaders.  With more than 1453 business leaders around the world committing to gender equality through the Women’s Empowerment Principles (WEPs), the future looks promising.

Before diving into any initiative, companies should gain a thorough understanding of all their functional units along their own supply chain. This assessment may eventually be followed by gauging needs that can be potentially catered by women entrepreneurs. USPWC’s networking events have allowed its member corporations to identify a few sectors that may have the flexibility to accommodate women entrepreneurs into their supply chain.  A similar lesson emerged from Harvard Kennedy School of Government’s study of Coca Cola’s “5by20” plan as well. The global team sits with the leaders of local supply chain units to understand their goals and identify the points of entry for women entrepreneurs. The joint global and local team collaborates with key stakeholders to create a plan that factors in the cultural context and needs of women-owned businesses.

USPWC’s corporate members are alert to the challenge of lack of compliance with global standards in goods and services sourced from local women-owned businesses. A Devex article studying Walmart’s “ambitious undertaking,” similarly concludes “that bridging the gap between a large multinational and small women-owned businesses will require both types of entities to change their business practices.” The article mentions Walmart leaders’ struggles to “scale down” their compliance systems to accommodate small businesses in the supply chains.

Based on these lessons, “it’s the right thing to do” approach may not be enough to convince private sector to act decisively to promote female empowerment in a context of free markets driven by laws of efficiency, economies of scale, and profit-making.

Despite making a strong business case for diversity in supply chains, most of the studies available are not backed by strong evidence. Inclusive supply chain models currently stand at a low level of maturity and there exists no long-term data yielding conclusive evidence. The Harvard Kennedy School Report on Coca Cola’s “5by20” initiative alludes to the challenges in how to define success when it comes to gender diversity in the supply chain, saying, “ To date, its global supplier diversity goals have been set in terms of procurement dollars spent, while its 5by20 goals have to do with the number of women reached. “ As Walmart realized,

“if you really want to integrate women into global supply chains, you’ll have to hold their hands and walk together with them in the process. That’s the challenge for Wal-Mart or any large corporation.”

This handholding demands attention and resources from all concerned partners, not just the corporations. As the leaders in supply chain diversity keep marching forward and blazing trails, the rest of the private sector should be guided and encouraged to gradually ease its way into these new territories reaching first for the low hanging fruit.

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