Inclusive Economy: How JPMorgan Chase Empowers Businesses

JP Morgan Chase’s Global Supplier Diversity initiative has long been a gamechanger for businesses owned by historically underrepresented groups, with over US$3bn spent last year, directly and indirectly, on those companies.

Ted Archer, Head of Business Partner Diversity, says: “JPMorgan Chase brings size, scale and expertise to all of its business practices and the long history of its supplier diversity strategy gives the firm the advantage of experience.

“We’ve learnt over the years that local community and supplier relationships are key components to success.”

The initiative is about more than just money, as Ted explains.

“Another important component is supplier development – through which we deepen relationships with our suppliers, surrounding them with all of the resources that JPMorgan Chase can offer, with the idea of ensuring their growth and success.

“Their success is not just in fulfilling contracts for JPMorgan Chase, but also being connected to other prospective corporate contract opportunities.”

What are the key benefits of the programme?

JPMorgan Chase says that advancing supplier equity in corporate supply chains is not a “philanthropic exercise”.

The programme offers numerous benefits, including access to innovative thinking and competitive pricing, ultimately serving customers and clients across all communities.

In 2023, JPMorgan Chase's diverse supplier spending supported over 13,900 new jobs and US$1.1bn in employee income, contributing to a stronger, more inclusive economy.

THe company also helps alleviate typical financial obstacles encountered by small and underrepresented businesses pursuing corporate contracts through its Diverse Supplier Grant Initiative.

This offers growth capital, aiding businesses in meeting the prerequisites for engaging in transactions with large corporations.

To ensure suppliers' success, the firm provides dedicated sourcing and business development support, along with cyber-readiness assessments.

Additionally, the Diverse Supplier Grant Initiative offers growth capital to small and underrepresented businesses to meet corporate contract requirements by leveraging industry relationships.

How has it been a success so far?

In 2022, JPMorgan Chase launched the Diverse Supplier Grant Initiative, which provides affordable growth capital to support diverse-owned businesses that need to meet the costs associated with capturing contracts with large corporations.

The firm has given a US$10m grant to LISC (Local Initiatives Support Corporation), a Community Development Financial Institution (CDFI) which works directly with prospective recipients and administers the programme.

Doug Roginson, Head of Supplier Relationship Management, JPMorgan, says: “Small businesses can find it cost-prohibitive to meet industry requirements like cyber security, insurance and bonding when bidding for new corporate business.

“This initiative provides businesses with funds ranging from US$25,000 to US$500,000 to cover costs including: technology, cyber or networking remediation; operational control enhancements; increases to insurance and bonding coverage and other costs associated with meeting corporate minimum standards.”

This is a recoverable grant in the form of a no-interest loan with flexible terms offered by non-profit programme partner LISC. If the supplier successfully gains new contracts, it returns the money to the programme to be issued to another eligible business owner. If it does not succeed, it has the opportunity to ask for loan forgiveness.

Doug adds: “We didn’t intend for this to be solely a JPMorgan Chase programme, so we have invited other corporations to join the cause.

“Donations from participating corporations to the grant initiative are matched dollar for dollar so that the amount of available funds can grow, forming an industry-wide solution to a common barrier faced by small and underrepresented businesses.”

The Racial Equity Commitment

In October 2020, JPMorgan Chase announced the US$30bn Racial Equity Commitment to help close the racial wealth gap among Black, Hispanic and Latino communities.

The firm brought together its business, philanthropy, policy and data expertise to help close the racial wealth gap and drive inclusive growth.

What can others learn from JPMorgan Chase’s approach to supplier diversity?

Some of the lessons the company said it learned include the importance of a dedicated cross-functional team and accountability in supplier diversity efforts.

Peter Van Allsburg, Head of ESG Sourcing, JPMorgan Chase, says: “Sourcing professionals have the tendency to consider suppliers that resemble the companies they work for - in size and scale. Large multinational corporations find it efficient to purchase from other global companies. 

"However, this approach has the effect of leaving out many diverse businesses that do not have the size and scale of other businesses, many of which can offer better solutions and competitive pricing.

“The way JPMorgan Chase has built a dedicated organisation around supplier diversity has truly paid dividends and will be the key to making this work sustainable.”

What is the future of supplier diversity at the company?

Ted says JPMorgan Chase does “not intend to slow down”, so it is clear that the momentum will continue to build.

He says: “What we've learned along the way has allowed us to implement some best practices. 

"We've collaborated in some new ways, and now we want to industrialise those lessons, so that it becomes part of how we do business every single day.

“First, what we're really interested in looking at are ways to scale businesses into larger companies, so that they can compete for larger corporate contracts.

“When businesses scale, they employ more people from their communities and that can pave the way for larger economic growth.

"Additionally, we want to build on some of the success that we've had in traditional categories of spend, like print marketing, real estate and staff augmentation and move towards growing industry areas like professional services, technology and creative marketing.”

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