Big News for LGBT-Owned Businesses

By Chris Hoenig

Photo by Shutterstock

New opportunities are on the horizon for LGBT-owned businesses in California.

Late Friday, Governor Jerry Brown signed legislation extending the supplier-diversity initiatives of the California Public Utilities Commission (CPUC) to LGBT-owned businesses.

The CPUC’s Supplier Diversity Program sets benchmark goals for the gas, electric, water and telephone companies it regulates. Participating companies—all of which have at least $25 million in annual revenue—already aim to spend 15 percent of their procurement dollars with certified minority-owned business enterprises (MBEs), 5 percent with women-owned business enterprises (WBEs) and 1.5 percent with disabled-veteran-owned business enterprises (DVBEs).

Under the new law, LGBT-owned business enterprises (LGBTBEs) are added to the slate of diverse suppliers, opening the door for these businesses to compete for the procurement money of these larger utilities.

“It’s not about getting special or preferred treatment, it’s about winning on merit,” Nikki Barua, CEO of California-based consulting firm BeyondCurious, said. “What this bill fundamentally does is it allows a variety of businesses to bring their capabilities, and from the perspective of large corporations, it allows them to get access to tremendous talent that they might not have seen before.”

LGBT-owned companies will be certified by the National Gay & Lesbian Chamber of Commerce, which worked with California businesses and legislators to pass the law.

“If you look at the 3 million small businesses that are in California, then the generally accepted statistic is about 6 percent of the population self-identifies as LGBT, we’re talking about 180,000 to 200,000 small businesses that could be impacted by this legislation,” NGLCC President Justin Nelson said.

Nelson, along with US Business Leadership Network Executive Director Jill Houghton, will deliver a presentation on finding suppliers in LGBT and disability communities at the 2014 DiversityInc Special Awards Event’s Best Practices Conference on Oct. 21 in New York City.

Supplier-diversity initiatives help businesses better connect with their communities and drive innovation through new perspectives.

Companies seek out bids from small businesses owned by members of underrepresented groups, and successful programs—like those on the DiversityInc Top 10 Companies for Supplier Diversity list—audit their supplier-diversity numbers, offer formal training and mentoring for diverse suppliers, and link procurement-management compensation to supplier-diversity goals.

“I think it’s long overdue,” said Ken McNeely, President of AT&T California. “Here in California, about 45 to 50 percent of all our expenditures go to disadvantaged or underrepresented businesses, which totals about $2 billion.”

Last year, AT&T California spent $1.2 billion—or 51.57 percent of its more than $2.1 billion in total procurement spending—with MBEs and WBEs. AT&T Wireless spent an additional $999 million in California with diverse suppliers.

AT&T is No. 1 on the 2014 DiversityInc Top 10 Companies for Supplier Diversity list. It is also No. 10 in the 2014 DiversityInc Top 50 Companies for Diversity and received our award as the Top Company for Supplier Diversity last year.

Two of the companies appearing at the top of the CPUC’s Supplier Diversity Program also appear on the 2014 DiversityInc Top 7 Utilities: Pacific Gas & Electric, No. 1 on the list ($2.3 billion in spending with diverse suppliers, or 42.1 percent of their total procurement spend); and Southern California Edison, No. 2 on the list ($1.3 billion, or 40.99 percent of procurement spending).

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