It’s playing a key role in the growth of indigenous and minority businesses around the world. In Aotearoa, the journey is just beginning.

Most New Zealanders are likely unfamiliar with the term “supplier diversity”. However, in the business world, ensuring a diverse supply chain is quickly becoming essential – and some say it could be crucial to unlocking the country’s economic potential.

What is supplier diversity?

Supplier diversity refers to a company’s commitment to spending its money with minority-owned and indigenous businesses. This can be everything from choosing a Māori-owned cafe for your office coffee to awarding multimillion-dollar contracts to diverse suppliers. In Aotearoa, the focus is currently on Māori and Pasifika businesses, but globally, supplier diversity includes businesses owned by ethnic minorities, people with disabilities, veterans, and members of the LGBTQI+ community.

Organisations usually address supplier diversity by either committing a percentage of contracts or a portion of their annual budget to diverse suppliers – sometimes, it’s both.

Is this some new ‘woke’ initiative that won’t go anywhere?

No, it already has global impact. Worldwide, minority and indigenous businesses generate trillions of dollars annually. Some countries have established extensive networks that connect buyers – governments and corporations – with diverse suppliers offering goods and services. In some cases, governments have passed laws requiring them to engage with diverse suppliers and often extend this obligation to the companies they buy from.

Over the last two decades, awareness of supplier diversity has increased as consumer preferences have shifted. Today, consumers expect more than just environmentally responsible businesses – they want companies that actively address social inequality. Supporting minority and indigenous-owned businesses is a tangible way for organisations to create lasting social change. As a result, both governments and businesses are now looking at their supply chains for evidence of social impact, alongside environmental factors like carbon emissions.

So why is it important?

Supplier diversity directly tackles the inequalities that minority-owned businesses face. These challenges typically include barriers to winning large government contracts, accessing capital for growth, or entering new markets. The ripple effects of supplier diversity go beyond the businesses themselves – their communities also stand to gain significantly.

Communities benefiting from supplier diversity tend to be those facing the most severe socioeconomic challenges. Across the globe, indigenous and minority groups often appear disproportionately in statistics around poverty, crime, poor health and education outcomes, and wealth disparity. Supplier diversity empowers these communities by providing capital through commerce – offering a “hand up” rather than a handout.

For every $1 spent on an indigenous business in Australia, there’s a $4.41 social impact return, according to research from Supply Nation. Money spent with these businesses typically stays in their communities, driving employment and professional development opportunities for local people. They also tend to reinvest in their communities, creating a positive cycle that improves access to healthcare, housing, education and more. Importantly, it allows people to build generational wealth and break cycles of poverty.

In addition to the direct and indirect community impacts, economies that support supplier diversity benefit from an influx of innovative approaches and diverse perspectives. Minority and indigenous businesses, having often started from a disadvantaged position, bring creativity and resourcefulness to the table. Their unique worldviews, coupled with generations of indigenous knowledge, drive innovation and strengthen economies.

What’s the state of supplier diversity in Aotearoa?

New Zealand’s supplier diversity journey is still in its early stages. Amotai, the country’s leading supplier diversity organisation, was established in 2018 within Auckland Council, helping connect Māori and Pasifika businesses with procurement opportunities (where council contracts are up for grabs) – and levelling the playing field through strategic partnerships between buyers and suppliers.

Businesses with at least 50% Māori or Pasifika ownership can register with Amotai. This gives them access to Amotai’s resources and connects them with a network of suppliers and buyers, making it easier for companies to source diverse suppliers through the Amotai directory.

In 2020, the New Zealand government set a procurement target for 150 agencies to award 5% of their contracts to Māori businesses. While a step forward, critics felt the policy didn’t go far enough. Some pushed for a higher percentage, while others argued that the target should be based on total government spending, not just contracts. By June 2022, 3,200 contracts worth approximately $930m had been awarded to Māori businesses, though this represented less than 2% of the government’s total procurement spend. The target has since been raised to 8%, but the government remains hesitant to commit to a percentage of total spending.

What about around the world?

In the United States, supplier diversity has been a formal policy since the early 1970s. The National Minority Supplier Development Council (NMSDC) was founded in 1972, following President Nixon’s executive order to address racial inequality in response to the civil rights movement. NMSDC certifies minority-owned businesses and supports a wide array of enterprises, including Black, Hispanic, Asian American and Native American businesses.

Under current chief executive Ying McGuire, NMSDC aims to help its certified businesses generate $1 trillion in annual revenue by 2030, up from $363bn today. Despite challenges, such as political opposition and barriers to accessing capital, NMSDC continues to engage corporate leaders across industries to advance supplier diversity and create generational wealth in communities of colour.

In Australia, Supply Nation has led the way in supplier diversity for more than 15 years, supporting 5,000 indigenous suppliers and over 800 corporate and government members. The Indigenous Procurement Policy, requiring 3% of government contracts to be awarded to indigenous businesses, has been highly impactful. However, Supply Nation continues to advocate for higher targets and stricter definitions of indigenous businesses.

What does the future of supplier diversity look like?

Globally, supplier diversity policies continue to evolve. Advocates argue that procurement policies should extend beyond the public sector to include private corporations bidding for government contracts. By engaging company executives and involving the people with the money, businesses can make supplier diversity a priority, rather than treating it as a siloed initiative.

Indigenous and minority business leaders are also calling for greater international collaboration, with forums such as the World Indigenous Business Forum playing a critical role in connecting these communities across borders. Together, these efforts will drive inclusive economic growth and address long-standing inequalities.

Supplier diversity isn’t just a buzzword, it’s a way to create real social and economic change. By prioritising indigenous and minority-owned businesses, both public and private sectors can help bridge long-standing equity gaps, foster innovation, and support communities that have historically been underserved. In Aotearoa, while the journey is still young, the potential for impact is immense. As global examples show, embracing supplier diversity not only strengthens economies but can build a more inclusive society for all.