Climate strategy has a procurement problem. A gender one too

Here’s a number that’s both shocking and not surprising: multinational companies spend less than 1 percent of their procurement budgets on women-owned businesses. 

Shocking because it's that low. Not surprising because anyone tracking gender-led investing (including my own coverage here) knows women lag far behind men when it comes to attracting the dollars that build business.

That includes procurement. Supplier diversity often gets championed in annual reports as part of a general corporate social responsibility pledge, yet it remains chronically underfunded in practice. If that’s how your organization thinks about inclusive procurement, you are leaving money on the table. Significant money.

The business case for gender-smart procurement

Here’s why. An International Finance Corporation (IFC) survey of 240 corporate buyers across six emerging markets found that companies that source from women-owned businesses report five measurable benefits: 

• Better delivery performance and reliability

• Stronger alignment with corporate sustainability and gender equality objectives

• Greater brand affinity and customer loyalty

• Increased flexibility to respond to market disruptions

• More innovation

These are not soft outcomes. These are the metrics your procurement team is already asked to track every quarter. McKinsey has found, for example, that minority- and women-owned suppliers deliver year-over-year savings of 8.5 percent, considerably more than the 3-to-7 percent most companies realize.

Meanwhile, the IFC survey found that sourcing from women-owned enterprises also allowed respondents to procure small orders, specialized products or critical services more quickly. And when it comes to branding, 80 percent of women aware of a company's commitment to female-owned suppliers say it solidifies their brand loyalty. Women account for an estimated $31.8 trillion in global consumer spending, so that’s loyalty that compounds.

If this all seems familiar, it is. The gender gap in procurement spending mirrors that of climate investment in which female-founded climate tech companies received just 0.4 percent of the $34 billion invested in the US sector in 2024. Once again, the same capital that could be flowing to women-owned businesses isn't. And the cost of this inaction is charged to lower performance, more fragile supply chains and missed innovation.

Inclusive procurement as climate strategy

For climate-focused companies specifically, inclusive procurement is not a parallel track to your sustainability strategy. It is part of it. Companies with gender-diverse boards are 60 percent more likely to reduce energy consumption and 39 percent more likely to cut greenhouse gas emissions. After the Paris Agreement, firms with more women in management reduced CO₂ emissions 5 percent more than male-dominated peers. The supply chain is where corporate values show up in practice.

Jessica Espinoza, CEO of 2X Global, has argued that “stepping back from diversity commitments is not neutral.” I agree. It's a risk decision, whether or not your company frames it that way. In a moment when climate-related supply chain disruptions are accelerating and ESG commitments are squeezed, this risk is growing quietly.

The gender gap in procurement is structural, not intentional

Most companies aren’t ignoring inclusive procurement out of bad intent. Instead, they lack the infrastructure to act on it.

According to IFC, 35 percent of buyers surveyed say the biggest barrier to increasing investment into women-owned suppliers is finding them. They point to a lack of a reliable database or established onramp. That’s because women-owned business leaders, more than their male-owned counterparts, tend to lack the formal business networks and digital presence that would make them visible to procurement teams. And on the flip side, even when buyers post RFPs, women-owned businesses often cannot find them.

Lack of access to capital only deepens the problem. Women-owned businesses frequently lack the supply chain finance that would allow them to fulfill larger orders, build credit histories or use purchase orders as collateral. In the IFC survey, 57 percent of buyers reported offering supply chain finance to their suppliers; however, few say they collect gender or diversity data to track the impact. Without this data, it’s nearly impossible to understand the financing gap, let alone close it.

Perhaps most telling: only one third of surveyed buyers have set any specific target for procurement spend with women-owned businesses. As the saying goes, you can't manage what you don't measure. By that standard, most companies aren’t managing this at all.

What it looks like when companies get gender-smart procurement right

The IFC survey finds that roughly 20 percent of respondents have a formal supplier diversity policy, track suppliers by gender and spend at least 5 percent of their procurement budget with women-owned enterprises. What distinguishes these programs is not one single sweeping initiative, but a sustained, operational commitment backed by senior management support. 

These forward-thinking leaders moved to map their supplier base before setting targets, giving them a baseline to grow from. They set measurable goals and track results on an ongoing basis — and critically, they’ve gone public with their commitment. As a marketing executive, I’m the first to underscore how important a public statement is. It signals intent to the market, invites women-owned businesses to engage with your program and holds leadership accountable in a way that an internal-only policy never can.

All of which shows what embedded sustainability looks like in practice. Not solely a press release or a pledge, but a relationship with your supply chain, built quarter by quarter, supplier by supplier. This is the work — and it’s a story that gets told only as you write each page and each chapter.

The question that changes the answer

Which brings us back to sustainability. The energy transition is the largest supply chain transformation in history, requiring unprecedented mobilization of capital, technology and human ingenuity. Nevertheless, we continue to conduct it while leaving the majority of the world's women-owned businesses on the periphery, concentrated in lower-value procurement categories, invisible to buyers, underfinanced and underutilized.

As with climate investing, supplier diversity is a force multiplier. Women-led businesses are more likely to hire other women, creating broader economic participation. They reinvest earnings into families and communities at rates up to 90 percent, compared with 40 percent for men. The impact ripples far beyond the company itself. 

It’s time to ask your procurement team what percent of your company's spend goes to women-owned businesses. Pull the data. Set a target and publish it. Work with your financial partners to make supply chain finance accessible to the women-owned businesses in your network. For companies building a gender-smart climate strategy — and if you are reading this, you likely are — the IFC's Sourcing2Equal program and 2X Global's gender lens investing framework are two of the most practical resources available for moving from intent to action.

The gap between what companies say they value and what their purchase orders reflect is one of the most solvable problems in sustainable business. It starts with one simple question, a willingness to find the data and a commitment to lean into the answer.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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