LGBT-Certified Suppliers Jump as Big Companies Seek New Sources

The number of businesses identifying themselves as “LGBT-certified” has tripled in the past five years as large companies, including Northrup Grumman Corp. seek more diversity among suppliers.

More than 900 companies are now part of the National Gay & Lesbian Chamber of Commerce’s program to certify their ownership as lesbian, gay, bisexual or transgender, according to Justin Nelson, president and co-founder of the group, which released the tally earlier in the month. That’s up from about 300 in 2012.

“Corporate America is saying ‘We want to do business with you -- not despite the fact that you’re LGBT but because you’re LGBT,’” Nelson said. “Twenty years ago, it was enough to sponsor a pride parade. It’s not enough anymore.”

Companies have been broadening their diversity policies even as U.S. lawmakers have been deadlocked on issues such as gay rights and equal pay. Apple Inc. and Facebook Inc., which have helped LGBT groups fight state laws seen as hostile to their civil rights, also are putting those priorities into purchasing requirements.

LGBT certification mimics the process used by companies to certify women-owned, minority-owned, veteran-owned and other groups, Nelson said. A company must be 51%-owned and controlled by an LGBT owner or owners. The NGLCC was formed in 2002 with partners such as JPMorgan Chase & Co. and American Express Co., and the certification program started in 2004.

Business owners also are finding it easier to label themselves as LGBT as more people identify as part of the group and amid growing recognition of their vast spending power, which rose to $917 billion in 2015, according an annual study by Washington-based Witeck Communications.

About 10 million Americans identify as LGBT, up from about 8 million in 2012, according to Pew Research Center.

Northrop Grumman, which subcontracts about $7.5 billion a year to roughly 9,500 suppliers, added an LGBT supplier inclusion and advocacy group in 2015.

“Northrop Grumman believes that creating a workforce and a workplace that values diversity and fosters inclusion is pivotal to promoting innovation and increasing productivity and profitability,” Jaime Bohnke, Northrop Grumman vice president, global supply chain, said. “Supporting our LGBT suppliers is an important part of our diversity and inclusion commitment.”

HRC Index

A third of Fortune 500 companies now include LGBT ownership in purchasing programs, according to NGLCC. Starting this year, companies that want to maintain a perfect score on the Human Rights Campaign Corporate Equality Index will need to add LGBT into their purchasing, Nelson said. The average revenue of the LGBT companies is about $2.5 million. Total revenue was about $1.15 billion in 2015.

“People have this misconception that if you’re an LGBT company you are stereotypically ‘gay’ -- you’re a florist or a designer, and all those businesses are great,” Nelson said. “But we have people doing aerospace and we have people doing construction and waste management.”

By Jeff Green