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Economic Vitality

Supplier Diversity

38.8%

Percentage of PG&E’s procurement budget spent with diverse suppliers in 2012, a record high for PG&E

Having a broad and diverse supplier base helps us to provide safe, reliable and affordable gas and electric service to our customers—while also supporting economic development, job creation and diversity in our communities. In fact, PG&E has worked for more than 30 years to bring more women-, minority-, and service-disabled veteran-owned business enterprises—or diverse business enterprises (DBEs)—and small businesses into the supply chain.

Supplier Diversity and Small Business Results

PG&E spends more than $5 billion each year with approximately 5,000 suppliers, procuring an array of products and services that help us to deliver safe, reliable and affordable gas and electric service.

In 2012, Pacific Gas and Electric Company spent more than $2 billion with DBEs—a record high for us—accounting for 38.8 percent of our total procurement budget. This exceeded our goal of 37.3 percent and capped a ten-year upward trend starting at 18 percent in 2003.

Local officials joined S&S and PG&E at a ribbon-cutting ceremony for the new Stockton pipe yard.
Local officials joined S&S and PG&E at a ribbon-cutting ceremony for the new Stockton pipe yard.

PG&E selected S&S Supplies and Solutions, an Asian- and woman-owned company, to support our extensive gas pipeline safety enhancement work by providing third party logistics services and inventory management at a new gas pipe yard in Stockton, California. Overall, PG&E has helped S&S grow significantly to $96 million in revenue with more than 120 full-time employees, demonstrating our commitment to helping foster the growth of the local economy by keeping more business and jobs in California. (Watch a video to learn more.)

We increased our spending in all three DBE categories: $1.3 billion with minority business enterprises, $659 million with women business enterprises and $115 million with service-disabled veteran-owned business enterprises.

According to the CPUC, Pacific Gas and Electric Company again spent more on products and services from DBEs than any of the state’s more than 30 other utilities and telecommunication companies in 2012.

The table below summarizes our recent supplier diversity performance. It also captures our work with non-DBE small businesses. As with diverse companies, small businesses are a vital source of jobs and economic activity in the communities we serve.

Supplier Diversity and Small Business Results
Category 2010 (%) 2011 (%) 2012 (%)
Minority Men 14.4 16.7 16.7
Minority Women 5.3 6.4 7.5
Minority Business Enterprise 19.6 23.1 24.2
Women Business Enterprise (WBE) 11.3 11.7 12.5
Subtotal Women, Minority Business Enterprise (WMBE) 31.0 34.7 36.7
Service-Disabled-Veteran Business Enterprise (DVBE) 1.7 1.8 2.2
Total DBE 32.7 36.6 38.8
Non-Diverse Small Business Enterprise 6.3 6.0 5.3
Grand Total 39.0 42.6 44.0
 
Category 2010 2011 2012
Utility’s Aspirational Target (%) 30.0 34.0 37.3
Total Diverse Spending (%) 32.7 36.6 38.8
 
Category 2010 2011 2012
Supplier Diversity Spend $1,134 million $1,611 million $2,052 million
Non-Diverse Small Business Enterprise Spend $219 million $264 million $280 million
Total Spend $1,353 million $1,875 million $2,332 million

Over the last five years, PG&E has made significant progress in diverse spending. During this timeframe, our total spend has increased $2.1 billion, or 67 percent, while our diverse spend has increased $1.3 billion, or 172 percent.

5-Year Supplier Diversity Trend

TIP: Click on the items in the chart legend to selectively remove or restore chart data.

Over the five year period, our spending across different ethnic categories has also increased significantly.

5-Year Supplier Diversity Trend

TIP: Click on the items in the chart legend to selectively remove or restore chart data.

Institutionalizing Supplier Diversity within PG&E

PG&E’s dedication to supplier diversity is a core part of our business strategy. We continue to focus on improving our internal business practices to drive results with supplier diversity.

This includes working with a network of Supplier Diversity Champions, a group of employees with the responsibility of expanding supplier diversity within our lines of business. Through monthly meetings with senior leadership, these employees set supplier diversity goals, develop strategies, share best practices and monitor progress toward achieving improved supplier diversity results.

Our employees look across the business and product and service categories to develop opportunities for DBEs to participate in our supply chain. For example, PG&E has devoted significant capital investment toward ensuring the safety of its gas pipelines. In fact, the purchase base of our Gas Operations organization grew by nearly 100 percent in 2012. Demonstrating our commitment, the organization grew its supplier diversity as well—increasing its spend to 35 percent.

Strengthening our Supplier Relationships

A growing area of focus for PG&E is working with our largest prime contractors to engage DBEs in subcontracting opportunities and business solution partnerships. In 2012, our prime suppliers reported $611 million in spending on diverse subcontractors. An additional $400 million can be attributed to our prime suppliers’ diverse business solution partnerships or value-added relationships.

One beneficiary of PG&E’s focus on diversity is RHA, Inc., a certified minority-owned business that implements and administers energy efficiency programs for PG&E, including energy audits, home and business weatherization, customer energy education, energy training and direct installation of energy efficiency solutions.

RHA has grown substantially since partnering with PG&E and now employs more than 360 staff with six offices throughout California. Their long-standing partnership with PG&E has been pivotal in providing diverse communities and small businesses with energy efficiency solutions and financial savings.

We achieved these results by asking prime contractors to set goals and report subcontracting monthly, detailing their progress toward these goals. Executive management also personally communicated with prime suppliers to drive diversity goal achievement and help foster DBE mentor relationships. Audits ensured development and growth of our prime suppliers’ diverse subcontractors and business solution partners.

PG&E also actively engages with a variety of organizations at the local, state and federal levels to promote supplier diversity, spur innovation and increase competition. Last year, PG&E participated in more than 90 outreach events to meet and promote diverse firms, introduce prime suppliers to the DBE community, and learn and share best practices with peer companies.

Offering Technical Assistance to Build Capacity and Support Supplier Development

PG&E supports a broad range of technical assistance and initiatives that help diverse suppliers build their capacity, many in collaboration with community-based organizations. Doing so serves as a catalyst to the growth and expansion of emerging and diverse firms. This includes training for DBEs of all sizes in the communities we serve and across the state.

With the emergence of new technologies in the utility industry, PG&E is also focused on helping DBEs prepare to compete in a changing supply chain. Signature training initiatives within PG&E’s technical assistance program include:

  • Diverse Suppliers Are Safe, which focuses on the competitive advantages of safety within the work environment and developing robust safety programs.
  • Diverse Suppliers Go Green, which features ways to establish a sustainability program; measure, reduce and report an environmental footprint; and define green business opportunities.
  • Diverse Suppliers Go Global, which highlights the advantages of evaluating and participating in global supply chains and global markets.

Through our formal Supplier Development Program, we are also focused on executive mentorship and identifying business opportunities through cross-functional collaboration across PG&E’s supplier diversity, sourcing and line of business team members. Highlights from last year include:

At PG&E’s Seventh Annual Supplier Conference and Awards Ceremony, six of the eight award winners were DBEs—and five were participants in PG&E’s formal Supplier Development Program, a testament to how customized business development support has led to success and recognition.

  • Sponsoring five DBEs for the UCLA Management Development for Entrepreneurs Program, an intensive certificate program that enables owners and managers of entrepreneurial businesses to develop key management skills and strengthen their ability to build effective organizations.
  • Offering scholarships to a program for International Organization for Standardization (ISO) 9001 and ISO 14001 certification. In 2012, one of our sponsored minority-owned suppliers achieved dual ISO certification.
  • Co-founding and providing scholarships for the University of California’s Advanced Technology Management Institute, an executive training initiative to prepare mature DBEs for emerging technology opportunities such as the Smart Grid. The majority of participating DBEs transformed their strategies and/or restructured, rebranded or repackaged their service offerings.

In addition to promoting economic vitality, job creation and non-discrimination, PG&E is working with suppliers to reduce their environmental footprint and advance clean technologies.