Companies are increasingly seeking to integrate Indigenous business into their supply chains and broader ESG (Environmental, Social, and Governance) strategies. Unfortunately, some groups have sought to take advantage of this in what is becoming known as “Black Cladding” Black Cladding refers to the practice where a non-Indigenous company forms a joint venture with an Indigenous company or individual, but the company is not genuinely Indigenous-owned and operated.
While the shareholding may indicate a majority stake for the Indigenous party, the reality behind the scenes often tells a different story. Recently our founder, Dwayne Good, spoke on the subject on a procurement panel hosted by the Australian British Chamber of Commerce. Here’s some of what he had to say.
“I’m an Aboriginal man with a lived experience of joint ventures having once been drawn into forming a joint venture with a large non-Indigenous owned company. Whilst I had the best intentions to drive meaningful outcomes for First Nations people, I soon realised the venture we created was not truly Indigenous owned and operated. Being true to my values I decided I did not want to be associated with that type of arrangement, so I organised my exit”.
Sadly when I look around now, I see there are more JV’s than ever. If economic independence for Indigenous communities is the desired outcome of the Government’s Indigenous Procurement Policy and mainstream ESG objectives, then I believe JV’s are not the answer. My firm view is that Indigenous entrepreneurs should back their ability and look at ways to grow their businesses without entering into JV’s. There are a few good JV’s who create financial independence for the Indigenous owner(s) and employ First Nations people, purchase from other Indigenous business, however there are sadly a higher percentage of JV’s that do little for the Indigenous owner(s) and nothing for Indigenous communities.
In most JV’s the upside is geared towards the non-Indigenous capability partner – it doesn’t matter how good the shareholder agreement is, or who has majority vs minority ownership, if the capacity partner is responsible for service delivery then they have true control of the business and its destiny. Where is the incentive for them to transfer their capability rather than just continue to profit?
What was quite refreshing last week was the honest and robust conversation from Indigenous and non-Indigenous people, all wanting to see black cladding come to an end. I feel like this topic is now becoming more and more important and the wider business community is wanting to see change.
If you’d like to discuss Indigenous procurement in your supply chain, please get in touch with our Director, Dwayne Good. You can connect with Dwayne here.