A Quick Guide to Supplier Diversity Policy

An essential element of your supplier diversity program is a policy outlining what the program is, who it includes, what the program goals are, and how you will achieve those goals. This differs from a supporting statement, which is a public-facing statement from a CEO or president expressing the company’s intention to be inclusive. The supplier diversity policy is strategic. It provides internal guidance for your supplier diversity team, encourages buy-in from stakeholders, builds public awareness of your program, and establishes expectations for suppliers.

Your supplier diversity policy should be comprehensive, but it doesn’t need to be a novel. It is a living document, updated regularly to reflect your changing goals and maturing supplier diversity program. Before posting this policy on your website and/or your supplier registration portal, ensure your organization is fully ready—meaning you have internal alignment, clear policies, and identified suppliers—so you can communicate and implement the program successfully.

Here are some suggestions for how to craft your supplier diversity policy and what should be included to follow supplier diversity best practices.

Introduction to Diverse Suppliers

Diverse suppliers are the backbone of a resilient and innovative supply chain. These businesses—ranging from minority-owned and women-owned to veteran-owned and disability-owned enterprises—bring fresh perspectives and specialized expertise that drive innovation and economic growth across industries. By encouraging and engaging with diverse suppliers, organizations not only strengthen their supply chain but also play a direct role in economic empowerment, especially in underserved areas. Starting with a focus on supplier diversity means your organization is committed to building a more inclusive supply network, fueling both business success and broader economic development.

Purpose

First things first, your supplier diversity policy should clearly state the purpose of your supplier diversity program. Why are you investing in supplier diversity? What does your company want to achieve with a supplier diversity program? 

The answer is probably some or all of these common reasons:

• To find the best suppliers (competitive advantage and customer satisfaction)
• To demonstrate corporate responsibility (providing opportunities for marginalized communities)
• To increase sustainability (stronger, diversified supply chain)
• To promote diversity (innovation and social responsibility)
• To support the local community (economic impact and reflection of customer demographics)

Minority-owned Business Enterprises (MBEs) are defined as businesses where at least 51% of the ownership is held by individuals from racial or ethnic minority groups. Additionally, supplier diversity programs are often statutorily required for government contractors to ensure equal opportunity for all vendors.

Select the rationale that best fits your purpose, then include that information in your supplier diversity policy. When your purpose is clearly stated, it’s much easier to be strategic about setting goals and creating initiatives.

Parameters

An effective policy that follows supplier diversity best practices defines the parameters of your program, providing focus and structure. Suppliers and stakeholders alike need to know which diversity categories you recognize and count toward your spend goals. 

The main categories are:

• Minority-owned: Businesses that are at least 51% owned, operated, and controlled by individuals who belong to underrepresented or disadvantaged racial or ethnic groups. To qualify, owners must provide evidence of social and economic disadvantage.
• Woman-owned: Women-owned Business Enterprises (WBEs) must have at least 51% female ownership to qualify as diverse suppliers. These businesses support gender equity and bring unique perspectives to the supply chain.
• LGBTQ+-owned: Companies that are at least 51% owned, operated, and controlled by individuals who identify as LGBTQ+, promoting inclusion and representation.
• Veteran-owned (including disabled veteran-owned): Veteran-owned Businesses are companies that are at least 51% owned and operated by U.S. military veterans, including disabled veterans. These businesses contribute unique skills and perspectives gained through military service.
• Disability-owned: Disability-owned Businesses are those where individuals with disabilities own at least 51% of the company, supporting economic empowerment for people with disabilities.
• Small businesses (See note)*: Small Business Enterprises (SBEs) are often locally owned businesses that contribute to the local economy and job creation. For most diversity categories, owners must belong to underrepresented or disadvantaged communities.

Including all of these categories is recommended, although you may decide to focus on increasing the number of diverse suppliers from one or two categories in the beginning. 

*A note about small businesses: This is the only category on the list that does not require the business to be at least 51 percent owned and operated by a member of a diverse or marginalized community. A small business is a company that is categorized as small based on revenue and/or employees as determined by the Small Business Administration’s classification standards. Some government contracts require prime contractors to subcontract with a small business.

Another parameter you need to make clear in your supplier diversity policy is whether or not you require third-party certification as opposed to self-certification. It is considered a supplier diversity best practice to require third-party certification to ensure the integrity of your supplier diversity reporting. 

Organizations should use certification databases like the National Minority Supplier Development Council and Women’s Business Enterprise National Council to find verified diverse vendors. Third-party certification is available to qualified diverse businesses through national certifying entities such as the National Minority Supplier Development Council, Women’s Business Enterprise National Council, National LGBT Chamber of Commerce, and Disability:IN. However, hundreds of other certifying bodies with similarly stringent requirements also exist. Most cities, states, and municipalities have their own certification processes as well as other private and government certifying agencies.

When crafting your supplier diversity policy, be up front about what types of certification you will accept.

Goals

It’s difficult—and inefficient—to work toward goals if you haven’t clearly stated what those goals are. Your supplier diversity policy clearly outlines the desired outcome for your supplier diversity program in both tangible and intangible results, aiding in decision-making and aligning efforts across the organization. 
 
For example, your tangible goals might include increasing diversity spend, either to a specific dollar amount or a percentage of overall spend. 
 
Perhaps you want to track your economic impact, translating spend with diverse businesses into real-world results and pledging to help drive a certain percentage increase in jobs within a diverse supplier’s community. 
 
Your intangible goals might be in the area of supplier development, such as increasing supplier capacity or increasing your company’s innovation, sustainability, and competitiveness within the marketplace. 
 
Following the social unrest of 2020, many companies are choosing to make at least some of their supplier diversity goals public. This can help improve brand reputation and increase consumer awareness of your company’s commitment to diversity, equity, and inclusion. 
 
Whether or not you choose to publicize your supplier diversity goals, make sure they are specific, attainable, measurable, and clearly communicated in your supplier diversity policy.

Strategy

Once you’ve stated your goals, how will you achieve them? Strategize the steps needed and include them in your supplier diversity policy. This provides guidance for your supplier diversity team and alerts suppliers to available opportunities.

Some examples include a supplier registration portal for ease of supplier identification, communication, and management; internal training on tools such as Supplier Explorer; internal awareness campaigns; educational opportunities about your company, your procurement process, and your supplier diversity program for diverse suppliers; supplier summits and networking events to build relationships and identify potential new suppliers; attending industry conferences; and partnerships with diverse supplier councils to maximize your supplier diversity program.

These guidelines are a jumping-off point for your supplier diversity policy. Your unique policy will provide guidelines and mileposts for both internal stakeholders and external entities, telling them what your program’s goals are and how you plan to achieve them. 

Remember, this policy is dynamic, so make it as clear and relevant as possible for your current program, knowing that you will update it as your supplier diversity program matures and your business changes.

Supplier Diversity Program Best Practices

A strong policy is the foundation, but the day-to-day practices you put in place are what separate high-performing supplier diversity programs from ones that stall.

1. Executive accountability

Leadership buy-in needs to go beyond a public statement. A press release or CEO pledge signals good intent, but it won’t move the needle on its own. What drives real change is tying diversity spend goals directly to executive performance reviews — making leaders personally accountable for outcomes, not just awareness. Establish a cross-functional supplier diversity council that brings procurement, finance, legal, and operations to the same table, and require quarterly progress reporting to the C-suite. When executives have skin in the game, supplier diversity stops competing for internal priority and starts receiving the budget and organizational credibility it needs to scale.

2. Embed diversity into procurement

Diverse suppliers shouldn’t be considered after shortlists are locked. That’s too late. Organizations that lead in supplier diversity treat inclusion as a standard step in every RFP process, not an optional add-on once preferred vendors are already identified. That means including diverse suppliers in every competitive bid as a matter of policy, weighting diversity in evaluation scorecards alongside quality, cost, and delivery performance, and actively training procurement teams to seek out qualified diverse bids from the start. This is a behavior change that has to happen across the entire organization. When sourcing teams internalize diversity as a procurement criterion — not a compliance checkbox — the pipeline grows organically.

3. Unbundle contracts

Size shouldn’t be a barrier to capability. Many certified diverse suppliers have the expertise and track record to deliver excellent results, but simply don’t have the organizational scale to compete for large, enterprise-wide contracts. The fix is straightforward: break large contracts into smaller, category-specific packages that reflect the actual scope of work. This is particularly effective in professional services, IT, facilities management, and marketing — categories where work can be divided without sacrificing quality or coordination. Contract unbundling is one of the most direct ways to increase meaningful diverse spend without overhauling your entire sourcing model. 
 

4. Build Tier 2 programs

Your direct spend tells only part of the story. Tier 2 programs require your prime (direct) suppliers to report on the diverse subcontractors they use — extending your program’s reach well beyond what your procurement team sources directly. Set clear Tier 2 expectations in contracts upfront, and review results on a regular cadence. This approach multiplies the impact of your supplier diversity program and holds your entire supply chain to the same inclusive standard.

5. Invest in supplier development

Sourcing is half the equation — helping diverse suppliers succeed is the other half. Finding and onboarding a certified diverse supplier is a meaningful step, but the organizations that see the strongest long-term results go further. Mentorship programs pair diverse suppliers with internal champions. Capacity-building workshops help them navigate procurement processes and scale operations. Technical assistance addresses specific capability gaps. Matchmaking events like “Meet the Primes” create direct connections that would take years to build organically. Supplier development builds a deeper, more reliable pipeline over time and directly counters the common objection that qualified diverse suppliers are hard to find. The truth is, they’re there — and the programs that invest in developing them build a long-term competitive advantage that self-certification checklists never will. 
 
Want to learn more about supplier diversity? Check out our 2025 State of Diverse Suppliers report.