Understanding Economic Impact Analysis: How it Adds Value to Your Supplier Diversity Program

EIA breaks down the benefits of your partnerships with diverse suppliers, giving you a clearer picture of how you’re helping create jobs, boost incomes, and support local economies. It’s a tool that lets you demonstrate the full impact of your decisions—not just for your suppliers, but for the people and communities connected to them.

Why economic impact analysis matters

More and more supplier diversity leaders are turning to EIA to show the real value behind their work. According to our 2024 State of Supplier Diversity Report, 37% of companies now use Economic Impact Analysis, up from just 10% last year. Companies like United Airlines, CVS, Fidelity, and American Water are using EIA to highlight the bigger benefits of their supplier diversity programs.

For you, it’s not just about reporting the numbers. EIA lets you tell the full story—how your supplier diversity program is contributing to local economies and making a meaningful difference.

What does economic impact analysis measure?

EIA helps you quantify how your supplier diversity program is impacting the economy. Here’s what it measures:

• Jobs Created: Your spending with diverse suppliers creates jobs as they ramp up to meet demand.
• Incomes Earned: Wages earned by employees at these suppliers circulate through local economies, helping support families.
• Tax Revenues Generated: The economic activity from your supplier relationships generates taxes that fund public services.
• Total Economic Output: Every dollar spent with diverse suppliers contributes to overall economic growth, creating a ripple effect that reaches other businesses in the supply chain.

How economic impact works

EIA doesn’t just show the direct effects—it captures the full chain of impacts from your supplier diversity program:

• Direct Impact: The immediate effect your suppliers feel when you buy from them, like hiring more staff or purchasing materials.
• Indirect Impact: The ripple effect across the supply chain, where your suppliers buy goods and services from other businesses.
• Induced Impact: The broader economic activity generated when employees of your suppliers spend their wages in their communities.

Why are companies embracing economic impact analysis?

Here’s why EIA can be a game-changer for your supplier diversity program:

• Engage Your Stakeholders: EIA gives you data-backed insights to share with investors, customers, and community leaders. It shows them how your program is contributing to economic growth.
• Showcase Your Impact: The results can be integrated into your company’s annual reports, CSR updates, or sustainability reports, giving stakeholders a clear view of how your efforts are making a difference.
• Strengthen Community Relationships: Communities and local organizations want to know how your company is improving their local economy. EIA helps you highlight those positive outcomes and build stronger partnerships.
• Build Investor Confidence: Investors want to see measurable returns, and EIA proves that your supplier diversity program isn’t just good PR—it’s driving real results.
• Boost Employee Morale: Knowing that the company they work for is making a tangible difference can help boost employee pride and engagement.

Putting EIA to work for you

With Economic Impact Analysis, you can create custom reports to showcase your program’s value. Whether you need an executive summary for board meetings or a detailed breakdown for public reporting, EIA provides the data to support your efforts. You can even dig deeper into how your spending impacts specific diversity groups, like MBEs (Minority Business Enterprises) and WBEs (Women Business Enterprises), helping you refine your strategies and maximize your program’s impact.

The Bottom Line

Economic Impact Analysis gives you the tools to show the full value of your supplier diversity program. By measuring the jobs created, incomes earned, and local economic growth supported by your efforts, EIA helps you tell a compelling story about the difference your program is making—ensuring that your supplier diversity efforts continue to grow and thrive.

For more information:

Watch the 2-minute overview to see how you can tell a more powerful story.

See examples of company Economic Impact Reports:

Fidelity Supplier Diversity Economic Impact Report

Supplier Diversity Economic Impact Brief (cvshealth.com)

Intuit Supplier Diversity Economic Impact Report

Dominion Energy Supplier Diversity Economic Impact Report