Chart of the Week: Companies with Veteran Supplier Programs Achieve Higher Profitability Than Those Without
As a follow-up to our recent Memorial Day chart, which analyzed companies with veteran hiring policies, we revisit corporate diversity and inclusion practices this week to evaluate if there is additional value in sourcing business from veteran-owned suppliers.
As the global economy begins to emerge from the COVID-19 pandemic, U.S. manufacturers have seen unprecedented product demand with global supply chain shortages continuing to exhaust the manufacturing sector. Given the heightened consumer demand and the supply chain risk of correlated suppliers failing to hit their production targets, there is a need for many companies to have a diverse set of suppliers. As part of a company’s supplier diversity programs, veteran supplier policies, in particular, provide equitable opportunity for direct and indirect suppliers owned by veterans.
Looking at the 928 companies we ranked in 2021, we find there are 309 that provide veteran supplier policies. Digging into the data around various profitability ratios, we see higher return on assets, return on equity, and return on capital across the board for companies with these policies in place.
And looking at average operating profit per employee, we see a roughly 60% annual increase across companies with a veteran supplier policy or program in place:
Finally, our analysis breaks out the companies with veteran supplier policies to show that the larger the market-cap of a company, the likelier it is to have a program in place.
Bank of America is our top-rated company for community development – the issue that tracks whether companies institute veteran supplier policies – and it not not only provides such a policy but offers resources to other companies looking to do so. Ranking #12 in the JUST 100, Bank of America spends nearly $2 billion every year with diverse businesses and has a number of resources on its website for smaller companies to get started on building their own diverse supply chain.
Bank of America’s approach to veteran suppliers and community development overall is an example of how taking a stakeholder lens to business can allow for finding opportunities for long-term value creation across every aspect of the company.
If you are interested in supporting our mission, we are happy to discuss data needs, index licensing, and other ways we can partner, please fill out our request form to answer a few questions, and someone from our Investor Solutions team will reach out to you within business days.
