Some industries have strong records of prioritising external stakeholder engagement, due to risk awareness or regulatory necessity. Energy and extractives, infrastructure and construction industries have developed in-house capabilities to deal with an array of stakeholders through all project phases. While the core rationale was to mitigate risk and avoid project delays, stakeholder engagement done well has had knock-on benefits of enhancing overall reputation and competitiveness.
Now, across all business sectors, the focus should be on addressing sustainability questions with the highest possible level of ambition. Genuinely participative relationships with external stakeholders will be needed for companies to tackle their biggest challenges: to generate and deliver sufficiently ambitious options around products and strategy; to take bold actions through logistics and supply chain that will drive down emissions and waste; and to protect human rights and create net-positive impact for communities and the environment.
BITCI’s Business Working Responsibly Mark supports the embedding of a robust process for engaging stakeholders in support of sustainability, through practices such as:
The goal, rather than simply managing critical voices or ticking boxes, is to conduct transformational conversations on economic, social, and environmental impact with customers, suppliers, communities and other key stakeholder groups. The diverse views gained through these interactions can then drive genuine innovation and collective impact
Stakeholder engagement is fundamentally about relationships. The same qualities and behaviours that make for good interpersonal relationships also make for successful stakeholder engagement. The following are questions to ask as a company when considering how to deal with external stakeholders in support of sustainability.
Mapping stakeholders is not the same as pigeon-holing them. Research to understand stakeholders is important, as are segmentation and disaggregation during mapping. They allow a company to tailor language and approaches for specific audiences, focus on what is genuinely relevant to each group, and maximise the value of the inputs that are gathered.
Mapping shouldn’t however lead to second-guessing stakeholder positions, or assuming that all members of a particular group will share a monolithic stance. There may be considerable nuance within a group’s position, and there is scope for rapid evolution of views, especially as awareness grows around climate, nature and other sustainability areas.
Within and between groups, power relations or cultural factors may also mean that some stakeholder voices benefit from being heard separately. They may need to speak confidentially or in a smaller sub-group, or even undergo capacity-building to be able to surface and represent ideas effectively. Sensitivities may arise, for example, in seeking different generational perspectives on a just transition, or designing approaches to monitor human rights in supply chains.
While the demands of sustainability reporting are increasing, it should be remembered that relationships aren’t compliance exercises and still need sufficient time and nurturing. The best engagement works as a loop, with a cycle of planning and preparation, engagement, analysis and feedback that shows genuine listening and evolution.
Preparation is key for every participant. However, the burden will usually fall on the company to inform and prepare both sides, as it is likely to have instigated the engagement. Prior to engaging, it should ensure that stakeholders understand the scope of what they are able to influence and possess all relevant context and information.
Preparatory meetings or workshops may be needed before stakeholders can give meaningful inputs. Improving stakeholders’ knowledge and understanding should be one objective of every engagement. If the engagement is intended to be informative rather than consultative, prior dialogue still helps to establish the baseline of stakeholder understanding and pitch accordingly.
A common pitfall is overestimation by a company of their brand and profile. Internally, a company may believe that it is a household name, that its strengths and values are well understood, and that its intentions are not open to misinterpretation. Stakeholders may however conflate or confuse a company with others in the sector; be unfamiliar with the technical aspects of the industry; or have mistaken or dated assumptions about how a company works.
While some stakeholders benefit from bilateral engagement, in other cases collective engagement can generate extra value.
Consumer panels, expert advisory boards or community forums can create rich and nuanced feedback and robust accountability. Dialogue between group members, all with some connection to the company’s activities, can help to flush out and mediate conflicting perspectives as well as generate creative approaches to challenges.
The core purposes of such bodies will vary. They may refine and endorse plans, then hold a company to account on delivery. They may provide expert input and act as a sounding board on an ongoing basis. They may critique strategy and strategic choices; more ambitious companies will invite robustly critical challenge and difficult questions, and seek the best external expertise.
Such structures require careful construction and clear terms of reference, plus adequate administrative resourcing, but can be extremely valuable. However, without a genuine mindset geared to change and accountability, they risk creating frustration and highlighting the gap between rhetoric and performance. Importantly then, companies should ask themselves:
As companies need to go further, faster, to reach ambitious sustainability targets, degrees of confrontation and opposition are likely. This will come both from groups resistant to change, and those wanting more and faster transformation.
Companies will benefit from being clear and realistic about the scope of their plans and ability to achieve them. Incremental change oversold as being transformative or disruptive will face backlash from resisters, as well as undermining the trust of progressive champions. Conversely, if the implications of major changes are under-communicated, a company will not retain stakeholder confidence or get credit for brave and positive change.
When a company uses environmentally-positive or ethical commitments as selling points but doesn’t perform – for example through supplier treatment or customer service – the backlash risks being worse than for a company that set a low bar in the first place. Ensuring that stakeholder relationships are in place to both deliver on commitments, and evidence that delivery, is crucial.
BITCI works with Irish companies to support the design and embedding of good practice, and to practically support stakeholder interactions that advance sustainability.
The most comprehensive cross-industry guidance on stakeholder engagement is found in AccountAbility’s AA1000 standard. It is a generally-applicable framework that organisations can use to assess, design, implement and communicate quality stakeholder engagement. Additional in-depth guidance is available for particular industries through their relevant associations.
Laura Morrison is a CSR and Sustainability Adviser at BITCI, and one of several members of the team with extensive experience of managing and advising on stakeholder engagement. She previously worked as an external affairs manager for an international energy company, and as a consultant advising international companies on managing stakeholder challenges.
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