Stakeholder engagement

Stakeholder engagement is the process by which an organization involves people who may be affected by the decisions it makes or can influence the implementation of its decisions. They may support or oppose the decisions, be influential in the organization or within the community in which it operates, hold relevant official positions or be affected in the long term.

Corporate social responsibility (CSR)

Stakeholder engagement is a key part of corporate social responsibility (CSR) and achieving the triple bottom line. Companies engage their stakeholders in dialogue to find out what social and environmental issues matter most to them and involve stakeholders in the decision-making process.

Stakeholder engagement is used by mature organizations in the private and public, especially when they want to develop understanding and agreement around solutions on complex issues and large projects.

An underlying principle of stakeholder engagement is that stakeholders have the chance to influence the decision-making process. A key part of this is multistakeholder governance. This differentiates stakeholder engagement from communications processes that seek to issue a message or influence groups to agree with a decision that is already made.

Jeffrey (2009) in "Stakeholder Engagement: A Roadmap to meaningful engagement" describes seven core values for the practices of gaining meaningful participation of which perhaps the three most critical are:

  • Stakeholders should have a say in decisions about actions that could affect their lives or essential environment for life.
  • Stakeholder participation includes the promise that stakeholder's contribution will influence the decision.
  • Stakeholder participation seeks input from participants in designing how they participate.[1]

The practitioners in stakeholder engagement are often businesses, non-governmental organizations (NGOs), labor organizations, trade and industry organizations, governments, and financial institutions.

Frameworks and relevant organizations

Engaging stakeholder is a requirement of the Global Reporting Initiative (GRI). The GRI is a network-based organization with a sustainability reporting framework that is widely used around the world.

The International Organisation for Standardization (ISO) has put forward a framework for sustainability (ISO 26000 - Guidance on social responsibility) that also requires stakeholder engagement.

The Environment Council, a European organization, developed the Principles of Authentic Engagement. These principles are intended to provide a framework for genuine stakeholder engagement.

Stakeholder engagement is also linked to Free, Prior, and Informed consent (FPIC).[2] In the oil and gas and in the mining industries, the International Finance Corporation (IFC) requires that organizations seeking financing for large projects obtain approval from project-affected persons (PAP) before the beginning of the project in an open and transparent manner. It also states that PAP can withdraw their support at any time.

The practitioners in stakeholder engagement are often businesses, non-governmental organizations (NGOs), labor organizations, trade and industry organizations, governments, and financial institutions. In a regional planning example in England, a line graph analysis of the relationship between these stakeholders over two decades has been provided[3]

Components

Partnerships, in the context of corporate social responsibility interactions, are people and organizations from some combination of public, business and civil constituencies who engage in common societal aims through combining their resources and competencies, sharing both risks and benefits.

Agreeing on the rules of engagement is integral to the process. It is important for everyone to understand each party's role.

Buy-in is essential for success in stakeholder engagement. Every party must have a stake in the process and have participating members have decision-making power. Every party must be committed to the process by ensuring action based on the decisions made through the engagement.[4]

No decisions should be already made before commencing stakeholder engagement on the issue. It is integral that the dialogue has legitimacy in influencing the decision.

Benefits

Stakeholder engagement provides opportunities to further align business practices with societal needs and expectations, helping to drive long-term sustainability and shareholder value.

Stakeholder engagement is intended to help the practitioners and their organization, to compete in an increasingly complex and ever-changing business environment, while at the same time bringing about systemic change towards sustainable development.[1]

The concept of stakeholder engagement in accounting is very important and strongly correlated[5] with the concept of materiality. The main guidelines on the preparation of non-financial statements (GRI Standards and IIRC <IR> Framework) underline the centrality of stakeholder involvement in this process (materiality analysis).

Stakeholder perceptions

See also

References
  1. Jeffery, Neil (2009). "Stakeholder Engagement: A Road Map to Meaningful Engagement" (PDF). The Doughty Centre for Corporate Responsibility, Cranfield School of Management. Retrieved 23 April 2015.
  2. "FPIC : Free, prior, and informed consent". Boréalis. 2011-05-26. Retrieved 2019-09-30.
  3. Ziafati Bafarasat, A. and Baker, M. (2016) Building consensus for network power? Some reflections on strategic spatial planning in the North West region of England, Environment and Planning C: Government and Policy, 34(5), pp.900-926.
  4. http://www.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/p_StakeholderEngagement_Full/$FILE/IFC_StakeholderEngagement.pdf Archived January 24, 2009, at the Wayback Machine
  5. Torelli, Riccardo; Balluchi, Federica; Furlotti, Katia (2019-07-22). "The materiality assessment and stakeholder engagement: A content analysis of sustainability reports". Corporate Social Responsibility and Environmental Management. doi:10.1002/csr.1813. ISSN 1535-3958.
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