Stakeholder engagement – building resilience

It’s when we start working together that the real healing takes place…when we start spilling our sweat, and not our blood.

David Hume

Companies which ignore the views of stakeholders from within and outside their organisation may overlook issues that could come back to bite them.

An essential part of a meaningful approach to sustainability and CSR management for more than a decade, stakeholder engagement is not just a way of keeping external parties happy, or a PR campaign. Used properly it can be a powerful way of building strategic awareness and resilience.

This post is aimed at practitioners in companies, providing guidance, hints and tips for designing and conducting stakeholder engagement which is meaningful and relevant for all parties involved.

Engagement builds resilient business

Just as any species unable to notice or adapt to changing conditions is likely to die out, companies which are unable to pay attention, interpret and respond to a changing operating environment are unlikely to last for long.

Any good company pays active attention to its operating environment and stakeholder engagement is one vital method for doing this – actively seeking input and insight from people who see your business differently. A great recent example of this is from one of our clients, Elopak, which kicked off a recent long term sustainability vision process with input from external parties and NGOs .

The difference between engagement and PR

We often hear companies, when faced with opposition to their plans, emphasise their failure to communicate rather than find fault with the plans themselves. This has come especially into focus with the recent “Shareholder Spring” votes against proposed executive rewards.

This stance highlights the difference between engagement and PR. With engagement there should generally be an openness and expectation that the engagement may result in a different outcome to the one that the company first envisaged.

PR, on the other hand, is about the transmission rather than the exchange of information – which lies at the heart of stakeholder engagement.

Who are your stakeholders?

Stakeholders can be broadly divided into two categories: internal and external. Everyone who works for the company is an internal stakeholder. However, identifying external stakeholders can be more complex.

A standard list of external stakeholders could include the following:

> Existing consumers	> Communities living near your operations/offices
> Potential consumers	> Business partners/allies
> Suppliers	> NGOs and pressure groups
> Regulators/government	> Competitors
> Investors	> The media

There is no one-size-fits-all approach, you need to understand how you might affect stakeholders, their interest (or otherwise) in your business and, if they are, what they want from you. This must also be assessed together with their potential to influence or have an impact on your activities.

Can you get stakeholder views without talking to stakeholders?

This may seem like a silly question but the answer is, yes, you can! It is possible, given the increasing amount of information and opinion freely available on the internet to conduct what we call “Stakeholder Engagement by Proxy”. This involves using existing sources of information pertaining to organisations in your sector or your company in order to gain a picture of the issues which are deemed to be relevant and therefore might become priorities for management. Such sources include the views of progressive investors such as the SAM yearbook , Eurosif’s sector reports , guidance on key indicators and issues for focus from the GRI Sector supplements and other sectoral and universal guidance on sustainable business issues.

But is this a substitute for talking to stakeholders?

No. Proxy sources of stakeholder information can never replace active engagement. Nevertheless, it can be a useful pre-cursor to active dialogue and engagement with stakeholders as it will arm you with a feeling for the sorts of issues which may come up.

Fundamental principles for stakeholder engagement

There are a number of very good sources of information and guidance on how to conduct stakeholder engagement and this article is not long enough to go into these in detail. If you want the “gold standard” for stakeholder engagement, start by looking at Accountability’s AA1000SES (Stakeholder Engagement Standard)

At its heart though, there are some simple fundamental principles which can guide your approach.

Here are my top three tips to bear in mind when planning and designing your approach.

1.                   Honesty – don’t expect to agree on everything

Stakeholder engagement is not about agreement but about honest and open interaction and this should work both ways. There will always be some things that you are able to change following engagement and things that you cannot or would rather not change. Just as you should be able to explain such issues to stakeholders and the wider world, you should recognise that some stakeholders will wish to do likewise with their points of focus and disagreement.

2.                   Relevance – don’t get diverted by immaterial issues

It is important that engagement focuses upon the issues that matter – to your business, stakeholders and the wider environment. If you go into stakeholder engagement seeking to focus upon what stakeholders might consider a peripheral or irrelevant issue then you haven’t understood the purpose and point of engagement and, crucially, you won’t gain strategic benefit from external input and insight.

3.                   Expectations – be clear on the scope for change

Be clear about what you are engaging about and also ensure that there are shared expectations on what scope there is to effect change. As noted above, engagement without change is difficult to differentiate from PR.

Conclusion

Companies which are capable of evolving in response to the signals that society and the environment send them will be those equipped to survive and capitalise upon the challenges of the future.

Ultimately, the businesses likely to become truly sustainable will only do so if they can successfully anticipate and react to changes in their marketplace, social context and resource base. Proper and full engagement with their stakeholders is an essential tool for achieving this and building businesses fit for the future.