Benefits and challenges of stakeholder engagement

1st June 2016

Benefits and challenges of stakeholder engagement

1st June 2016

Benefits and challenges of stakeholder engagement

Stakeholder engagement is not a new concept. Recent reporting frameworks (GRI and IIRC) have however pushed the topic up the ladder of importance for companies, as it is a specific reporting requirement in order to develop and release sustainability and integration reports.

On the upside, reporting requires companies to report annually on stakeholder engagement activities, almost forcing the activity to be conducted at least once a year. On the downside, many reporting companies still confuse stakeholder engagement with other types of traditional communication activities such as marketing, promotions, sales talks or supplier conventions, or annual investor briefings.

Taking stakeholder concerns and interests into account can improve business relationships, which may: make it easier for a company to operate; lead to ideas for products or services that will address stakeholder needs; and allow the company to reduce costs and maximise value.

Sustainability and integrated reporting requires stakeholder engagement to:

  • Identify material risks and opportunities
  • Obtain input for organisational priorities and activities
  • Provide feedback on progress towards a more sustainable future

However, many companies miss the opportunity to use stakeholder engagement to:

  • Pool knowledge, experience and co-create solutions that addresses societal, industry and business issues
  • Develop new products and services or even enter new markets
  • Build collaborative partnerships and relationships that contribute to value creation (profitability)
  • Accurately estimate the power of collaboration within an industry or value chain, as many companies only focus on existing stakeholder groups such as customers, employees and investors.

Some considerations for more effective stakeholder engagement:

  • Ensure that the right stakeholders are identified. Stakeholders very seldom see themselves as neat little homogenous stakeholder groups. An NGO/activist group can provide valuable insight into various economic, social and environmental issues.
  • Furthermore, a concerted effort must be made to ensure that stakeholders are qualified to provide the right insight/feedback into a specific sustainability aspect. This may require capacitating stakeholders with the knowledge and skills to be able to engage.
  • Ensure that the right stakeholders are identified early enough to ensure that a variety of perceptions and inputs can be obtained that represents the views and opinions of a wide variety of stakeholders, as this will ensure balanced and fair representation of opinions on a specific subject matter. Companies should be cautious not to only engage stakeholders they have existing or good relationships with, but be resilient and courageous enough to listen to opposing and critical voices.
  • Ensure that engagement happens regularly (not just once a year) so that a variety of opinions, insights, knowledge and collaborations can be obtained and feedback can be provided on actions taken based on specific stakeholder requirements and expectations.
  • Sometimes it may be required that stakeholders and representatives of stakeholder groups be educated and trained in aspects of engagement.It is important to note that from a historic perspective worker representatives and unions enter engagement with a view to negotiate or communities enter engagements with a view to obtain development funding. As such, engagement objectives and outcome expectations of the engagement must be stated and agreed upfront to ensure successful outcomes for all parties concerned.
  • Specific and varied engagement strategies are required to deal with urban vs. rural stakeholder groups as well as other intrinsic qualities and characteristics of stakeholders to cater for unique local conditions such as gender and language and literacy issues.

Related Articles


The success of social innovation doesn't depend on just one thing... That's why we have a targeted approach and method to ensuring real, widespread and inclusive development and economic growth. Learn more about how we do what we do;...


With over 20 years in the world of social innovation and transformation… we’ve learned quite a bit… And we believe that knowledge is a social currency that is best shared. Visit to learn more about social...


Next Generation Consultants makes some exciting predictions about what could be shaking up the social investment and development industry sectors in the year ahead, taking a closer look at the future of social enterprises, new...


Next Generation Consultants imagine the world the way it could be… and then we get to work. We partner with companies across Africa, focusing on sustainable development through social innovation to realise the dreams made possible...


For the past 15 years, Next Generation Consultants has published an annual guide on the trends and forecasts for the social investment and development sectors in Africa. We’d like to share some findings from our report for 2018 in 3...


Some people say success can’t be measured… We’re not those people. Our published book, The Investment Impact Index, explores our matrix for quantifying and qualifying the impact of social investment and development. It not only...