Reana RossouwWritten by

Reporting on stakeholder engagement

Advisory and consulting| Views: 193

Sustainability and integrated reporting guidelines and frameworks require in-depth reporting on stakeholder relationships and engagement activities.  However, it seems that companies are at a loss of how to engage, what to engage on, how to report on engagement activities and outcomes and what to do with the feedback obtained from stakeholders as a result of specific engagement activities.

A stakeholder is someone who has a stake in a business or a relationship with a specific business. A stakeholder therefore is anybody who has a claim, stake or vested interest in the issue at hand, or in an organisation, or in his or her relationship with a product, service or brand. Stakeholders are generally classified into groups which may include employees, shareholders, business partners, suppliers, regulators, communities, non-governmental organisations, the media and customers. Stakeholder theory uses levels of influence and interest of stakeholders to determine their level of importance.

Businesses, particularly those with a large variety of stakeholders, are confronted with a continuous need to identify, manage, respond to and keep pace with stakeholders and their varying needs, perceptions, expectations and demands. Often businesses find it a challenge to keep their stakeholders engaged so that when confrontational issues do arise, stakeholders are better informed.

One of the more fundamental issues about sustainability in a business context is the fact that directors have a fiduciary duty to take into account interests of those stakeholders other than investors/shareholders and, taking the extreme view, they are in fact in breach of fiduciary duty by not doing so.

An organisation’s reporting of its governance, economic, social and environmental performance is increasingly being regarded as a key form of stakeholder engagement, and the most accepted formal way of communicating sustainability and non-financial information to stakeholders and shareholders.

Recommendations for reporting on stakeholder engagement:
  • Company reports should clearly define and identify the organisation’s stakeholders, including explaining the process by which they have been identified.
  • Organisations should give an overview of why and how they engage with each stakeholder group, giving case studies as examples. Explaining how this dialogue impacted on the organisation’s processes also helps to put the engagement into context.
  • Targets and metrics on stakeholder engagement are currently rare in reporting. Reporting organisations should treat dialogue targets the same as any other environmental or social target, with explanations of past performance, and with new qualitative and/or quantitative targets set when existing ones are achieved.
  • Reporting on stakeholder engagement should make it clear that dialogue mechanisms are fully integrated into the business as part of an ongoing programme rather than an ad-hoc process.
  • Using the results of dialogue to shape policies and procedures within the organisation, feedback should also be used to select for inclusion in the report those material issues considered by stakeholders to be most important.
  • Reporting should inherently be linked to stakeholders through a feedback loop. A number of feedback options – web, email, phone and post – should be offered, with a particular individual named as being responsible for sustainability.

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