Consultation tends to be a one-way flow of information where a company solicits input from stakeholder groups. Stakeholder dialogue is a more robust conversation. It gives companies an opportunity to provide context for their operational issues and also means recognising the potential for engagement to influence the behaviour of regulators, investors, consumers, competitors, and suppliers.

Face-to-face meetings are most appropriate for stakeholders who are most closely linked to or impacted by a company. Open houses, public forums and disclosure may suit the needs of other stakeholder groups. While ad hoc stakeholder engagement is generally less valuable than ongoing engagement that develops relationships and trust, it may be useful in the early stages of engagement as a way to get more information about stakeholder interests and find appropriate representatives of stakeholder groups with whom to engage.

Formal engagement can take many forms, from partnerships with NGOs to formal community engagement programmes or advisory bodies. Advisory bodies are often helpful in extractive industries projects, where a standing advisory body can serve as representatives for local communities impacted by mine operations. In such cases a company may have an ongoing relationship with a community for decades, so it is worthwhile to develop an ongoing forum to facilitate communication and address concerns.

Follow-through is important to any relationship and this certainly applies to relationships with stakeholders. Whether or not a company is able to implement what it has learned from stakeholders, there is an obligation to report back, to make it clear that stakeholder concerns and interests were heard, considered, and are valued. In addition to reporting back to specific stakeholder groups, sustainability or integrated reporting provides companies with an opportunity to communicate environmental, social, economic, and governance performance to a wider range of stakeholder groups. It can also involve reporting on the process of stakeholder engagement itself, providing transparency about who was consulted or engaged on what topics and with what results.

Companies have a responsibility to respond to stakeholders about concerns shared, to explain how or whether concerns or suggestions are being addressed.

In addition to responding to issues raised by stakeholders, companies should keep track of any promises or commitments they have made to stakeholders. Just as a company would hold themselves accountable for promising earnings growth to shareowners, commitments to community members or NGOs need to be taken seriously for an engagement process to be considered credible.

Information reported to stakeholders should be translated into local languages and in easily understood formats, and any material changes to commitments or implementation actions should be communicated very clearly.

Sophisticated stakeholder engagement reports, while commendable and necessary, do not always provide the information communities seek or understand. There are various tiers to consider in the communications effort across a wide spectrum and it can be costly to implement but will help create and preserve reputational as well as business value for the company.

Annual sustainability reports are one of the ways that a growing number of organisations around the world are communicating with stakeholders about their governance, social, environmental and economic impacts and performance.

Sustainability and integrated reporting is aimed at a wide, multi-stakeholder audience. It is a tool to report performance on issues that stakeholders care about, as well as a process for monitoring internal performance improvements. Both sustainability and integrated reports should form part of a broader strategy for communicating with and reporting back to stakeholders on the outcome of consultations or dialogues.

To be of value, multi-stakeholder reports should be characterised by candour, describing a company’s programmes and policies clearly, accurately, and truthfully. If necessary, it should even highlight challenges still to be overcome and outline steps to address this. Reporting should include a clear understanding of key stakeholder groups — who they are and their main needs and positions — as well as a description of stakeholder engagement processes and a summary of how the company is responding to and addressing stakeholder priorities. In addition, it should contain evidence of how feedback and engagement processes have been integrated into the company’s decision-making processes, supported with examples of results from this integration.

An increasing number of sustainability and integrated reports now make use of independent or third party assurance to attest that the information and data in the report is reliable and based on sound information and management systems. Assurance also evaluates how well the company has identified and prioritised the sustainability issues it needs to address — including consideration of stakeholder needs and concerns — and what it is doing to respond to them. The value of best practice sustainability and integrated reporting is that it requires an organisation to view sustainability issues not just in terms of producing a report, but also in terms of managing the issues in an integrated way.

KPMG’s survey of corporate responsibility reporting in 2008 found that third parties – such as stakeholder panels, subject matter experts, and professional assurance providers – are playing an increasing role in enhancing the credibility of company sustainability reports. The study found that formal third party assurance jumped from 30% to 40% of the Global 250 reports in the past three years, while 27% of reports contained other types of third party commentary, such as stakeholder panels or subject matter expert statements.