Your organisation doesn’t exist in isolation. It relies on multiple interdependent relationships with customers, employees, suppliers, communities and investors; in other words your organisation’s stakeholders.
By engaging with stakeholders, as part of your processes for CSR reporting, organisations can ensure their materiality assessment is robust and inclusive.
The stakeholders you decide to engage with will vary depending on the structure of your between. Interestingly, there has been a noticeable shift in the stakeholders that companies identify as having the greatest impact on CSR business decisions, moving away from NGOs to wider society, consumers and employees.
It may be tempting for companies to think “Why bother?” when it comes to stakeholder engagement because it can potentially create more work and complicate the process of producing your CSR report. But what they should be thinking is “What will happen if we don’t engage?”, as poor stakeholder engagement can lead to stakeholder issues at a later stage. Investors may get nervous, customers may see the firm as unresponsive, or worse, as irresponsible and local communities, where operations are based, may react negatively if they feel disengaged or ignored.
According to the Centre for Innovation in Management, stakeholder engagement provides three key benefits:
#1 It Drives Innovation - By engaging stakeholders, organisations are able to identify new business opportunities as information flow is improved.
#2 It Builds Social Capital - Social capital is defined by the Office for Economic Co-operation and Development as “networks together with shared norms, values and understandings that facilitate co-operation within or among groups”. In today’s world, social capital should be considered at least as important as fixed assets as benefits include greater access to information, improved influence and the benefit of support rather than scrutiny should unexpected problems arise.
#3 Risk Reduction - In a society where global communication takes place at the push of a button; stakeholder engagement can provide an early warning signal for potential risks such as apprehension regarding products and social and environmental impacts.
Engaging stakeholders consistently and from the beginning enables companies to design a programme that helps to identify appropriate standards and approaches to CSR management, recognising that some stakeholders are extremely knowledgeable and may even be involved in the development of these standards and codes. This is extremely valuable when evaluating the options available for CSR reporting.
[image credit: Michael Patterson]