• Establish clear and realistic timeframes for stakeholder input . Without proper planning and input, a stakeholder engagement issue can continue to escalate until a proper consultation plan is put into place and appropriate actions are taken to address the situation. Stakeholders are people interested in your company, ranging from employees to loyal customers and investors. Now that you have identified all the stakeholders for your RFP, here are a few things a comprehensive stakeholder team will help you determine: Thorough RFP requirements. Stakeholders can be internal or external, including employees, investors, consumers, communities, NGOs, governments, regulators, the media, and business partners, among others. Its goal is to build trust and to create tangible and intangible value, both for your company and relevant stakeholders. Market constituents, including employees, customers, suppliers, and creditors can directly trigger a shortfall in economic rents due to unfavorable economic choices. Increased access to the internet and mobile services and the sophistication of social media platforms has boosted the capacity of civil society, consumer groups, and activist organizations to share any information about (alleged) adverse business impacts on local stakeholders in real-time and on an unprecedented, global scale. Stakeholders provided input on: the benefits and challenges of a national performance measurement framework for BAIs including the sharing and standardization of data and, the viability of BAIs to share data to determine a) how BAIs influence start-up performance, and, b) how to establish an appropriate … A study by Wang and Choi (2013) finds that enhanced financial performance driven by positive stakeholder relationships isn’t only dependent on the company being actively involved in social actions. However, according to the analysis, there’s still a long way to go to improve the quality of the information provided. Corruption is another global threat to sustainable development that is highly relevant for corporate stakeholder relations. Engaged with its Stakeholders”, published in the Summer 2011 edition of the MIT Sloan Management Review, Gap reacted by putting together “a team of internal auditors to verify that contractors were living by its code of conduct.”  Ideally, this initiative would have been able to effectively monitor all outsourced factories and make sure that they were all operating within established labour relations standards and by the Gap code of conduct. Read more in our blogpost: 10 Business opportunities of supporting the SDGs. According to the MIT Sloan article, Gap reacted by communicating up front with trade unions and NGOs with the result that they and other stakeholders did not react negatively towards Gap (as they had previously done) because they participated in Gap’s decision-making and were pleased with how Gap handled the situation. For example, in 2007 a new labour relations conflict arose in India. Another challenge is defining the relative value of different stakeholder input. Your email address will not be published. According to an article by N.C. Smith, S. Ansett and L. Erez, entitled “How Gap Inc. Widely used international guidelines and frameworks for social responsibility, such as ISO 26000 and AA1000 AccountAbility Stakeholder Engagement Standard (2015), stress the importance of including the perspectives of your organization’s relevant stakeholders in decision-making processes. There are a number of steps to take when developing an engagement plan that include, but are not limited to: Communica’s expertise is supporting our clients with these services, and providing a dedicated and experienced team of resources to help clients achieve their stakeholder engagement goals. Several guidelines on the market focus on human rights grievances, in accordance with the so-called Remedy Pillar of the widely used, voluntary UN Guiding Principles on Business and Human Rights. This Consideration Memo summarizes how key themes from stakeholder input have been considered in refining the structure and implementation of the Gateway Infrastructure Fee. The Gateway improvements are estimated to produce an economic benefit of $528-790 million. Actively reaching out to external stakeholders during the elaboration and evaluation of sustainability reports is also very relevant if your company commits to supporting the Sustainable Development Goals. Business is about relationships – whether you’re in the business of a start-up, government, a non-governmental organisation, or small or big company. Five Benefits of Stakeholder Engagement When done right, stakeholder engagement yields specific benefits including: ... burning issue comes up, the quicker you can get in front of stakeholders to gather input, the better. Grievance mechanisms are an effective component of any stakeholder strategy aimed at creating peaceful relations with local communities as well as workers and their families. Your email address will not be published. You can do a lot of this by seeking stakeholder input … 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. For example, in 2014, the longest running corporate social responsibility benchmark: the Dow Jones Sustainability Index added the quality of companies’ stakeholder engagement as an assessment criterion. The Reporting Exchange (2018) registers more than 2,000 global and national reporting provisions. Businesses tend to value stakeholders because of the unique benefits they can bring to the way a company is managed, by the expertise their workforce provides or the ability of individuals to generate capital investments to secure the long-term growth of the business. It was at this stage that Gap executives decided to reevaluate their strategic stakeholder engagement approach, or lack of same. The average reporting quality score for those companies that had prioritized SDGs is 2.71 out of 5. The benefits of getting RFP stakeholder input. This means stakeholders, integral to the product development process, will actively participate by providing direct input at all stages of the development cycle. You take action to keep the relationships alive. A good ranking score in corporate benchmarks is, in itself, a way to improve trust among financial stakeholders. Stakeholders exist both within the organization and outside of it. The BSDC calculates that achieving the goals will open up 12 trillion dollars in market opportunities and lead to the creation of more than 380 million jobs in both developed and emerging economies. It can also positively impact sales and market value. Supporting the Sustainable Development Goals (SDGs) is a powerful way for your company to help reduce these global challenges. Required fields are marked *, Website: Sabine Boogaard  |  Logo: Kamaleones, SustainAbility Common Threads survey (2018), AA1000 AccountAbility Stakeholder Engagement Standard (2015), IO Sustainability and Babson Social Innovation Lab, ISO 26000 and AA1000 AccountAbility Stakeholder Engagement Standard (2015), the BSR report The future of stakeholder engagement, Queensland University and Harvard Kennedy School study, the toolkit developed by the International Council on Mining and Metals (ICMM), Doing business with respect for human rights, World Economic Forum’s Global Risks Perception Survey 2018-2019, The UN Guiding Principles on business and human rights. There was an acknowledgment that return to work can be much more challenging today due to the complexity of the lives of Nova Scotians, many of whom … Transparent and continuous communication between the company and local populations and clarity about the benefits and risks involved in the company’s activities are also critical to building trust and social legitimacy. ... Benefits of Stakeholder Engagement Benefits of stakeholder engagement for RECBC include: • Understanding the views of stakeholders . We all know that communication in the workplace is paramount to a safe environment so involving stakeholders, especially employees, in the process of assessing risks makes a lot of sense. Human rights risks are among the major global threats. Top management may include the president of the company, vice-presidents, directors, division managers, the corporate operating committee, and others. Customers, investors, and regulators around the globe are calling for transparent reporting about the impacts of business activities on communities and local societies. Below we’ll highlight 7 of them. Stakeholders give your business practical and financial support. They have different objectives and goals based on … In turn, when a firm performs well financially, good stakeholder relations help sustain this positive performance for a longer period of time. And to elaborate those reports, it’s important to actively involve communities, civil society groups, local authorities, and other stakeholders present in your organization’s areas of influence. Actively manage stakeholder expectations. Increased stakeholder engagement has numerous benefits: Dedicating resources to communicate your company’s commitment to this field – and help build trust with your stakeholders. This does not mean that Gap will never encounter another stakeholder issue; nonetheless, it shows that they are much more prepared to handle critical situations should they arise, and to engage and communicate with those stakeholder audiences. Benefits of GST in India for industry and business: Ease to perform: Read more in our blogpost: 10 Business opportunities of supporting the SDGs. Of respondents to the World Economic Forum’s Global Risks Perception Survey 2018-2019, 34% expect the risk of human rights violations to increase in the short term. It contributes to instability and poverty and its consequences hurt vulnerable people disproportionately. Approval among relevant stakeholders comes with quantifiable business benefits. Several challenges related to specific human rights are also expected to grow significantly. o Maintain engagement throughout the life of the project, process or activity (from planning , through implementation, to review). Evidence with risk assessments by private sector actors across the globe shows that these processes are most effective if the perspectives of affected communities are added. On-the-ground experiences such as those of mining companies in Peru demonstrate that a social license to operate starts with deeply understanding the socioeconomic environment and a strong commitment to the community. Save my name, email, and website in this browser for the next time I comment. The UN Guiding Principles on business and human rights stress the importance of human rights due diligence by companies to guarantee the dignity and well-being of local communities and other stakeholder groups that can be affected by business activities. This includes listening to the views and beliefs of stakeholders as well as seeking their feedback. If your company engages in strong stakeholder relationship management practices this can pay off with reputational gains that support sales … An examination of the UN Global Compact”, “Integrating the Sustainable Development Goals into Corporate Reporting”. It will remove the economic barriers, boost the economy and will make our products and services more competitive. Our team helps companies identify these types of external risks up front and assists with the creation of appropriate stakeholder engagement plans. Stakeholders can comprise of a group or a body … Is it proactive or reactionary communication? Performance Standards on Environmental and Social Sustainability issued by the International Finance Corporation (IFC), UN Guiding Principles Reporting Framework, the GRI & UN Global Compact’s practical guide, 8 Benefits of maximizing your business’ social impact, 7 Steps to turn conflict risk into opportunities for responsible business. Information – and misinformation – spreads fast, and reputations can be severely damaged before corporations get around to investing time, money and resources to try to “fix” a problem that is already out of control. The success or failure of any policy or product starts and ends with stakeholders. Others are no less important but are involved only in parts of the project, such as subject matter experts, cross-functional … Including multiple points of view and information sources brings in knowledge your organization would otherwise not have access to, helping it to arrive at unforeseen solutions. Investing in relationships with neighboring communities is even more important for companies in sectors with a high potential for causing adverse social and environmental impacts. While building collaborative relations with your neighbors is essential to doing business based on values, it is also becoming a critical component of reputation management among your company’s wider audiences. The benefits of quality stakeholder engagement are manifold. It’s a frequent complaint from NGOs and civil society groups: companies continue to invite them to invest time and share their insights but don’t reflect this input in changed behavior. It is also about utilising the vast amount of information and knowledge that stakeholders hold to find workable, efficient and … This means there are plenty of reasons why your company should invest in a solid stakeholder engagement strategy and issue quality reports to inform its audiences about the impacts it has on people and society. In the mid-1990s, Gap was accused of outsourcing the manufacturing of its products to factories that operated with sub-par labour standards. According to the World Economic Forum corruption costs the global economy 3.6 trillion dollars every year. Typically, stakeholders can be catego… With the latter approach, it isn’t until organizations find themselves over their head in public scrutiny that a stakeholder engagement plan becomes front of mind. According to a Queensland University and Harvard Kennedy School study, the conflict between companies and communities can incur costs of 20 million US dollars per week for extractive industry projects valued between 3-5 billion dollars. The benefits of stakeholder analysis are: You can identify the most powerful stakeholders and have them help shape your project in its early stages. It’s important to put procedures for handling grievances in place as a standard practice instead of waiting until incidents occur. There are a number of steps to take when developing an engagement plan that include, but are not limited to: 1. Input from stakeholders tells the company what kind of software is needed, suggesting ideas for features or problems it needs to solve. These assessments should include indicators for human rights risks, environmental impacts that could threaten traditional livelihoods, and conflict risks if your company operates in fragile areas. ... All port users will benefit from the GIF projects. This includes identifying public concerns and values and developing a broad consensus on planned initiatives. The benefits of stakeholder engagement It offers those who will affect or be affected by the outcomes a chance to voice their opinions It ensures that an organisation has greater clarity and a shared vision amongst its key influencers Include representatives of stakeholder groups in discussions for strategic planning to the greatest extent possible, and do not limit planning and … Stakeholder management includes the identification of your stakeholders and seeking to understand their preferences. A meta-analysis of hundreds of corporate responsibility studies by IO Sustainability and Babson Social Innovation Lab finds that firms that treat their stakeholders well have the potential to increase their market valuation by 40% to 80% compared to companies with average or weak relationships. Suppliers. Suite 1410, 150 - 9 Avenue S.W. Sound stakeholder management can increase sales and market valuation, Stakeholder engagement improves your company’s decision making processes, Effective relationship management enhances your company’s social license to operate, An ongoing dialogue with communities prevents costly conflicts, Stakeholder engagement helps your company address global sustainability challenges, Engagement of local civil society enhances effective risk management, Stakeholder engagement is key to quality impact reporting, 7 Ways promoting human rights adds value to your business, AccountAbility Stakeholder Engagement Standard, IO Sustainability and Babson Social Innovation Lab, Project ROI study: “Competitive and Financial Advantages of Corporate Responsibility and Sustainability”, Corporate Social Performance study by Wang and Choi (2013), Guidance on social responsibility – ISO 26000, Article by Claudia Sícoli Pósleman: “Social license to operate in the mining industry: the case of Peru”, BSR Report: “The Future of Stakeholder Engagement”, Doing business with respect for human rights: Remediation and grievance mechanisms, World Economic Forum’s Global Risks Report 2018-2019, UN Guiding Principles for Business and Human Rights, “Corporate social responsibility and financial performance relationship: a review of measurement approaches”, Performance Standards on Environmental and Social Sustainability, “Does voluntary corporate citizenship pay? As these populations are becoming increasingly well-informed and capable to voice their concerns, there will be an increase in their demands for responsible corporate behavior around social and environmental matters that affect their lives. Failure to engage can cost time, money and reputation, and … 10,11,14,23 Only a limited number of stakeholders are engaged per review and it can be a challenge to determine whether a particular stakeholder is an outlier or has a personal or political agenda. Less stress for your stakeholders translates into less stress for you as the project manager. Through these mechanisms, individuals and communities can voice their concerns over the alleged adverse impacts of your company’s activities or those of its suppliers. The IO Sustainability and Babson Innovation Lab study finds that risk reduction and enhanced license to operate associated with socially responsible business practices has the potential to protect as much as 10% of the firm’s value. Common complaints include human rights incidents or environmental damage. If your company doesn’t really modify decisions based on relevant stakeholder input, they’ll see no point in participating again. All stakeholders can have a say in the development of an effort that may seriously … Read more in our blogpost: 7 Ways promoting human rights adds value to your business. That’s why it’s critical to conduct solid context analysis and risk assessments that go beyond the identification of risks to your company and take into account potential negative effects on local populations. Good relations and strategic partnerships help your company and your stakeholders address critical global challenges that impact local societies and create stable and sustainable operating environments. While stakeholder engagement can include many different internal and external interest groups, at FairChange we prioritize engagement with local populations and civil society groups who are directly impacted by your business’s decisions and activities and that can, inversely, impact your company. Some are more important to the life of the project, such as the sponsor, steering committee, or project team members. Without respect for the human rights of everyone, just and inclusive development is not possible. Evidence analyzed by IO Sustainability and Babson Social Innovation Lab suggests that a company’s performance in certain ratings may result in improved financial performance. In fact, there’s an increasing demand for transparency expressed by consumers, investors, and a critical community of civil society and online campaigning organizations. These assessments typically build a business case using financial measures to determine which alternative aligns best with the project objective(s) and organizational strategy. According to the AA1000 AccountAbility Stakeholder Engagement Standard (2015) –the most widely applied global framework on this issue– organizations should involve stakeholders in ‘identifying, understanding, and responding to sustainability issues and concerns.’. Talk to your stakeholders throughout the project to ensure a common understanding of the project scope, benefits, and time and cost estimates. The 17 SDGs, endorsed in 2015 by the government members of the UN, are a roadmap for collective action across sectors to achieve inclusive economic development, social justice, and protection of the environment by 2030. Stakeholder participation, in turn, improves the quality of the decisions your company makes about its actions for positive social impact. Actively involve stakeholders in the process. A system must be in place that holds companies to account for their policies, so that they can then be accountable to the public and to their … They also have a statistically significant higher Return on assets (ROA). Improved communication. Sound stakeholder management can increase sales and market valuation. Effective engagement with key stakeholders leads to enhanced trust, reputation, and brand value. They broaden the pool of people who care about the well-being of your company, making you less alone in your entrepreneurial work. Your company’s stakeholders should participate in all cycles of the sustainability reporting process, from the definition of material topics (or priority management issues) to the evaluation of the quality of previous reports. Also, the GRI standards demand that the sustainability report should be clear about the key topics and concerns that have been raised through stakeholder engagement, how your organization has responded to those issues and concerns, and how these are being included in the company’s management and reporting cycles. Stakeholder engagement is not a new concept. Effective dialogue with stakeholders enhances the quality of decisions on issues that impact your stakeholders. After all, these are the people who will shape and influence future successes (or failures).A stakeholder is anyone with an interest in the business, either having an effect on the business or being affected by it. The extractive industry has gained considerable experience in the development of grievance mechanisms and many tools are freely available online to help oil and mining companies set up and implement such mechanisms. This is why the prevention of complaints and conflicts must be at the center of your company’s community dialogue strategies as an ongoing effort. A good place to start is the guide about remediation and grievance mechanisms by Doing business with respect for human rights, the leading center of expertise on the Guiding Principles. Several studies document evidence across countries and industry sectors demonstrating the positive relationship between corporate social responsibility and a reduction of financial risks. Participatory planning requires the involvement of concerned stakeholders. The benefits of stakeholder participation in IFM are to: Provide all stakeholders with full opportunities to share their views, needs and knowledge on flood management Build consensus through bringing together a diverse range of stakeholders to share needs, information, ideas and knowledge and harmonize … Still, even today, many companies think maintaining an ongoing dialogue with key social groups is not worth the investment. 1 INTRODUCTION ... 2016-2020 to fully realize the benefits of these changes. Large projects often assess the feasibility of multiple alternatives during the initiation phase. It’s fair to everyone. Subscribe to our Energy News Digest (END) to receive the top energy headlines delivered to your inbox weekly. Establishing dialogues with multiple stakeholder groups enriches your organization’s capacity for analysis. Calgary, Alberta, T2P 3H9, Office 2178 – 200-120 Lonsdale Ave., North Vancouver, BC V7M 2E8. The two most common advantages include: 1. Business experience. Global Goal 17 addresses the importance of stakeholder engagement and multi-stakeholder partnerships–-including public-private and civil society alliances. The participation of relevant stakeholder groups is central to the Global Reporting Initiative (GRI) reporting standards –which are the most widely used sustainability disclosure framework adopted by larger companies across countries and increasingly by small and medium-sized companies too. Suppliers are people or businesses who sell goods to your business … A stakeholder is a party with an interest in an enterprise or project; stakeholders in a corporation include investors, … An ongoing and meaningful dialogue with neighboring communities and other local stakeholders helps your company prevent disputes and protests that disrupt operations and may result in significant security risks. Learn about how bundling software and services ensures consistency, excellence and risk mitigation across your projects or operations. According to the ‘Better business, better world’ report of the Business and Sustainable Development Commission (BSDC), embedding the SDGs into business models is not only an effective strategy to manage global risks, the positive business impacts are also compelling. Quality engagement with local communities and civil society groups is part of being a good corporate neighbor and improves your company’s social license to operate. It thus prevents extra business costs and revenue losses stemming from actions that look to affect business operations such as blockades, boycotts, or sabotage. The system you use needs to be easy and fast to If the way it treats a stakeholder group varies markedly over time or the quality of its relations differs across multiple stakeholder groups, this will lead to the perception that its commitment to social responsibility is inconsistent. The importance of a positive relationship with stakeholders for a company’s market value is illustrated by the inclusion of stakeholder engagement in corporate rankings. Through gaining support from powerful stakeholders, you’ll generate more resources – making the project more effective. Although it’s not always easy to effectively balance the information needs of these different reader groups, it’s certainly worth the effort. Stakeholder engagement has evolved significantly over time and today it is recognized as a fundamental mechanism for inclusive decision making and accountability. Effective stakeholder engagement strategies increase your company’s capacity to assess and manage social risks and impacts. This, in turn, is the most effective way to avoid unforeseen consequences ending up at your company’s gate when it’s much more difficult to manage them. Organizations that are socially responsible engage stakeholders in the initiation phase of a project to solicit their feedback on the alter… Required fields are marked *. Examples include: ‘loss of privacy to companies’ (related to the fundamental right to privacy), which respondents think will increase by 63%, and ‘high levels of youth unemployment’ (related to the right to work) by 58%. Within the rapidly expanding movement around corporate social responsibility and social impact management, stakeholder engagement –especially with neighboring communities and relevant civil society groups– is considered a key strategy area. Building positive relations with key stakeholders enhances your company’s license to operate. Either way they have a vested interest in the final product. CEOs surveyed for the SustainAbility Common Threads report 2018 measure the benefits of active stakeholder engagement through a mix of quantitative and qualitative indicators that include removal from NGO campaign target lists, withdrawal of shareholder resolutions, and identified or realized commercial opportunities. Companies should not only report on their own actions, but also about the impacts created by actors in their local or global supply chains. Specific benefits This, in turn, can positively affect financial performance. 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