Corporate Social Responsibility

by Becky Toal and Veronica Broomes

Your stakeholders

Most businesses understand and can identify financial risks to their operations; however, if a organisation is to engage in the responsibility agenda, it is important to have an understanding of stakeholders and how to interact with them, as this helps identify non-financial risks.

So who are your key stakeholders? How do you identify them and engage with them?

Who are stakeholders?

A useful definition of ‘stakeholder’ is

  • Anyone who has an implied or explicit contract with your organisation
  • People who can influence or are affected by the activities of the organisation
  • People who posses the information, resources and expertise needed for strategy formulation and implementation.

So, for example, stakeholders might include

  • Your employees
  • Customers
  • Suppliers
  • Sub-contractors
  • Shareholders
  • Local neighbourhood/community
  • Regulatory bodies, such as the Environment Agency and local authorities.

All businesses will have certain stakeholders, such as the Environment Agency and their respective local authorities. In most other cases, however, stakeholders will vary according to sector, key activities of the business, geographic location and so on.

Engaging with stakeholders

I think we have moved from a shareholder society to a stakeholder society, and that has massive implications.

Richard EDELMAN (CEO of Edelman)

A key process in developing your business CSR strategy will be to engage with your stakeholders. This will help you to understand their views, establish priorities, resolve conflicting interests, formulate actions and review progress. It also helps to build and deepen two-way understanding and trust.

Before you engage with your stakeholders, you must first identify them. This can be done by preparing a list or developing a stakeholder network based on a specific activity. Using this, you can then begin identifying who will be involved in taking specific action or will be among those to be consulted, for example, on developing and/or marketing a new product or service. Managers can also use process mapping of a given task or event to identify the various stakeholders.

Stakeholder identification and engagement does not need to be overly complicated. Many businesses will already be undertaking such activity in the form of

  • Customer feedback/satisfaction surveys
  • Customer complaints
  • Employee satisfaction surveys
  • Supplier feedback
  • Data from tender documentation
  • Employee intranet
  • Team briefings
  • Presentations (in house and visiting)
  • Workshops and seminars
  • Employee focus groups
  • Staff suggestion schemes.

Bigger examples of stakeholder engagement include

  • Customer focus groups
  • Market research
  • 360 degree feedback on products and services.

Identifying stakeholder issues

Ideally, stakeholder dialogue will align business practice with stakeholder expectations, thus creating stakeholder loyalty and offering many other advantages. It can form the basis for the creation of relevant key performance indicators in the area of CSR, demonstrating both accountability and transparency, as suggested below.

General CSR issues for stakeholder groups

Stakeholder Group Interest area Possible concerns and considerations

Shareholders

Governance of your business

  • Executive accountability and control of performance
  • Executive remuneration

Socially responsible investment

  • Investment decisions based on potential CSR issues over the long term

Employees

Working conditions

  • Terms and conditions of employment (working hours, pay, holidays and so on)
  • Health, safety and environmental regulations
  • Managing varying local standards in international operations
  • Contract labour and wider supply chain issues

Fair wages

  • Minimum wage and equal pay
  • Managing varying norms in different countries

Diversity

  • Equality of opportunity
  • Discrimination on the basis of race, gender, age, religion, disability, sexual orientation and nationality

Consumers

Product responsibility

  • Product safety and labelling for environmental concerns/animal welfare/socially responsible practices and products, such as low fat/low salt products, recyclable products

Marketing

  • Misleading or deceptive marketing practices

Pricing

  • Anti-competitive behaviour and/or malfunctioning markets leading to unfair pricing
  • Affordable access where users have an irrevocable need, such as for housing, food and medicine

Vulnerable consumers

  • Duty of care to vulnerable consumers, especially in relation to products perceived as harmful, such as alcohol and cigarettes

Governments and regulators

Lobbying and party financing

  • Transparency on payments and lobbying priorities

Suppliers

Sourcing

  • Responsible sourcing, taking account of issues such as labour standards and environmental management in the supply chain

Fair contracts

  • Transparency of contract
  • Abuse of market power
  • Payment terms

Society/Local Community

Environmental and social NGOs

  • Environmental issues, such as climate change
  • Access to clean water/pollution
  • Habitat loss, sourcing of products/services

Emerging economies

  • Management of bribery and corruption
  • Variations in local standards

Contribution to local economy

  • Revenue sharing, particularly linked to the exploitation of natural resources

Taxes and subsidies

  • Responsible practice in tax planning
  • Transparency of payments

Human rights

  • Child labour/working hours
  • Forced labour/gang master labour
  • Proactive protection of human rights in areas of high risk

Relationships with local communities

  • Resettlement issues
  • Management of nuisance