Engaging Stakeholders Can Help Deliver Sustainability Strategy, Create Value for the Company.
By Tensie Whelan and Chisara Ehiemere
In today’s hyperconnected and social media-dominated world, stakeholders of all kinds can have a significant impact on your business success. A tweet from a disgruntled employee, a photograph of problematic labor conditions or a social media campaign by an activist group can go viral overnight. Stakeholders represent a risk to be managed far more proactively and authentically than in the past. But stakeholders also represent an opportunity for improving credibility, reputation, reach, strategic planning and competitive advantage, and for building coalitions to tackle sustainability challenges.
A company needs to map the importance and influence of their stakeholders, evaluate what they care about through the lens of ESG and determine how to interact with them on relevant sustainability topics. Assessing stakeholder opinions on material ESG issues can be done as part of developing a materiality matrix or through stand-alone stakeholder outreach and surveys. Once that initial research is done, the company can then assess how best to interact with different stakeholder groups to implement its sustainability goals. For example, a company could collaborate with a stakeholder or just monitor them.
Stakeholder importance differs from influence in that a stakeholder group may be important to the company for its business success but not individually influential. For instance, tomato farmers for a ketchup company are necessary (thus important) to produce ketchup but not influential, while the large retail customer selling the ketchup will be very influential. Internal stakeholder opinions are also important and are reviewed separately from external stakeholder opinions; they show up on two different axes in a materiality matrix.
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Tensie Whelan is a Clinical Professor of Business and Society and Director of the Center for Sustainable Business.