Stakeholder Dialogues Wield Power to Reduce Corporate Risks
The ability to conduct dialogues and thus generate the required involvement with stakeholders is definitely the fastest and safest path to the new business landing. By Fernando Almeida
Day after day, it becomes evident that more and more companies are now integrating social responsibility and environmental management -- supported by sustainable development practices -- into their business practices.
This trend has been confirmed by a recent survey carried out by the World Bank and International Finance Corporation, which found out that chairmen of global corporations dedicate 68% of their time, as compared to five years ago, to this new pattern of conduct.
A company’s public image accounts for loyal customers and so defines its competitive edge. This new and positive image emerges from differentiated internal policies that translate into social and environmental benefits for society that are, actually, higher than those standards required by the applicable legislation. All this takes place, obviously, without any trace of hindrance to the company’s profitability.
The current scenario is highly dynamic and societal demands for transparency are on the increase. Within this context, the key word to reduce corporate risks is “engagement”. This involves, nonetheless, a long process which should responsibly tackle some basic questions, like: Why engage? When? With whom? How and What for?
The answers are to be found in the so-called “stakeholder dialogues.” This is a powerful tool to listen and learn through an exchange and sharing process mediated by professionals from within and outside the company. This process fosters changes in every stratum of society and finds the solutions for specific problems, shapes and prioritizes polemic issues and promotes engagement and participation of all the different stakeholders in order to establish partnerships.
Ill-planned and ineptly conducted dialogues may bring about more evil than good. On the other hand, inertia may lead to losing opportunities, to inappropriate decisions upon a poorly-informed basis and worse, to losing public trust. The process may be triggered by either of these two reasons: the need to set up an internal policy of corporate sustainability -- a proactive action; or because of a crisis -- a reactive action -- which is much less effective.
In the early days of this enterprise we were plagued by myths like “we’re feeding ammunition to our enemies”, or “we’re generating problems and unrealistic expectations,” or even still “stakeholders won’t comprehend the technicalities involved.” Recent experience has proven all these suppositions false.
Stakeholders are comprised within a much wider universe: individuals, people or institutions that are or might be affected by a company’s operations or, likewise, that might impact upon the company’s activities. Just to mention a few: clients and investors, NGOs, authorities, the media, employees, universities, customers and suppliers, among others.
However, some definite standards must be fully understood. Objectives must be clearly stated, and all the interested parties must have a strong enough reason to get engaged. The first steps must be taken inside the company and legitimacy should underlie engagement, as not everyone can be consulted with. There are other equally important starting points: a clear definition of who is to benefit or be affected by a given enterprise; who holds the expertise; and who the potential partners are.
As in any other situation that gathers different participating groups, diversity is a constant variable to consider. This does not mean, at all, that exclusion rules should be adopted, quite the contrary. Exchange should be as open as possible and everyone should be free to venture their opinions; previous mistakes ought to be acknowledged and responsibility taken on. There shall always be different interests, behaviors, beliefs and values and these must be dealt with as expected and common features of the process. Dialogues are opportunities to be wisely used, be it through partnerships or taken as means to help decision-making and foster corporate governance.
It is also important that all stakeholders collaboratively define the extent to which they are willing to engage, how often they can participate and when they can be called upon. There is no ready recipe: each company’s recipe must be developed together with stakeholders for co-authorship determines higher chances of success. It becomes, then, sensible and opportunate to develop policies for the dialogue that are scaffolded by the concept of sustainability. These policies should also supply the employees with specific training so as to be able to assess the various stakeholders’ level of satisfaction, given the company’s limitations, and whether newly established partnerships are legitimate and productive.
Experience has shown this is a hard but rewarding and beneficial process. The Corporate Social Responsibility Guide published by the World Business Council for Sustainable Development, with the collaboration of the affiliated National Councils worldwide – the Brazilian Council among them -- serves as a living meaningful example. A pioneering document about CSR, the guide ”Making Good Business Sense,” is a compilation of 100 stakeholder dialogues held all over the world and has become a must in reading for those who wish to fully comprehend the concept of social responsibility management.
Two more examples must be mentioned: the document drawn from four international dialogues -- one of which was held in Brazil in 2001 -- has projected into the future the issue of sustainable mobility, that is, how the issue of transportation – people, services and cargoes -- may be solved. This $20 million project was funded by 11 global business groups of the transportation and energy sectors. Another example comes from three companies that operate in Brazil -- Amanco, Alcoa and Petrobras, which have implemented Sustainability Councils that have formally embraced the vision of sustainable development at the top of the decision-making process of the three business groups.
Recent events, both positive and negative ones, point to the concept of sustainability as the sole path to survival. Companies that insist on adhering to traditional business models will most certainly not be able to cope with the pressures of an increasingly more competitive and demanding market. The ability to conduct dialogues and thus generate the required involvement with stakeholders is definitely the fastest and safest path to the new business landing.
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Fernando Almeida is the executive president of the Brazilian Business Council for Sustainable Development and a professor at the Federal University of Rio de Janeiro.
This article has been reprinted courtesy of the World Business Council for Sustainable Development.
This trend has been confirmed by a recent survey carried out by the World Bank and International Finance Corporation, which found out that chairmen of global corporations dedicate 68% of their time, as compared to five years ago, to this new pattern of conduct.
A company’s public image accounts for loyal customers and so defines its competitive edge. This new and positive image emerges from differentiated internal policies that translate into social and environmental benefits for society that are, actually, higher than those standards required by the applicable legislation. All this takes place, obviously, without any trace of hindrance to the company’s profitability.
The current scenario is highly dynamic and societal demands for transparency are on the increase. Within this context, the key word to reduce corporate risks is “engagement”. This involves, nonetheless, a long process which should responsibly tackle some basic questions, like: Why engage? When? With whom? How and What for?
The answers are to be found in the so-called “stakeholder dialogues.” This is a powerful tool to listen and learn through an exchange and sharing process mediated by professionals from within and outside the company. This process fosters changes in every stratum of society and finds the solutions for specific problems, shapes and prioritizes polemic issues and promotes engagement and participation of all the different stakeholders in order to establish partnerships.
Ill-planned and ineptly conducted dialogues may bring about more evil than good. On the other hand, inertia may lead to losing opportunities, to inappropriate decisions upon a poorly-informed basis and worse, to losing public trust. The process may be triggered by either of these two reasons: the need to set up an internal policy of corporate sustainability -- a proactive action; or because of a crisis -- a reactive action -- which is much less effective.
In the early days of this enterprise we were plagued by myths like “we’re feeding ammunition to our enemies”, or “we’re generating problems and unrealistic expectations,” or even still “stakeholders won’t comprehend the technicalities involved.” Recent experience has proven all these suppositions false.
Stakeholders are comprised within a much wider universe: individuals, people or institutions that are or might be affected by a company’s operations or, likewise, that might impact upon the company’s activities. Just to mention a few: clients and investors, NGOs, authorities, the media, employees, universities, customers and suppliers, among others.
However, some definite standards must be fully understood. Objectives must be clearly stated, and all the interested parties must have a strong enough reason to get engaged. The first steps must be taken inside the company and legitimacy should underlie engagement, as not everyone can be consulted with. There are other equally important starting points: a clear definition of who is to benefit or be affected by a given enterprise; who holds the expertise; and who the potential partners are.
As in any other situation that gathers different participating groups, diversity is a constant variable to consider. This does not mean, at all, that exclusion rules should be adopted, quite the contrary. Exchange should be as open as possible and everyone should be free to venture their opinions; previous mistakes ought to be acknowledged and responsibility taken on. There shall always be different interests, behaviors, beliefs and values and these must be dealt with as expected and common features of the process. Dialogues are opportunities to be wisely used, be it through partnerships or taken as means to help decision-making and foster corporate governance.
It is also important that all stakeholders collaboratively define the extent to which they are willing to engage, how often they can participate and when they can be called upon. There is no ready recipe: each company’s recipe must be developed together with stakeholders for co-authorship determines higher chances of success. It becomes, then, sensible and opportunate to develop policies for the dialogue that are scaffolded by the concept of sustainability. These policies should also supply the employees with specific training so as to be able to assess the various stakeholders’ level of satisfaction, given the company’s limitations, and whether newly established partnerships are legitimate and productive.
Experience has shown this is a hard but rewarding and beneficial process. The Corporate Social Responsibility Guide published by the World Business Council for Sustainable Development, with the collaboration of the affiliated National Councils worldwide – the Brazilian Council among them -- serves as a living meaningful example. A pioneering document about CSR, the guide ”Making Good Business Sense,” is a compilation of 100 stakeholder dialogues held all over the world and has become a must in reading for those who wish to fully comprehend the concept of social responsibility management.
Two more examples must be mentioned: the document drawn from four international dialogues -- one of which was held in Brazil in 2001 -- has projected into the future the issue of sustainable mobility, that is, how the issue of transportation – people, services and cargoes -- may be solved. This $20 million project was funded by 11 global business groups of the transportation and energy sectors. Another example comes from three companies that operate in Brazil -- Amanco, Alcoa and Petrobras, which have implemented Sustainability Councils that have formally embraced the vision of sustainable development at the top of the decision-making process of the three business groups.
Recent events, both positive and negative ones, point to the concept of sustainability as the sole path to survival. Companies that insist on adhering to traditional business models will most certainly not be able to cope with the pressures of an increasingly more competitive and demanding market. The ability to conduct dialogues and thus generate the required involvement with stakeholders is definitely the fastest and safest path to the new business landing.
-----
Fernando Almeida is the executive president of the Brazilian Business Council for Sustainable Development and a professor at the Federal University of Rio de Janeiro.
This article has been reprinted courtesy of the World Business Council for Sustainable Development.