The 5 keys to successful stakeholder engagement
Engaging stakeholders is a necessary but sometimes challenging process for an organization to undertake and effectively manage on a regular basis. Feedback obtained through the stakeholder engagement process is vital for a balanced and transparent sustainability report.
It demonstrates to readers that an organization is tuned into stakeholder concerns — or areas of opportunity — and is taking active measures to address their input. However, some organizations are still not putting enough emphasis on either the process of engaging stakeholders or disclosing details of the process in their sustainability reports.
Perhaps there is uncertainty around the best stakeholder engagement approach, or the organization has not found the right formula yet. If this dilemma sounds familiar, consider following some of these best practices for successful stakeholder engagement and disclosure.
The Global Reporting Initiative’s (GRI) G4 guidelines — as well as the new GRI standards — emphasize the importance of reporting on content that matters most to an organization and its stakeholders. GRI’s Reporting Principles for defining report content and quality specifically require stakeholder inclusiveness and materiality.
Therefore, to identify what matters most to stakeholders, many organizations supplement ongoing stakeholder engagement practices with periodic materiality assessments to prioritize sustainability topics. All of this information should be considered when determining what information to include in a report.
Organizations across the board typically meet the requirements to list the stakeholder groups with whom they engage (G4-24/Standard 102-40) and many provide details around how each stakeholder group is engaged (such as surveys, focus groups and annual meetings). But companies usually fall short of reporting the specific frequency of their stakeholder engagement and whether they were engaged as part of the reporting process. Further, companies do not always specify the key concerns raised by stakeholders or how they are responding to these concerns.
Keys to success
These five keys to success may help organizations achieve best practices in stakeholder engagement:
- Benchmark other organizations’ reports to identify approaches that resonate with both internal and external audiences. Try to look at companies in your industry as they likely have a similar value chain. Benchmarking peers is an effective way to level set your own organization relative to stakeholder groups and potential material issues.
- Work with internal subject matter experts (SMEs) to identify key stakeholder groups and establish your organization’s current management approach to engagement. These SMEs will have a pulse on what groups to engage as they likely interact with them on a regular basis for their daily operational tasks. This step, also called stakeholder prioritization, is important because not all stakeholders are equal and it’s impossible to try to engage every single one (and in the same way with the same frequency, as we reiterate in step 4.
- Identify whether, and how, all stakeholder groups are being engaged. In the spirit of transparency, if some are not being engaged, provide the rationale for why.
- Establish a calendar of direct stakeholder engagement to ensure regular communication with the various stakeholder groups and employ multiple channels of communication where appropriate. Not all stakeholder groups are equal, and trying to engage them in the same way across the board likely will not provide ideal results.
- Keep accurate records of issues raised, whether these issues were addressed and how, along with other relevant information to help your organization plan ahead and not duplicate efforts. Also, you want stakeholders to feel they are being heard and their concerns — or opportunities — were addressed, so recording interactions with them further demonstrates commitment.
Disclosure best practices
Once you’ve found the right formula for successful engagement, you will be better prepared to disclose your activities and outcomes. Based on issues raised, there are a couple of ways to generally organize the content of your report. One is the stakeholder lens, in which you organize content around what matters most to each stakeholder group.
The second is the material issues lens, in which you organize content around the most material topics and illustrate how and where these issues overlap among stakeholder groups. This approach works well in creating opportunities to brand a sustainability program or management approach long term.
Based on how you organize report content, there are two effective approaches to disclosing stakeholder engagement activities.
One is referring the reader. In this method, provide a high-level summary of stakeholder concerns, then refer readers to specific sections of the report containing the Disclosure on Management Approach (DMA) and other relevant information regarding those concerns. Southwire Company, LLC, does this well in its 2016 Sustainability Report, using a table that lists categories, topics and the stakeholders identifying these topics as material. The topics are linked to other sections of the report that provide the DMA and other relevant information.
The second is the "one-stop-shop." Here, include an all-encompassing section within the report (often in a Stakeholder Engagement section or Appendix) that describes each element of the engagement process.
The table format is a clear and concise way of presenting this information. Edwards Lifesciences provides detail about its materiality and stakeholder engagement processes in one report section, using an interactive materiality matrix that allows the reader to click on a topic and see the definition, why it's material, which stakeholders are affected and the company’s associated aspirations.
While the steps to success are unique to each organization, these steps should open the doorway to better sustainability reporting.