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How Stakeholder Engagement Can Make or Break a Climate Strategy

<p>A business that engages and communicates effectively with its stakeholders might be better prepared for climate change, and will certainly be better prepared to take advantage of the new opportunities arising from climate change.</p>

Climate change will expose businesses and other organizations to a range of new risks and opportunities. An important strategy for managing risks and exploiting opportunities involves stakeholder engagement and communication: A business that engages and communicates effectively with its stakeholders might be better prepared for climate change.

A Changing Climate for Business

Climate change exposes businesses to an array of risks and opportunities. Some of the new risks and opportunities businesses will face will be common across all business sectors, while others will be organization-specific, depending on where the business is located, what they are doing and what their priorities are.

Many risks and opportunities are already present, including the opening up of new markets and services (e.g. low carbon solutions), emergence of new legislation (e.g. the CRC Energy Efficiency Scheme) and the occurrence of climate-related impacts (e.g. increased incidence of flooding).

However, the future evolution of risks and opportunities related to climate change is hard to quantify, making them difficult to include in formal business and strategy planning. Furthermore, the emergence of "new" risks and opportunities makes it problematic to make judgements based on past experience.

Why Engage and Communicate?

Communicating how a company is managing climate change -- how risks are minimized, opportunities exploited and solutions developed -- is a crucial element of creation. Communicating its approach to climate change can help distinguish a company from the competition and offers opportunities to gain competitive advantage.

For example, construction companies are finding that pre-qualifications and tenders increasingly include criteria relating to whether the challenges of climate change (as well as other aspects of sustainability) are being addressed, such as the embodied carbon of materials used.

Many companies submit to third party sustainability ratings schemes as a way of reporting progress and benchmarking against peers. Yet, these schemes are frequently based on the quality, clarity and transparency of information submitted rather than evidence of actual performance.

Hence, clear communication of businesses' views, strategies and actions on climate change, and evidence that they have engaged with and understand the concerns and priorities of their stakeholders, can be the most important factor in determining companies' final scores and positions.

One of the most high-profile third-party measures of how businesses are responding to climate change is the Carbon Disclosure Project (CDP). Now in its tenth year, the CDP has encouraged 3,000 organizations from across the globe to voluntarily measure and disclose their greenhouse gas emissions and climate change strategies, and it is seen by many as the definitive listing of corporate action on climate change. The CDP's profile was raised further in 2010 when Google added companies' CDP Leadership Index scores to the "key statistics and ratios" section on its Finance pages.

Crucially, however, the CDP Leadership Index is not a measure of a company's absolute performance, as it makes no judgment about the success of mitigation actions or emission reductions. Instead, a company's Disclosure Index score "reflects the comprehensiveness of a company's response in terms of the depth and breadth of its answers." This necessarily includes demonstrating understanding and management of exposure to carbon- and climate-related risks and opportunities.

Given the blend of certainty (that there are risks and opportunities associated with climate change) and uncertainty (about their nature, timing and scope), engaging the relevant communities of interest, or stakeholders, is often considered as a key to success.

Stakeholders bring different perspectives, values and expectations that can help a business build a better understanding of the nature and scope of the climate risks and opportunities, and how best to approach them. Ensuring that a broad range of perspectives is considered increases the likely acceptability, as well as the effectiveness, of any proposed actions.

Consequently, stakeholder engagement and communications are becoming a critical element of how businesses approach climate change.

Why Online?

Online stakeholder engagement is becoming increasingly attractive to businesses, as a way of complementing traditional face-to-face dialogue, and tools such as StakeholderTALK, developed by IMS Consulting, have opened up new possibilities for all involved. Businesses are no longer limited to providing static snapshots of their actions and achievements in relation to carbon management and climate change, and are starting to develop more dynamic and responsive ways of disseminating information.

Emerging web technologies like social media and crowdsourcing are starting to be understood as realistic means of inviting mass collaboration from a large (often undefined) community of stakeholders.

For stakeholders, online engagement means that they can communicate when it is convenient or appropriate for them, making the process of consultation simpler, cheaper and more accessible. It ultimately opens the way for genuine two-way engagement, where responses to issues like climate change can evolve as an outcome from discussion between businesses and their stakeholders.

Engagement and Communication in Practice

In practice, there are many ways in which businesses may choose, or are in some cases required, to engage with stakeholders and communicate progress on climate change. Online stakeholder engagement and communication can help businesses respond to this challenge in various ways:

1. Awareness-raising. An important foundation for any business serious about climate change is raising awareness. This could include awareness of what climate change means, how it impacts on the business, what measures have already been taken, which staff are responsible and what future initiatives are planned.

Such communications might be directed at staff, particularly where an organization is comprised of multiple divisions or units, or might be intended for external stakeholders such as suppliers and clients. Online stakeholder engagement can be used to provide a dedicated online home for such awareness-raising efforts.

2. News. With climate change and related topics constantly in the news, it is sometimes difficult (and certainly time-consuming) for staff to untangle important and useful stories from the background noise. Filtering and delivering targeted climate change news and intelligence has become an increasingly useful exercise, to ensure that the workforce is aware of any important developments that might affect the business. Dedicated online climate change news can be an effective way for a business to capture and deliver relevant news stories to staff.

3. Good practice examples. Most businesses will have particular activities and actions associated with climate change that they are proud of, but not all of them necessarily communicate this effectively to their stakeholders. Reporting best practice is particularly powerful for businesses that are project-based, as it allows successful aspects of different projects to be showcased.

Establishing a central set of online case studies, that can be searched and downloaded by staff and external stakeholders alike, is a relatively straightforward but effective way of demonstrating real evidence of progress made addressing climate change.

4. Risks and opportunities. Anticipating the risks and opportunities presented by climate change has become an important part of business planning. Which risks and opportunities are considered significant or important varies considerably from business to business, making it crucial to engage staff, management and external stakeholders.

Online stakeholder engagement can be used to help businesses better understand the climate change risks and opportunities that are of greatest concern to its stakeholders, and to encourage discussion about how to prioritize them in business planning.

5. Behavioral change. Perhaps the ultimate goal for any company who wants to take a real lead on climate change issues is to become established as thought leader that can effect wider behavior change. Online stakeholder engagement is a powerful tool for facilitating how a company is perceived by the market and by society as a whole.

It can be used as a means to publicize policy initiatives, such as a requirement for suppliers to commit publicly to a particular climate change pledge or agreement. Alternatively, it might be through a wider online campaign or manifesto that aims to both promote the efforts of a business while challenging competitors or the public to make similar changes.

Putting Engagement and Communication at the Center of the Process

The challenges created by climate change are complex and wide-ranging, and the processes for dealing with them efficiently are still evolving. It is inevitable that businesses don't have all the right answers (no-one does), and only by trying different approaches -- and crucially asking and sharing what is important, what worked and what didn't -- can they develop robust solutions.

For this, engagement and communication is essential; not only to share good practice and showcase successes, but also to understand priorities and shortcomings, and to explore what lessons can be learnt from them.

Stakeholder engagement and communication are increasingly central to effective management of climate risks, yet from IMS Consulting's experience, are still commonly perceived as "optional extras" or "bolt-ons." In some cases, after spending considerable time and resources developing strategies and solutions for climate change, businesses then communicate them poorly to their stakeholders.

In others, the strategies and solutions may themselves have been improved had stakeholder engagement occurred earlier in the process. Instead, engagement and communication need to be viewed as an important part of the process; sharing and improving businesses' climate change intentions, actions and outcomes. Online stakeholder engagement represents a relatively straightforward way in which this can be achieved.

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