2. What is a Stakeholder ? Any group or individual who can affect, or is affected by, an organisation or its activities. Also, any individual or group that can help define value propositions for the organisation Building stakeholder intelligence
3. What Does This Mean For Businesses ? MONTREAL - The Quebec Federation of Labor, the province's largest union group, said Wednesday it is calling on consumers to boycott Shell Canada gas stations for 24 hours late this week to protest against the European parent Royal Dutch Shell PLC's decision to close its 100,000 barrels-daily Montreal East oil refinery Building stakeholder intelligence
4. What Does This Mean For Businesses ? Alberta's oilsands are facing a new cross-border assault, with a community in the U.S. boycotting the resource and a cosmetics store in Canada demanding development be halted. Building stakeholder intelligence
5. What is Engagement ? An organisation’s efforts to understand and involve stakeholders and their concerns in its activities and decision-making processes Building stakeholder intelligence
6. The Three Phases of Stakeholder Engagement The Awareness Era – 80’s The Attentive Era – 90’s The Engagement Era – the 2000’s Building stakeholder intelligence
7. Corporate Social Responsibility CSR - companies are accountable The Global Reporting Initiative Building stakeholder intelligence
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11. Increasing Regulation The Massachusetts Privacy Law 2010 Mandates Encryption of Personally Identifiable Information Standards to be met by persons who own or license personal information about a resident of the Commonwealth of Massachusetts A Massachusetts resident's first name and last name or first initial and last name in combination with any one or more of the following data elements.... financial account number, or credit or debit card number Building stakeholder intelligence
14. Management are often unaware of impacting issues until it is too late.Building stakeholder intelligence
15. Corporate head office have a monthly reporting process Responses are inconsistent Inadequate data is transcribed into (yet) another database Information never reaches the managers and decision makers who need to use it Common Case Study Building stakeholder intelligence
16. What Can We Do ? Identify your stakeholders Decide how you want to engage with your stakeholders Understand how you are currently engaging with your stakeholders Gap analysis Develop a plan to address the gaps Develop tools to support the plan Building stakeholder intelligence
17. Summary Today’s corporate environment is increasingly focused on deeper engagement with stakeholders Few organizations are equipped to meet the increased regulatory burden that comes with engagement Penalty Costs Opportunities Building stakeholder intelligence
Thanks for coming out today – we appreciate your interestI’ve got quite a broad mandate today – I’m looking to give you a brief introduction to the background of stakeholder engagement and how it could apply to your daily lives – in doing that, I recognise that I have quite a spread of roles here so I’m going to try to include something for everyoneThe key underlying theme that I want to pick up on, however, is the role of stakeholder engagement in risk – the risk to your businesses of doing something wrong in your relationships with stakeholders and the opportunity risk from not engaging appropriately – to start, I’d like to go back to basics and look at the most obvious questions
When talking to people I often get asked – what is a stakeholder ? The first thing to say is that, to my knowledge, there isn’t a firm legal definition for this term in the sense that it is being used here – in law, a stakeholder has a completely different meaning, relating to the holding of money or property– for the purposes of this exercise I’ve taken this definition from a 2005 UN document.When talking to prospective clients for the first time part of the work that we often have to do is to help them understand exactly who their stakeholders are and, as I am sure many of you appreciate, the answer is not always what they expect – for example, as you can see from this definition, the collective group of stakeholders can extend to the employees of a company. Organizations also need to understand how they want to engage with their stakeholders as forms of engagement vary from, for example, the strictly regulated to the less clearly definedNow – parts of today are going to be interactive and I want you to undertake some work for me – we’re going to conduct a brief exercise – I want the group here to take some time to brainstorm and tell me – who are your stakeholders....As legislation increases – particularly in areas such as privacy, which we’ll see later, and in NGO activism – the understanding of who your stakeholders are becomes increasingly important for a business. For example, in recent months three oil and gas companies have faced shareholder votes at their AGMs relating to their tar sands activity – none of those votes was held in Alberta but the negative outcome of any single vote could have had a profound impact on our economy.
To illustrate this I have taken a couple of headlines from the press on the day in which I was working on this presentation – the first is fairly obvious but it clearly illustrates the power that an organisation such as a union can have on the commercial dealings of a company – and also stresses how unions have developed tactics to reach out to groups such as consumers.
The second illustrates the sheer spread of challenges that a company can face – in this instance, the US town is Bellingham and the cosmetics store is, in fact, the Canadian arm of the UK company Lush.And I have one more thought for you – the US Justice Department is apparently considering forcing BP to postpone their dividend to ensure that they have funds to support a clean-up – good planning on the part of the government – I have seen, however, one estimate that says that would result in a $4 billion loss of revenue to US investorsI could produce many more instances of this type but I think it’s clear – we live in a small world these days and stakeholders can be anywhere and interact in any way
With that in mind, what, then, is engagement ? From the same study comes this definition. As you can see from this definition, the engagement of stakeholders isn’t necessarily a negative thing – in fact, a recent study found that Eighty-four percent of Americans say they can help companies create products and services that benefit consumers, business and society but only 53 percent feel that companies are engaging with them on corporate social/environmental practices and products. In the same study, 44% of Survey respondents said they are prepared to help influence corporate social/environmental practices throughbuying or boycotting a company’s products As you can see, it is now likely that stakeholders will be engaging with your organisation – and that could be a positive or a negative thing – the good news is, however, that you can influence the likelihood of the result you will seeNow – back to interactive time – we’re going to see how many ways you can actually engage with stakeholders.....
It helps to understand how we got to this position to understand the levers that are driving stakeholder engagement. There have been three broad phases – The first era, during the 1980s, was primarily focussed on environmental and local issues.It consisted of a few leading companies in a handful of industries (e.g., resource extraction,chemicals, micro-electronics) reacting in countries where an active consumer or environmental movement reflected growing public concern for the environment and an increasing mistrust of companies. These companies had a number of features in common: a largelocal presence and easily identifiable “point-source” environmental or consumer impacts (e.g., air or water pollution, toxic chemical emissions, technological accidents, etc.). Issues such as Torrey Canyon and 3 mile island created a fertile ground for growing awareness of the damage that large organizations could do to the planet.During this era, the majority of companies addressed issues only when they were made aware of problems by external actors and responded largely by denying or avoiding the problem as best as possible.- During the second era local environmental issues gave way to more global concerns in both environmental and social arenas. Thiswas the result of globalisation by business coupled with an increasingly knowledgeable and “connected” public and communities of non-governmental organisations (NGOs). It is also arguable that the discovery of global threats such as ozone depletion and climatechange led to a more planetary perspective in the public mind. An increasingly sophisticated understanding ofthe long-term and global impacts of industrial development in general, as well as of such specific issues as biotechnology and climate change, brought about a more general acknowledgement of the complexity of the issues and the magnitude of the challenge. Asa result, the problems became much harder to ignore. The combination of these factors propelled stakeholder engagement from its largely localised origins to the global stage. This was the era during which Greenpeace and others challenged Shell’s actions in theBrent Spar incident and in Nigeria with respect to the environmental and social justice issues for the Ogoni. Also, companies such as Nike and GAP – which were previously perceived to have minimal environmental and social impacts – were called to account by their stakeholders for labourconditions in their supply chains. Many companies started to be more attentive to these issues, acknowledging that they had responsibility for the impacts of their operations. The result for some was a more proactive approach to managing issues through, for example, reporting of progress in their environmental and social reports. We’ve now reached the stage where Many individual corporations have become increasingly sophisticatedin addressing environmental and social issues within their own operations. At the same time, a number of leading businesses, along with governments and NGOs, began to recognise that none of them could tackle global sustainability challenges on their own. Thus many large corporations increasingly became engaged in multi-stakeholder dialogues and partnerships convened by industry associations, governments and international agenciesThere has also been an increasing focus on the transparency and accountability not only of companies, but also of civil society organisations, as well as the new generation of multi-stakeholder institutions themselves that have emerged to address these new challenges. This era of engagement ,however, is an ambiguous period where signs of increased corporate citizenship by some must be juxtaposed against indifference by many and continuing negative social and environmental trends on many indicators. We still have muchprogress to make.
A development that is closely allied to stakeholder engagement is corporate social responsibility, a trend that is picking up a lot of attention these days – putting it simply, companies are accountable for the impact that they have both socially and environmentally – a fact that the Federal Government has acknowledged, for example, by appointing a CSR counsellor for the resources sectorwe see stakeholder engagement as the foundation for CSR – without data, there is no accountability – if you don’t know how you are engaging you can’t evidence that you are acting in a responsible manner – and we are seeing an increasing trend of CSR audits and sections in the annual reports issued by companies, so, if you don’t have CSR in your daily life now, I think you will soon – and, while I haven’t reviewed all of the attendees in detail, IO know that at least two of you have sustainability as a core element of your mission statement and at least two others are reporting on your websites and in your annual reports on this subjectI’m going to take a little time aside to mention the global reporting initiative and refer to the work of one of our partners out of OhioIn their own words Global Reporting Initiative (GRI) is a network-based organization that has pioneered the development of the world’s most widely used sustainability reporting framework and is committed to its continuous improvement and application worldwide. What I’m going to do is to take the stakeholder engagement process used by Brown Flynn, our partner out of Ohio, and show you how it relates to the CSR standards of GRI – and I promise that I won’t use too many more tla’s....
As you can see, the net result is a measurable process that can be used to support CSR reporting
Another feature of the current stage is the steady increase in regulation governing organizations. Much of this legislation is well intentioned but can result in significant headaches for organisations – I’m going to focus on just one example today that you may not be aware of – The Massachusetts privacy law was enacted on January 1st this year and says, in essence, that if you have the name and bank account or credit card number of a Massachusett’s resident on any of your servers then you are required, by law, to meet the Massachusetts state standards for data encryption and storageOK – hands up who knows whether they actually have that information about someone from Massachusetts on their server ? Looking over the list of potential attendees for this event I identified at least 5 people in the room whose organisation could feasibly fit this criteria...Clients, donors, alumni – all of them are your stakeholders and the regulations governing their personal information are increasing as a digital age drives us into new legal areas relating to the privacy of individuals and what happens to their data
So – what is the current state of play in the real world ? Well – as organisations become bigger their stakeholder relations become less co-ordinated – it is often only the people on the front line that really understand what is going on – I bet many Toyota dealers knew they had a brake issue before the company’s management didStakeholders, on the other hand, are becoming more sophisticated – the internet age has enabled small groups to reach very high levels of organisation – and anyone who wants to understand the impact that could have should look at Barack Obama’s election campaign which specialised in mobilising small groups who previously had little impact in the political arenaThe net result is that management is often unaware of issues that impact them until it is too late – and you are recalling millions of cars....
Many organizations think that they are in control – they have a monthly reporting process and that covers it The responses from stakeholders, however, are always inconsistent – this is a rapidly evolving field – partial data gets inscribed in a database – or is kept in Excel – or Outlook.... In fact, we see an evolution of data systems – first, there is paper – and don’t delude yourselves – many people are still reporting stakeholder transactions in a written format – then it moves to the outlook / excel combo – popular in many small companies – the next stage is to repurpose other software, such as a CRM – finally, purpose built systems are used – but there is a risk that these are designed by it departments with insufficient user input...As a result information doesn’t flow through the organisation
There are some clear tasks that a company can undertake now – first – identify your stakeholders – it sounds obvious but do you really KNOW who they are ? you need to understand how you want to engage with your stakeholders – that has a broad range from how would you like to engage them to how do you HAVE to engage with them – what are your regulatory requirements ?Next – understand how you are currently engaging with them – what are you doing now ?You should not underestimate the challenge that these steps constitute – they cover a broad range of fields and departments and can create a sizeable challengeOnce you have a gap analysis you can begin to plan how to meet the challenge and, as important, shape the right tools to help you – and, again, this is an area where many companies fall shortI know this looks simple and comes straight from the project playbook but I hope that I’ve given you some sense of just how complex those early stages can be – and how big a project this can be too
In summary – we are now in an age of unavoidable engagement with stakeholders, a trend that is only accelerating – we have seen, for example, a notable shift in activity from NGOs over the last month as the situation in the Gulf plays itself outWith increased engagement comes increased regulation – and, again, we are already hearing rumblings about increased regulation in the oil and gas sector Companies need to understand that, with engagement, comes the potential for significant penalty costs – and, while I have focussed significantly on the downside of risk today, we shouldn’t neglect the opportunities that also come from engaging with stakeholders, a trend that will only continue as consumers come to expect companies to act in an appropriate manner – and develop tools to ensure that happens
