Evidence has shown that stakeholder engagement is critical to a company’s ability to capitalize on its eco awareness, product stewardship, reputation, and overall business sustainability. However, confusing as stakeholder engagement may be, the first step is identifying who they are. Within our sustainability consulting, we engage in building business sustainability by working with clients to identify direct and indirect stakeholders. As explained in our professional consulting, direct stakeholders are defined as any person, group, or entities that have a direct relationship with us. These include:
• Shareholders – Returns
• Partners – Investment
• Employees – Job status
• Customers – Delivery and quality of product
• Suppliers/Contractors – Contracts
• Local Communities – Impact to way of life
• Friends/Family – Personal welfare
• Natural Environment – Change to current state
• Non-human species – Impact to way of life
Indirect stakeholders are persons, groups, or entities who have a stake in the outcome, but don’t necessarily have a direct relationship. These include:
• Investment Community – Financial impacts
• Industry Peers – Implications to similar situations
• Trade Organizations – Implications to business segments
• Government – Legislation
• Civil Society – Impact to way of life
• Media – News reports
• Environmental Organizations – Legislation, eco awareness
• Future Generations – All of the above
Something to remember: Anyone who thinks they are a stakeholder – Is a stakeholder.
Another key component of stakeholder engagement is authentic communication.
A report by Futerra Sustainability Communications, Understanding and Preventing Greenwash: A Business Guide, provides a framework for companies to better communicate their environmental message, based on their true business sustainability practices and/or products. Here are a few tips from the report:
• Impact: Make sure it’s real
• Alignment: Build Support Internally and Externally
• Communication: Communicate it accurately
• Business Integration: improve business practices to drive strategy, educate, and link internal and external groups.
• Risk Management: assess, prioritize, monitor, and address emerging issues
• Communication: provide a direct link from decision makers to the key issues and opportunities.
A strong reputation is a critical component of every business, but it is especially important in driving consumer eco awareness of a specific product or service. To build business and product reputation, companies need to be able to demonstrate what they say they value. Knowing who your stakeholders are and how to authentically communicate with them are the first steps.