Corporate Governance

Governance of Stakeholder engagement

Stakeholder engagement is a recognition that employees, communities and society at large  are vital to a company’s success, and they are also directly impacted by it. The Board should oversee the adequacy of stakeholder engagement and ensure that proper mechanisms are in place, including stakeholder mapping, engagement policy and grievance mechanisms.

Guidance for reporting on Governance of Stakeholder Engagement

01
Commitment, Policy, and Strategy

Describe the policy and strategy for stakeholder engagement, including identification, approach for priority groups, and grievance mechanisms

02
Management and Governance

Describe the oversight role of the board on effectiveness of stakeholder engagement, including dialogues and grievance mechanisms

03
Stakeholder Identification

Describe constituencies identified as key stakeholders of the company, and the process of identification of material stakeholders.

04
Communication and Grievance

Describe mechanisms to respond to stakeholders’ complaints, including grievance and whistleblowing mechanisms for external and internal stakeholders.

Commitment, Policy, and Strategy

The report should describe the policy and strategy for stakeholder engagement, including :

  • Stakeholder identification;
  • Stakeholder analysis to identify the needs and interests of diverse stakeholders;
  • Differentiated approaches for priority groups;
  • Iterative disclosure and consultation;
  • Grievance mechanism and reporting;
  • Management-level mechanisms to raise and resolve consistent stakeholder issues.

Leadership Practices

Stakeholder engagement commitment and policy should be visible to staff, contractors, suppliers, and collaborators through a publicly disclosed code of conduct. Stakeholder engagement can be extended to suppliers and contractors through policies or tender requirements.

Stakeholder Identification

The report should describe constituencies that have been identified as key stakeholders and the issues associated with each category of stakeholders. It should also describe the process of identification of material stakeholders, including a formal stakeholder-mapping process.

Leadership Practices

  • Expanded definition of stakeholders to include contracted workers, primary-supply-chain workers, neighboring projects, and international NGOs and CSOs.
  • A senior executive should be responsible for stakeholder relationships and should ensure integration with strategy and target setting.

Who are stakeholders?

Based on the size and impact of the company, stakeholders typically include the following:

  • Local communities directly affected by the company;
  • Customers and regulators;
  • Workers, contractors, and primary-supply-chain workers;
  • Neighboring projects;
  • International NGOs and CSOs

Management and Governance

The report should describe who among employees and executives is responsible for stakeholder engagement. It should also describe the role of the board in overseeing the stakeholder engagement, including the effectiveness of grievance mechanisms and company dialogue with key stakeholders. This includes the absence of retaliation and ensuring that the number of grievances reflects actual incidents rather than how comfortable workers or stakeholders are using the  mechanisms.

Leadership Practices

  • Stakeholder engagement policies and procedures should be integrated into requirements for contractors and primary suppliers.
  • Management should analyses trends and root causes of grievances.

External Communication and Grievance Mechanisms

The report should describe mechanisms in place to respond to stakeholders’ questions or complaints in a timely fashion, including grievance and whistleblowing mechanisms for both external and internal stakeholders.

The report should also describe the types of complaints received, and outstanding matters. It can be useful to have KPIs on the number of complaints and how many were resolved.

Leadership Practices

  • Stakeholder engagement should follow internationally standards,(AA1000 or ISO 26000).
  • Communication should be in an understandable format and language.
  • Issues raised by workers should be resolved with a worker representative.
Examples Of Reporting

Stakeholders Engagement Commitment—Danone Annual General Meeting, 26 June 2020

The Board of Directors of Danone met yesterday to agree arrangements and proposed resolutions for the 2020 AGM, which will be held on 26th June 2020 in closed session, given the context of COVID-19 pandemic. This context brings with it increased expectations on companies to demonstrate their use to society, and for trusted brands to go beyond their normal ways of engaging with consumers. The Board reaffirmed under these circumstances the strong commitment of Danone to the sustainable shared value creation model that has driven its vision of business since it established its dual economic and social project for the first time in 1972. At the heart of this business model lies the conviction that commitment to all stakeholders creates further value for all of them, including shareholders.

Stakeholder Identification—Vopak Annual Report 2019

Stakeholders and Sustainability—Tata Motors 2018–2019 Annual Report