13 Stakeholder Management & Sustainability Reporting

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COM 362: Decision Making for Responsible andCOM 362: Decision Making for Responsible andSustainable Global BusinessSustainable Global Business

Dr. Monika WinnDr. Monika Winn

Professor of Business Strategy and SustainabilityProfessor of Business Strategy and Sustainability

UVic BusinessUVic Business

Stakeholder ManagementStakeholder Management&&Sustainability ReportingSustainability Reporting


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LEARNING OBJECTIVESLEARNING OBJECTIVES Understand the expanding scope of strategicUnderstand the expanding scope of strategic

stakeholder managementstakeholder management

Learn how firms may determine immediatelyLearn how firms may determine immediately

important (salient) stakeholdersimportant (salient) stakeholders

Understand sustainability reporting asUnderstand sustainability reporting as a response to calls for greater transparency, disclosure anda response to calls for greater transparency, disclosure and

accountabilityaccountability

a means to retain a firms social license (LTO, LTG)a means to retain a firms social license (LTO, LTG) an effort to manage reputation and stakeholder perceptionsan effort to manage reputation and stakeholder perceptions an emerging (and imperfect) sciencean emerging (and imperfect) science

Place stakeholder management in the SVFWPlace stakeholder management in the SVFW


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A Changed Landscape:A Changed Landscape:Todays Corporations Face Tough Demands

Rise of civil societyRise of civil society

Calls for corporate accountability & transparencyCalls for corporate accountability & transparency

Power of social movementsPower of social movements

IT & rapid, worldIT & rapid, world--wide information disseminationwide information dissemination

Need to maintain social licenseNeed to maintain social license

LTO, LTG: License to Operate, License to GrowLTO, LTG: License to Operate, License to Grow

From environmental to tripleFrom environmental to triple--bottom line reportingbottom line reporting

New business modelsNew business models

Disruptive changeDisruptive change


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Stakeholder ManagementStakeholder Management


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StakeholdersStakeholders

What is a stakeholder?What is a stakeholder?

Why do we consider stakeholders?Why do we consider stakeholders?

Who do you consider to be a stakeholderWho do you consider to be a stakeholderand why?and why?


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TheTheCorporationCorporation

SuppliersSuppliers

GovernmentsGovernmentsCustomersCustomers

CompetitorsCompetitors

Societies &Societies &CommunitiesCommunities

MediaMediaManagementManagement

Board of DirectorsBoard of Directors

EmployeesEmployees

Investors,Investors,Shareholders,Shareholders,

OwnersOwners

Special InterestSpecial InterestGroups, NGOsGroups, NGOs

InsurersInsurers

StakeholdersStakeholders

InternationalInternationalAgenciesAgencies

FirstFirst

NationsNations


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TheThe

CorporationCorporationSuppliers,Suppliers,

InsurersInsurers

GovernmentsGovernments

CustomersCustomers CompetitorsCompetitors

Societies &Societies &CommunitiesCommunities

MediaMedia

EmployeesEmployees

InvestorsInvestors

IndustryIndustry

buyers ofbuyers ofproducts &products &

servicesservices

capitalcapital labor, ideas,labor, ideas,expertise,expertise,

valuesvalues

publicitypublicity

regulation,regulation,legal systemlegal system

normsnorms

innovation,innovation,best practicesbest practices

IntlIntlAgenciesAgencies

inputsinputs

SubstitutesSubstitutes

NGOsNGOs

health concerns,health concerns,values, social licensevalues, social license

advocacyadvocacy

ProfessionalProfessionalEnvironmentalEnvironmental

ServicesServices

knowledge,knowledge,skillsskills

Stakeholders & Drivers of ChangeStakeholders & Drivers of Change

innovation, newinnovation, newtechnologiestechnologies

FirstFirst

NationsNations

standardsstandards

legallegal

rightsrights


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Salience of Stakeholders to a FirmSalience of Stakeholders to a Firm

PowerPower

LegitimacyLegitimacy UrgencyUrgency

Government regulation

Customer buying power

Shareholder investment

Labour unions

Competitors

Environmental activists

NGOs

Media

Local community

Employees

Suppliers

Mitchell, Agle & Wood, 1997Mitchell, Agle & Wood, 1997

The stakeholdersThe stakeholders powerpower to influence the firmto influence the firm

TheThe legitimacylegitimacy of the stakeholders relationship with the firmof the stakeholders relationship with the firm

TheThe urgencyurgency of the stakeholders claim on the firmof the stakeholders claim on the firm


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Power, Legitimacy & UrgencyPower, Legitimacy & Urgency

Careful analysis of environmental, safety, healthCareful analysis of environmental, safety, healthand economic considerations had convincedand economic considerations had convincedindependent experts, Shell UK, and the Britishindependent experts, Shell UK, and the Britishgovernment that this was the best option.government that this was the best option.

An emotive Greenpeace campaignAn emotive Greenpeace campaign (urgency)(urgency) gavegaveit symbolic significanceit symbolic significance (legitimacy)(legitimacy) beyond anybeyond anyrational, scientific calculation of its impact.rational, scientific calculation of its impact.

Political and public pressurePolitical and public pressure (power)(power) on Shellon Shellcompanies on the Continent, and the growingcompanies on the Continent, and the growingsafety threat, forced Shell UK to abort its planssafety threat, forced Shell UK to abort its plans

Shell briefing document 27, July 1995Shell briefing document 27, July 1995


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Managing StakeholdersManaging StakeholdersStrategicallyStrategically

Managing StakeholdersManaging Stakeholders

Traditional stakeholder viewTraditional stakeholder view Power, Legitimacy, UrgencyPower, Legitimacy, Urgency

How does this view perceive the relationshipsHow does this view perceive the relationshipsbetween the firm and its stakeholders?between the firm and its stakeholders?

Engaging with StakeholdersEngaging with Stakeholders

Including not only salient (primary orIncluding not only salient (primary orsecondary), but also fringe stakeholderssecondary), but also fringe stakeholders How does this view perceive the relationshipsHow does this view perceive the relationships

between the firm and its stakeholders?between the firm and its stakeholders?

PP

LL UU


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Sustainability ReportingSustainability Reporting

What is a sustainability report?What is a sustainability report?

What is sustainability reporting?What is sustainability reporting?

Why is this difference important?Why is this difference important?


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How is sustainability reporting related toHow is sustainability reporting related tostakeholder management?stakeholder management?


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A ContinuumA Continuum

PDF Report Multi-

stakeholder

virtualdiscussion/

debate

PDF

Available

online

Emails

one-way

communication

Two way

communication

Stakeholder Management

Pushing info out

Limited understanding

Firm view

Stakeholder Engagement

Stakeholder accessibility

Data collected on users

Opportunity to respond

Web-Based

Reporting


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Shell and the Ogoni PeopleShell and the Ogoni People

The Execution of Ken SaroThe Execution of Ken Saro--WiwaWiwa

Shells call for quietShells call for quietdiplomacy in the 11diplomacy in the 11thth hourhourfollowing the confirmation offollowing the confirmation ofthe death sentence by thethe death sentence by the

Nigerian Ruling Council has aNigerian Ruling Council has ahallow ring. Shell had amplehallow ring. Shell had ampleopportunity to demonstrateopportunity to demonstrateconcern over the 17 months ofconcern over the 17 months ofKens incarceration and trial.Kens incarceration and trial.They chose to maintain theirThey chose to maintain theircozy relationship with thecozy relationship with the

military dictatorship to securemilitary dictatorship to secureoil profits rather thanoil profits rather thancondemn, the brutal andcondemn, the brutal andunjust arrest and laterunjust arrest and latersentencing of nonsentencing of non--violentviolentenvironmental campaignersenvironmental campaigners(November 10(November 10thth, 1995, UK Newspaper), 1995, UK Newspaper)


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2005 Sustainability Report2005 Sustainability Report

But opposition to the project remained amongBut opposition to the project remained amongsome community members concerned about thesome community members concerned about thesafety of the onshore pipeline, about real benefitssafety of the onshore pipeline, about real benefitsfor the local communityfor the local communityWith hindsight, we underestimated the intensity ofWith hindsight, we underestimated the intensity ofthe opposition and its impact on this community.the opposition and its impact on this community.By focusing on obeying the law and following theBy focusing on obeying the law and following the

permitting process, we paid too little attention topermitting process, we paid too little attention tothe communitys concerns, to communicating thethe communitys concerns, to communicating theprojects safety features and to finding ways forprojects safety features and to finding ways forthe community to benefitthe community to benefit

Shell 2005 Sustainability ReportShell 2005 Sustainability Report


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Audio Clip of the son of executedAudio Clip of the son of executedKen SaroKen Saro--WiwaWiwa

International Finance CorporationInternational Finance CorporationSustainability Learning ProgramSustainability Learning Program

20032003


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Sustainability ReportingSustainability Reporting Lessons LearnedLessons Learned

About a firms environmental performance?

A firms social performance?

About the role of reporting standards?

Any tie-in to competitive advantage?

Other?


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TripleTriple--Bottom Line PerformanceBottom Line PerformanceAnnual ReportsAnnual Reports

add Environmental Reportsadd Environmental Reports on to Sustainability (TBL) Reportson to Sustainability (TBL) Reports

Global Reporting InitiativeGlobal Reporting Initiative emerging standards for comparable reportingemerging standards for comparable reporting

performance criteriaperformance criteria

measures & metricsmeasures & metrics


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What is the Role of Stakeholder Mgmt in the SVFW?What is the Role of Stakeholder Mgmt in the SVFW?The Role of Reporting?The Role of Reporting?

Internal External

Tomorrow

Today

Sustainable

Shareholder

Value


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SUMMARY (1)SUMMARY (1)

Stakeholder Management rose in parallel to the growth of corporations in size,

economic power and environmental/social impact

goes beyond a narrow shareholder orientation

utilizes P-U-L to assess immediately importantstakeholders

broadens how and with whom firms conduct business


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SUMMARY (2)SUMMARY (2)

Sustainability Reporting is an evolving learning process for firms (and entire

industries) and their myriad of stakeholders

is another example of innovation (societalinnovation as much as business innovation) and assuch contains opportunities for yourself

Sustainability Reports are a means of corporate communication

are a response to pressures from an increasinglyskeptical civil society to reveal corporate action andaccountable

are an effort to retain legitimacy: social license,

license to operate, license to grow

Documents

13 Stakeholder Management & Sustainability Reporting