The concept that businesses exist to maximize shareholder value is still the dominant paradigm in corporate strategy today. However, it is coming under pressure in the face of increasing political, social and environmental disruption, and an unprecedented lack of trust in business. Civil society, business leaders and academics are increasingly coalescing around an alternative, which is a stakeholder thinking approach. Stakeholder engagement has often been treated as a siloed sustainability exercise, but this must now evolve.
BSR’s new report, “The Future of Stakeholder Engagement,” argues that stakeholder engagement must evolve from a process too often undertaken merely for the sake of doing it, into a strategic priority that integrates stakeholder feedback and input deeply into all aspects of a company’s operations. Numerous research studies have demonstrated that there will be concrete benefits to companies that pursue this approach, in terms of resilience, return on equity, cost reduction and consumer sales. To take just one example, McKinsey recently found that 30% of corporate earnings are at stake depending on a company’s reputation with stakeholders.
To this end, BSR has developed a new framework for the future of stakeholder engagement organized around three dimensions:
- The purpose of stakeholder engagement: Companies can move beyond consulting their stakeholders on corporate performance by pursuing opportunities to collaborate on challenges of mutual concern.
- The type of stakeholder: Companies can broaden their frame of reference to include not only their direct stakeholders but also more diverse and divergent voices, such as supply chain workers and people who are disproportionally affected by the adverse consequences of business operations.
- The level of engagement: Companies can move beyond high-level engagements by integrating stakeholder engagement more deeply into corporate strategy, across all functions and geographies.
You can download BSR’s Future of Stakeholder Engagement report here.
