S2: Substantive Stakeholder Dialogue
CERES ROADMAP EXPECTATION
|Companies will engage stakeholders in a manner that is ongoing, in-depth, timely and involves all appropriate parts of the business. Companies will disclose how they are incorporating stakeholder input into corporate strategy and business decision-making.|
The Evolution of Engagement
Ford Motor Company has worked closely with Ceres since 2000 to not only disclose and improve its sustainability performance, but to embed sustainability expectations across its business model.
Before working with Ceres, Ford’s relationships with external stakeholders were often adversarial. Ceres helped Ford to shift that perspective by bringing it together with investors, issue experts and environmental and social advocates for constructive dialogues. Read more...
Check out Roadmap in Action for more examples of how companies are implementing the Ceres Roadmap.
Once companies have identified key stakeholders, a framework for regular and proactive engagement is required. Engagement strategies can vary depending upon the stakeholder group involved, as may the frequency of engagement, but the overriding objective should be the incorporation of stakeholder feedback into corporate strategy and business decision-making.
HOW ARE COMPANIES PERFORMING?
In The Road to 2020: Corporate Progress on The Ceres Roadmap For Sustainability, we evaluated 600 of the largest U.S. companies on their progress towards meeting the expectations laid forth in The Ceres Roadmap for Sustainability. Using data compiled and analyzed by Sustainalytics, for this expectation the extent of a company’s stakeholder engagement efforts was evaluated.
Of the companies evaluated, 28 percent (165 companies) disclose the details of stakeholder outreach. Of those, only five percent (27 companies) are included in Tiers 1 and 2 demonstrating leadership for activities including ongoing engagement with diverse stakeholder groups, executive-level engagement with key stakeholders, participation in industry-relevant multi-stakeholder initiatives and inclusion of stakeholder feedback in the shaping of sustainability strategy and targets.
Communication between companies and stakeholders should flow in both directions. It is becoming increasingly common for companies to establish an ongoing stakeholder process that involves a series of dialogues. These discussions evolve over time and allow companies to gather stakeholder feedback on strategic decisions including goals and targets and policy setting, as well as insights on key performance challenges or emerging issues for the sector. Companies, including Ford Motor Company and State Street, conduct year over year engagements with a consistent multi-stakeholder group and disclose details of how these engagements impact priority setting for the business.
Engagement can take many forms. Employees, suppliers and distributors can be engaged through quarterly surveys and town-hall style meetings. Community Action Panels are an effective means of engaging local community members, while Investor Perception surveys enable companies to obtain investor feedback on specific issues. Companies like Ingersoll Rand have developed multi-stakeholder Advisory Panels comprising prominent external leaders on material issues, to help guide and integrate sustainability into daily operations.
Often companies will limit their engagement with stakeholders to a discussion of their annual sustainability report. This is a good first step, but not enough when you consider that failure to regularly and proactively engage stakeholders can increase the risk of litigation, reputational damage and subsequent loss of shareholder value. High profile issues such as oil spills, allegations of fraud or human rights violations demand immediate proactive engagement, rather than a delayed discussion at the next quarterly or annual meeting. Companies, such as Dow Chemical, have started providing bi-annual updates on their sustainability progress with qualitative and quantitative information on various material performance metrics. These updates show stakeholders that the company is not only listening, but also proactively working to mitigate risks.
Click on a performance tier below to view more information about how companies are performing.