Building Trust: To Engage Stakeholders or Lobby Them?

July 22, 2009

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This week, Environmental Leader is presenting a five part series by Jonathan Ballantine entitled “Building Trust in Corporate Responsibility.”

Here is Part Four, “To engage stakeholders or lobby them?”

It can be said that many organizations are not really engaging with their stakeholders but are in fact adopting lobbying tactics to convince them that their approach is acceptable rather than a genuine attempt to help in the identification, development and implementation of solutions.

¨I have lost count of the number of times I’ve read in reports words along the lines of ’stakeholder views inform/influence our strategy/policies/actions…’ and yet when you read the report, specific examples where this has happened are few and far between,” said Paul Burke, Senior Partner, Acona.

Paul suggests this is because the way in which companies are structured, and, for some companies, the distance between the corporate responsibility team and the CEO. For many organizations the CR lead is, at best, middle management and is basing the rational for change on the views of an indeterminate number of stakeholders, which is open to internal criticism and may go against the views of arguably more important stakeholders such as institutional investors. ¨Here I have a lot of sympathy with this argument, given the increasing emphasis on risk management and being able to quantify upside and downside risk. How sensible would it be to make significant changes to core strategy without a nuts and bolts review of what is being proposed?” he added.

GSK is one organization that has corporate responsibility embedded through its strategy, and is aiming to be recognized around the world by all stakeholders as a company with the highest ethical standards. GSK understand the importance of a genuine stakeholder engagement process in reaching their objectives. “We will engage with a range of stakeholders and will communicate openly about how we are addressing CR issues, in ways that aim to meet the needs of different groups while allowing us to pursue legitimate business goals,” said James Hagan, Vice President, Environmental, Health & Safety.

For GSK stakeholder engagement helps them to identify important issues and shape their responses in the interest of our shareholders and wider society. Regular engagement means they are better informed of emerging and current issues and changing societal expectations. It provides an opportunity for them to voice their approach to responsibility issues, obtain important feedback and build trust. “Most of this discussion takes place in the normal course of business. For example, our scientists regularly meet academics, researchers and other pharmaceutical companies through advisory boards and medical conferences,” added Hagan.

In 2005 GSK developed an Environment, Health and Safety and Sustainability Stakeholder Panel in the UK which has provided independent feedback on their performance since 2005. The panel of 13 members represents customers, suppliers, regulators, public interest groups and investors. Two senior EHSS representatives from GSK regularly participate and other GSK managers attend discussions on specific topics. The panel is facilitated by The Environment Council, an independent charity. The panel met in April and October 2008 to debate a range of issues.

“We have been using the feedback from the stakeholder panel to inform our Environment, Health and Safety and Sustainability program and also provide input to the new GSK Sustainability Council composed of senior managers from across GSK business units,” Hagan said.

Panel members provided feedback about the direction the panel should take and the effectiveness of the dialogue. They proposed that the panel should have a broader geographic reach. GSK has added three new European panel members and is recruiting two more. The panel finds GSK honest and open in the discussions so they consider their participation to be valuable. However, they commented that it takes GSK a long time to demonstrate changes that occur as a result of their suggestions and feedback. ¨We value the feedback we receive from the panel and we will look for ways to speed up our response to their recommendations,” Hagan added.

Arguably the most critical component of stakeholder engagement is the ¨follow through.” After the dialogue and engagement process have commenced and there is agreement by both the company and the stakeholders on the approach and deliverables, it is important for the participating parties to deliver on their engagement commitments.

Click here for Part One, Part Two and Part Three of the series.

Jonathan Ballantine is a European-based business engagement specialist – advising private sector firms, business consultants and NGOs on corporate responsibility issues, including brokering collaborative partnerships between business and NGOs, stakeholder engagement and outreach communications.

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