Analyse and Plan the Engagement

P1: MAPPING YOUR STAKEHOLDERS
BACKGROUND
Stakeholders are individuals or groups who aff ect, or are aff ected by an
organisation and its activities.3
Th ere is no generic list of stakeholders for all companies, or even for a single
company (these will change over time) – those who aff ect and are aff ected depends
on the industry, company, geography and the issue in question. New business
strategies and changes in the business environment will often mean a new set of
stakeholders. Th e box below highlights some of the broad groupings typically
considered.
Th ere are a number of diff erent dimensions that you can consider when identifying
stakeholders;

  1. By responsibility: people to whom you have, or in the future may have, legal,
    fi nancial and operational responsibilities enshrined in regulations,
    contracts, policies or codes of practice.
  2. By infl uence: people who are, or in future may be, able to infl uence the ability of
    your organisation to meet its goals – whether their actions are likely to drive or
    impede your performance. Th ese can include those with informal infl uence and
    those with formal decision making power.
  3. By proximity: the people that your organisation interacts with most, including
    internal stakeholders, those with longstanding relationships, those you depend
    on in your day-to-day operations, and those living next to your production sites.
  4. By dependency: the people that are most dependent on your organisation, for
    example employees and their families, customers who are dependent on your
    products for their safety, livelihood, health or welfare or suppliers for whom you
    are a dominant customer.
  5. By representation: the people that are through regulatory structures or culture/
    tradition entrusted to represent other individuals; e.g. heads of a local
    community, trade union representatives, councillors, representatives of
    membership based organisations, etc..
    3 Freeman, R.Edward. Strategic Management: A Stakeholder Approach. Boston 1984.
    Stakeholders might include, but are not limited to:

Investors/shareholders/ members
Customers and potential customers
Suppliers/business partners
Employees
Government and regulators
The media
Trade Unions
NGOs and pressure groups
Host communities
Competitors/peers
Opinion leaders
Academia and the scientifi c community
Supranational institutions
STAGE 1
SUGGESTED METHODOLOGY M1:
MAPPING YOUR STAKEHOLDERS
Th e purpose of this activity is to ensure that, as far as possible, all relevant stakeholders
are identifi ed.
Convene a cross-functional group of people who have broad knowledge about
the organisation, project, department or even specifi c issue that you want to
identify the stakeholders for. Th ese could include, but are not limited to, people
from the legal department, risk management, external communications,
procurement, EHS, HR, and investor relations. You could also involve external
consultants and specialists.
Brainstorm a list of stakeholder categories using the three dimensions outlined
below (Depending on size of group you may want to do this in pairs or small
groups before sharing conclusions as a wall display)
People you have
legal, fi nancial or operational
responsibilities to.
Stakeholders who are
affected by your organisation’s
operations.
People who are likely to infl uence
your organisation’s performance
(those with infl uence and
decision makers)
SUMMARY TEMPLATE T1: MAPPING STAKEHOLDERS*
THE PRACTITIONER’S HANDBOOK ON STAKEHOLDER ENGAGEMENT | 25
*electronic version downloadable at www.accountability.org.uk
Analyse and Plan the Engagement
Group the stakeholders into categories (you may want to use the generic
categories highlighted above, or use your own categories) and subgroups likely
to share similar perspectives. For example “Non-governmental Organisations”
might include humanitarian organisations, human rights organisations, animal
welfare groups and environmental groups. Th is further diff erentiation is of critical
importance, as this is where stakeholder identifi cation becomes meaningful and
detailed enough to decide on their materiality and possible next steps.
See examples below:
P1: MAPPING YOUR STAKEHOLDERS
This is a high level stakeholder map developed by a UK pharmaceutical company
Sub-groups
Board and executive team
Management
Staff
Trade unions
New recruits
Potential recruits
Employees who have left the company
Institutional investors
Pension funds
Fund managers and analysts
Rating agencies
Socially responsible investment movement
National Health Service Trusts
Doctors
Patients
Private clinics
Hospitals
Pharmacists
Wholesalers
Prescription infl uences (e.g. nurses, social
workers, teachers, psychologist)
Internal clients
Suppliers of materials and ingredients
Contract manufacturers
Doctors (as R&D consultants)
Clinical trial centres
Volunteers and patients in trials
Service providers and infrastructure
products
Stakeholder
Category
Employee
Investors
Customers
Suppliers
Stakeholder Category
Competitors
Government and
Regulators
Business Partners
Local Communities
Academia and
Scientifi c Community
Media
NGOs and Pressure
Groups
Sub-groups
Pharmaceutical companies
Biotech companies
Department of Health
Pharmaceutical regulatory authorities
Food and Drug Administration (US)
World Health Organization (UN)
Licensees
R&D partners
Other pharmaceutical companies
Clinics/universities
Neighbours
Local authorities/ Planning Department
Charities and voluntary organisations
Environmental groups
University centres
Researchers
Students
TV and Radio
Medical/scientifi c publications
National/local newspapers
Financial newspapers
Patient organisations
Human rights organisations
Animal welfare organisations
Environmental organisations
Alternative medicine associations
STAGE 1
THINGS TO CONSIDER
At this point, only consider general groups of stakeholders (e.g. environmental
NGOs, not “Greenpeace” for example). Guidance on how to identify specifi c
stakeholder group representatives will be provided in Stage 2.
Many stakeholder groups will be included in more than one of these dimensions;
you can situate them into the ‘overlaps’ between the circles.
A stakeholder map is not analytically comprehensive. It is a tool that illustrates
the range of stakeholders and helps you develop your engagement plan.
Do not exclude any stakeholder groups at this Stage, even if you do not have good
relations with them or you do not think they are willing to engage.
Th e stakeholder map will evolve as the engagement process goes on and you learn
more about your stakeholders.
As you engage with stakeholders you should also ask them who else they think
you should engage with.
Camelot’s Eight Stakeholder Groups
Camelot, the operator of the UK national lottery, manages its social responsibilities and social impact in consultation with eight
stakeholder groups:
Players and Winners: The UK residents who regularly play National Lottery games, and winners of both large and small amounts.
Employees: Around 900 full time equivalent staff.
Local community: Communities represented by local charities, voluntary and community groups.
Governmental bodies: The Department for Culture, Media and Sport, other government departments, the National Lottery
Commission, the National Lottery Distribution Bodies and the National Lottery Promotions Unit.
Retailers: Their network of around 28,000 retailers, ranging from the large supermarket chains to the corner shop.
Suppliers and partners: Around 600 large and small suppliers of goods and services, and strategic partners.
Public interest groups: Academic institutions, charities, religious groups, campaigning organisations and welfare groups
representing amongst others those who may be at risk from gambling products, including young people, those on low incomes and
those who may play excessively, or who work around environmental issues.
Shareholders: Their fi ve corporate shareholders.
THE PRACTITIONER’S HANDBOOK ON STAKEHOLDER ENGAGEMENT | 27
Analyse and Plan the Engagement
BACKGROUND
Why should you engage? Th e fact is you already do. Stakeholder engagement
is not a new fad – it’s as old as business itself. Th e process by which you already
communicate with your shareholders, customers, staff , business partners and
suppliers is stakeholder engagement. In these cases, the strategic importance of
engagement is immediately obvious. However, as we have seen, there are many
good strategic and operational reasons to engage with less-traditional groups
and on less-traditional issues. Th e table below highlights how the nature of
stakeholder engagement is changing:
Norsk Hydro in the Barents Sea Region
The Norwegian oil and aluminium company Norsk Hydro started working with local communities to facilitate and support the
development of a competitive local supplier industry in the Barents Sea region even before they had made a fi nal decision to build
a production facility there. Developing a supply base alone would have been unfeasible for Norsk Hydro, due to a lack of local
knowledge and insights into local development requirements. Working with local communities and the regional administration
allowed them to learn from each other, develop a trust-based relationship, and to identify the best opportunities for developing the
region to mutual advantage.
From traditional
business
interactions:
From legal and
contractual
issues:
From one-way
communication
What issues do you need to address with them?
Employees, customers,
suppliers, investors, and
regulators.
Marketing, industrial relations,
site selection, business
planning, and procurement.
Market research, corporate
communications, advertising
and media publicity.
Local communities, supply
chain workers, employees’
families, civil society
organisations, …
Corruption, social exclusion,
human rights, health risks,
economic development,
supply chain labour conditions,
environmental impacts…
Consultation, stakeholder
advisory panels, online
feedback, multi-stakeholder
forums and partnerships,
convening networks of
stakeholders.
How do you do it?
Who are your stakeholders?
THE CHANGING NATURE OF RELATIONSHIPS WITH STAKEHOLDERS
These changes in the nature of relationship with stakeholders are driven by a
broad but interlinked variety of changes in the business environment. Th ese include
the eff ects of technological innovations, political and regulatory developments,
societal trends as well as market developments. Th e table on the next page provides
a brief overview:
To broader groups:
To emerging issues
and new
responsibilities:
To dialogue and
partnership:
P2: SETTING STRATEGIC OBJECTIVES FOR ENGAGEMENT
STAGE 1
New Legal and voluntary obligations to disclose information and engage with stakeholders,
for example:
– The US Sarbanes Oxley Act, Federal sentencing guidelines, Toxics Release Inventory and Community Reinvestment
Act, as well as the Canadian Bank Act in North America.
– The UK Operating and Financial Review and Pensions Act, the French New Economic Regulations, the Danish
Financial Statements Act, the German Bilanzrechtsreformgesetz, Swedish Annual Accounts Act and Dutch
Environmental Protection Act in Europe.
– The Japanese Law of promotion of environmentally conscious business activities, the Australian Financial Services
Reform Act, and voluntary stock exchange requirements for example in South Africa and Brazil.
– Whilst various Governments in Europe have started to develop national corporate responsibility plans in which
stakeholder engagement is a key ingredient, international fi nancial institutions (such as the International Finance
Corporation and World Bank) today also require for stakeholder engagement in advance of major projects.
More people have become interested in the conduct of business, in the past decade:
– World’s number of NGOs has risen from 3,600 to 44,000 in the last two decades.
– $1 in every $8 in the USA is invested according to some kind of ethical, social or environmental criteria.
– The Internet has made information pervasive and immediately available.
Companies need to understand their consumers, workers and related communities, who
are increasingly concentrated in emerging markets:
– Two out of fi ve people live in India or China.
– 50% of the world’s people live on less than $2 per day.
– By 2015 there will be 2 billion more people, almost all born in developing countries.
Society increasingly expects business to be part of the solution in issues like equity, health and security.
In the past decade:
– Strong state intervention or the ‘welfare state’ has shrunk in many countries.
– Foreign direct investment has grown tenfold and is now more than six times greater than international aid.
– Multistakeholder partnerships and initiatives have become key vehicles mobilising business in development.
Technological inventions and applications raise often complex ethical questions and dilemmas in applying precaution.
In many cases companies alone may not have the answer and need societal / stakeholder dialogue to come to joint
understanding of acceptable levels of risk. For example:
– Genetically modifi ed organisms (GMOs)
– Nanotechnology
– Mobile phone technology
– Nuclear power
It has often taken a major incident for companies to realise that they need better systems for stakeholder engagement.
For example :
– The Bhopal tragedy in India led chemical companies to engage with stakeholders over environmental impacts,
setting up the Responsible Care initiative.
– Shell realised it had to engage with critical stakeholders after it faced campaigns against its handling of Brent Spar
and treatment of the Ogoni people in Nigeria.
– Press exposés on issues of child labour, forced labour and poor working conditions in chocolate, sportswear and
mobile phone supply chains led to companies engaging with NGOs to address these issues.
– The prevalence of industrial accident worldwide led to UNEP and the International Council Chemical Associations
setting up the “Awareness and Preparedness for Emergencies at Local Level (APELL) Programme (see overleaf).
New obligations
Public Scrutiny
New Markets
Societal
Expectations
New
Technologies
Critical Events
The changing drivers for engagement 4
4 For a more historical overview of these trends, please see this handbook’s sister publication, “The Guide to Practitioners’ Perspectives”. P16. Please also see the introduction in this Handbook.
THE PRACTITIONER’S HANDBOOK ON STAKEHOLDER ENGAGEMENT | 27
Analyse and Plan the Engagement
Many of the companies who actively engage with their stakeholders have been
able to translate this into better decision-making both within and outside of
the company, and have used it as a strategic tool to strengthen their business
performance, for example:
Agricultural company Monsanto admits that in the 1990s the company was arrogant and secretive in its dealings
with the outside world over genetically modifi ed crops, which severely damaged its reputation, markets and investor
confi dence. The fi rm has now committed to ‘The New Monsanto Pledge’ of dialogue, transparency, technology sharing
and respect for stakeholders.
The US company IBM considers community needs and benefi ts alongside the R&D efforts that IBM makes in creating
new products. Sometimes IBM will use the community to beta-test new products before going to market. The dual
benefi ts of this approach are that the community gets quicker and cheaper access to products that are useful to them
and IBM gets valuable information about its products before going to market.
Nike established a multi-stakeholder Report Review Committee to consult them during the development of their 2005
CSR report. As an outcome of consultation and negotiation with these stakeholders, Nike disclosed an unprecedented
wealth of information about its supply-chain, including labour and human rights abuses. In doing this, they raised
the benchmark for corporate transparency and contributed to taking the societal dialogue on corporate responsibility
issues to a higher level.
The Spanish telecommunications company Telefónica has a history of extensive efforts to provide integrated support
to the disabled, access to telecommunications to the disadvantaged, and of a range of other initiatives to contribute to
society. It’s employees reward this with a remarkably high satisfaction rate: In a survey undertaken in 2004, 77% of the
174,000 Telefónica employees responded with “Yes, I am happy to be working in this company”. The culture of social
responsibility is reinforced by and expresses itself in initiatives like ATAM, a Telefónica association providing care for
disabled people. ATAM was founded out of the commitment of employees in partnership with labour unions and the
company itself in 1973. Telefónica employees give 1% of their salary to this initiative, Telefónica doubles this amount.
Employees, company and unions are present in ATAM governance bodies. See also www.atam.es.
The UK telecommunications company Orange engages with local communities and administrations in order to identify
and ideally agree on the best possible location for new mobile phone transmitter masts. As the number of its masts
determines its networks capacity and business potential, engaging with these communities to make its networks
expansion as smooth as possible is a strategic priority.
IBM’s Community Relations Unit brokered a partnership between IBM’s research labs and the non-profi t organisation
SeniorNet to help them understand the needs of computer users with vision, motor and memory impairments and to
develop and test solutions.
The Norweigan oil and aluminium company Norsk Hydro is continously discussing common standards for corporate
responsibility with industry peers. The key objective here is to take social and environmental issues out of business
competition, as competitive pressures can keep companies from adopting more responsible practices. Within the
IPIECA (International Petroleum Industry Environmental Conversation Association), the competitors agree on social
standards that are promoted by the association in cooperation with governments.
The French water company Suez is working with governments, NGOs and citizens to reduce the cost of delivering