Erb Institute Toolbox: Stakeholder Engagement

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Stakeholder Engagement


Stakeholder Engagement

Contents Introduction + Business Case.............. 1 Step-by-Step Approach........................ 3 Important Considerations................... 11 Case Studies........................................ 14 Resources............................................ 16 Appendix............................................. 17

Stakeholder Engagement


Introduction + Business Case This toolbox is part of a series of toolboxes designed by the University of Michigan’s Erb Institute to inform and aid a wide variety of sustainability practitioners. This is the Erb Institute’s version of a process for stakeholder engagement in sustainability. Stakeholder engagement is presented as the first toolbox in the series, reflecting its foundational role in designing, executing and reporting on sustainability strategy. Later toolboxes refer to this one for that reason. We designed the toolbox to be relevant irrespective of geography, industry, organization size or budget.

Topics we’ll cover include: • a process for defining and prioritizing stakeholder groups, and then identifying and mapping their key economic, environmental and social issues • planning and implementing engagement strategies • documenting the process • completing the engagement cycle and soliciting stakeholder feedback • using metrics to measure impact from your initiatives • key foundational principles applicable to stakeholder engagement At the end of the toolbox, you’ll find two case studies, a list of additional resources and an appendix that contains templates and similar material. A word about the business case for stakeholder engagement: Businesses won’t invest in engaging stakeholders in sustainability without first understanding the business rationale for expending the time, money and other resources necessary to design and execute a stakeholder identification and engagement strategy.

Businesses need answers to questions such as:

What expenses do we expect to incur, based on the scope and length of the engagement process? Do we need to build in a contingency for unforeseen costs?

What revenue-generating opportunities exist or can we create by designing and executing best-practices-based stakeholder engagement? What is the likelihood of them paying off?

What costs can we avoid by identifying and meaningfully engaging key stakeholders up front? Are these avoided costs one-time costs or ongoing?



Each company has its unique value proposition (including return on investment), some of which will be readily quantifiable and some of which will be less tangible. In any case, the resources expended in engaging stakeholders in sustainability usually

• help prioritize the many possible areas of work—focus on what matters most. • identify new and/or emerging issues—listening to stakeholders can reveal unexpected risks and opportunities. • mitigate unknown and unexpected risks—build resilience and protect the brand. • provide opportunities for collaboration and innovation—open new markets, new products and new revenue streams. • facilitate up-front buy-in to sustainability approaches—lessen pushback later in the process. • offer the opportunity to improve sustainability strategy— incorporate shared knowledge into your thinking.


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Stakeholder Engagement


Step-by-Step Approach Stakeholder engagement (of any type) is part art and part science. A consensus has formed around a basic approach, based on best practices, that has proved useful to both companies and stakeholders in identifying and responding to issues of concern. The approach is governed by foundational principles, which we cover in Section 3.


Step 1

As a preliminary step, first define the scope of your business related to the engagement. Which parts of the business—operational, geographic or investment-related—will you include when you think about the impacts (real or perceived) that the company has on the stakeholders involved? An incorrect or incomplete definition of the scope risks either including extraneous stakeholders or issues, or excluding germane ones.

ACTION: Define the scope of the business that the stakeholder-engagement initiative will capture. Consider and analyze: Organizational boundaries, such as

Operational boundaries, such as •

company-owned factories, warehouses, transportation fleets

direct operations

wholly owned subsidiaries

co-ventures in supply, production, distribution

business units

suppliers and other supply-chain partners

joint ventures

Geographic boundaries, such as •

factory and warehouse locations

local communities related to suppliers

After analyzing, you can complete this step in a list format, but sometimes it’s more useful to use a visual representation of your business as the scope-defining tool. (For example, you could use symbols for parts of your business and draw a circle around what you want to include.)

At the end of this process, you will be ready to identify the stakeholders and issues you will consider in your stakeholder-engagement initiatives.



Step 2

IDENTIFY THE ECONOMIC, ENVIRONMENTAL AND SOCIAL IMPACTS IN THE BUSINESS AND THE STAKEHOLDERS TO BE ENGAGED ISSUES AND IMPACTS “Triple bottom line” sustainability encompasses a wide range of economic and social aspects of business activity, not just the environmental aspects that the term has come to connote in many circles. Sustainability in this sense seeks to minimize (-) the real and/ or perceived negative impacts and to maximize (+) the real and/or perceived positive impacts. The list of possibilities is long.

Here are some examples: Economic



+ fair business dealings

+ biodiversity

+ anti-discrimination

+ innovation opportunities

+ climate adaptation

+ community engagement

+ competition

+ resource efficiency

+ diversity and inclusion

+ transparency

+ forest and land stewardship

+ equal pay

+ use of diverse suppliers

+ recycling/reuse

+ freedom of association

+ use of local suppliers

- greenhouse gas emissions

+ human rights

+ economic development

- human health dangers

+ labor rights

- corruption/bribery

- toxic chemicals

+ indigenous rights

- product “dumping”

- ozone depletion

+ peace building

- monopolistic behavior

- water consumption

- child labor

- infringement of intellectual property rights

- solid waste

- forced labor

- price fixing

- pollution (air and water)

- human trafficking

This list gives a feel for the breadth of sustainability issues that can arise in a business context.


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Stakeholder Engagement

It’s worth noting that you should consider perceptions as well as actual impacts—how stakeholders perceive your company may differ from the actual economic, environmental and social impacts that you or experts identify. And remember that the stakeholderengagement process itself sometimes helps you identify issues. Consider whether the trends by sector, organization type and locale apply in your situation—that’s sometimes a good place to start. However, your organization’s list

of possible issues may differ from those of industry peers and companies of similar size and geography, because of your unique circumstances. Also, this list will change over time as issues come and go. Take a dynamic view of identifying and analyzing issues, and review the list at least annually. As with potential issues, the universe of potential stakeholders with an interest in or reason to be engaged in your organization’s sustainability strategy1 is large and diverse.

These stakeholders range from employees to future generations. It’s difficult to think of someone, or a group, not affected by an organization’s environmental, social or economic impacts.

Stakeholders in Corporate Sustainability


Throughout this toolbox, the term “sustainability strategy” is used in its broadest sense. It includes issue identification, vision- and goal-setting, strategy

development and implementation, metrics and reporting and continuous improvement. It is also meant to encompass an organization’s environmental, economic and social dimensions.



At first, think broadly about the issues identified and the potential related stakeholders—consider this a first “screen.” Then dive deeper and build your list of issues and stakeholders.

ACTION: Task your team with identifying issues (impacts and perceptions) and stakeholders. One way to do this is to look at four possible business-related “buckets” that generate actual and/or perceived sustainability impacts. Looking at sustainability this way can shorten the time it takes to create an issues list. Remember to keep in mind the scope boundaries you defined in Step 1. • People (employees and contractors) • Places (buildings, land, communities) • Processes (operations, supply/value chain, administrative) • Products (and services, over the entire course of their life cycle) Have the team prepare (a) a complete list of real and perceived impacts using this framework and (b) a list of stakeholders actually and/or perceived to be affected by these impacts. (b) a list of stakeholders actually and/or perceived to be affected by these impacts.

Once you have identified the issues and created a stakeholders list, your next step in the process is to map issues and stakeholders, based on certain stakeholder attributes.

Step 3

MAP ISSUES AND STAKEHOLDERS This visual exercise helps you prioritize work areas and stakeholders before engaging them. For example, an environmental issue that is relevant to many particularly influential stakeholders might end up near the top of your “to do” list, so key stakeholders interested in that issue will be engaged deeply. Conversely, if that same environmental issue doesn’t seem to map to many stakeholders, or only to low-priority stakeholders, then you might decide not to act on it for the time being or to simply give it a light touch. Your mapping process should take into account—at a minimum—two key attributes for every stakeholder or stakeholder group:


How does the stakeholder influence the organization?

How does the organization influence the stakeholder?

Often, these concepts are captured on a stakeholder map as “power” and “interest,” but you can use other similar attributes. Because your organization’s situation is unique, this toolbox can’t tell you where your stakeholders will end up on the map—you have to assess your specific issues and stakeholders on a case-bycase basis through the mapping process.

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Stakeholder Engagement

ACTION: Create a stakeholder map that includes identified stakeholders and issues. The axes may be “power” and “influence,” or you can use other dimensions that reflect their influence and interest. Color-code issues and use these colors as the plot points for each stakeholder. (For example, Supplier A (SH2) is plotted with a green dot in “Engage/ Manage Closely” because of its high interest/high power ranking on greenhouse gas issues.) You’ll end up with a map that looks something like this, with individual stakeholders plotted on the X and Y axes. The example here seeks only to plot stakeholders and issues, without reference to how stakeholders interact with and influence each other. In the grid, you see three different stakeholders (SH1, SH2 and SH3) mapped according to their power and interest. Note that they are plotted using different colors, reflecting the fact that they are related to different issues. (In this example, SH1 is a nonprofit focused on environmental issues that are not really significant to your business model, so they end up in the “low-low” quadrant.)

ALTERNATIVE ACTION: Create a stakeholder map that includes the relationships among stakeholders on your map. This can help you understand power dynamics. Here is an example of a more complex stakeholder map that not only plots stakeholders and issues but also shows how stakeholders interact with and influence each other. Here, we’ve taken the grid from the first example and applied arrows to show relationships among stakeholders. For example, an arrow pointing from SH2 to SH1 shows that this SH2 influences SH1. This second example reveals the complexity of stakeholder-related sustainability issues at one point in time. An even more complex grid could add a third dimension to reflect changes over time.

Now you’ve mapped issues and stakeholders, which places each stakeholder in one of four quadrants that reflect common engagement approaches. Your next step is to create engagement strategies appropriate for each of the four approaches.



Step 4

PLAN AND IMPLEMENT ENGAGEMENT The planning and implementing phase of the stakeholder-engagement process consists of discrete but related activities:

designing engagement tactics

creating a stakeholderengagement annual business plan (with budget and calendar)

rolling out the tactics according to the plan

TACTICS Here are some suggested tactics and examples for each of the quadrants on your stakeholder map, from the lowest engagement level to the highest.

Monitor •

Gather information from stakeholder communications, public sources, association/working group memberships and third-party services. Disseminate this information to key internal stakeholders. Pay particular attention to any new or emerging issues this group brings forward. Regularly review this group to ensure group members are still appropriately mapped.

Example: Many companies subscribe to services such as CSRHub, EcoVadis and others that collect information from public and private companies and place it on a shared platform that can be accessed by subscription. Some of these services “rate” companies on sustainability attributes.

Example: Novo Nordisk A/S uses a dedicated Twitter account (@ NovoNordiskTBL) to communicate with stakeholders about sustainability issues—environmental, social and economic. Two company managers are assigned to the account to create relevant tweets and gather feedback from followers. As of October 2015, the Danish company had more than 5,000 followers using this sustainabilityspecific tool.

Keep Informed •


Create and disseminate outwardbound communications, including sustainability reports, web-based and social media posts, FAQ sheets and news reports/press releases. While you need to involve the communications team in these efforts, try to incorporate opportunities for feedback and listening. Regularly review this group to ensure that group members are still appropriately mapped.

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Stakeholder Engagement

Keep Satisfied •

Strike a balance between informing and listening. Along with disseminating outward-bound communications, create and offer limited inbound engagement, including conference/focus group/ interactive webinar participation. Regularly review this group to ensure that group members are still appropriately mapped. Example: Telefonica S.A., a global communications giant, launched RConversa (http://www. rconversa/en) as a digital platform to engage stakeholders in themed “debates” about sustainability topics, which have ranged from health-related issues to social media to sustainability, energy efficiency and the environment.

Likewise, the large insurer SwissRe developed the Open Minds platform (http:// as a digital tool to enable discussion about four key topics: 1.

Funding longer lives: How will society pay for an aging population with increasingly fewer people of working age?

2. Partnering for food security: How can we secure a sustainable food supply for a growing global population? 3. Managing climate and natural disaster risk: How can communities better prepare for natural catastrophes in a changing climate? 4. Advancing sustainable energy solutions: How can the world produce and consume more energy without adversely affecting the climate?

Engage/Manage Closely •

Invest in a collaborative approach to sustainability issues that includes partnerships, forums and summits, councils, joint ventures and platforms to share best practices, in addition to integrating appropriate tactics you use from the other groups. Pay particular attention in this group to creating opportunities for innovation, identifying new/emerging issues and sharing newly created value/revenue. This is an area ripe for generative discussions and thinking.

Example: Keurig Green Mountain (http://www.keuriggreenmountain. com) has welcomed stakeholder participation in sustainability initiatives. In 2013, Keurig established an External Advisory Panel (EAP) to formalize its approach to stakeholder engagement. The EAP includes representatives from: ɗɗ Business for Social Responsibility (BSR): nonprofit ɗɗ Global Water Challenge: nonprofit ɗɗ Harvard School of Public Health: academia ɗɗ Johnson & Johnson: customer



Example: Unilever (http://www. has a well-respected plan to address sustainability challenges, in part founded on the principle of stakeholder engagement. For example, the Unilever Sustainable Living Plan Council is a group of external advisors who provide advice and guidance on

a wide range of sustainability-related issues. This group of diverse experts meets twice each year with Unilever’s senior management team. Their work product is shared with functional leadership teams, as well as the board’s Corporate Responsibility Committee.

Irrespective of the engagement tactic, ensure that all parties involved clearly understand expectations and deliverables. Show cultural sensitivity and allow room for people to express different views.

BUSINESS PLAN AND CALENDAR Develop a business plan, a budget (with a list of required resources) and a calendar of engagementrelated activities. Your organization may have standard procedures for creating these deliverables, or you may need to create them from scratch. Laying out the process for this is beyond the scope of this toolbox, but you should ensure that:

Your plan allows sufficient time. Many stakeholderengagement initiatives last longer than the standard one year contained in business plans.


Your budget includes a reasonable contingency. The landscape of stakeholder engagement can change significantly, and quickly, once the process begins.

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Your calendar reflects organizational capacity. Don’t build in activities that can’t be completed, because this can erode stakeholder trust rapidly.

Stakeholder Engagement


Important Considerations FOUNDATIONAL PRINCIPLES Whatever tactics you use, your stakeholder-engagement strategy needs to reflect the fact that stakeholder engagement is: •

a dynamic process, with a life cycle spanning from identification to disengagement;

a balanced, collaborative relationship among parties that share control of the dialogue;

as much of a listening process as a communications process;

focused on outcomes as much as strategies; and

not the same for every stakeholder or stakeholder group.

Be transparent and accountable. Show empathy for stakeholders’ situations and points of view; this can help build trust and unearth issues that may take longer to bubble up.

DOCUMENT THE STAKEHOLDER-ENGAGEMENT INITIATIVE Document all aspects of your stakeholder-engagement strategy, so that you build a record that (a) can be reviewed in the case of errors/disagreements, and (b) can aid in continuous improvement. Certain frameworks and protocols, including the International Finance Corporation’s Stakeholder Framework, have stringent documentation requirements. If your stakeholder-engagement initiative is governed by one of those frameworks, ensure that your documentation meets the relevant requirements.

ACTION: Capture the following in writing and retain the documentation consistent with your organization’s document retention policies. • What are the vision and goals of the stakeholderengagement plan?

• What internal and external resources were used in stakeholder and issue identification?

• What are the key timeline, milestones and deliverables?

• What were the key issues? Who were the key stakeholders?

• Who are the internal and external players on the strategy-development team?

• What was said in meetings?

• What was the team’s charter or charge? • What is the budget for the sustainabilityfocused stakeholder engagement, and where is it sourced from? • What process was used to identify issues and stakeholders; what process was used to build the stakeholder map? Were these processes used previously or developed for this initiative?

• What were the outcomes, and how well did they tie back to the vision and goals? • What opportunities were stakeholders given to provide feedback on their experience? • What was the process for closing the stakeholderengagement loop?



COMPLETE THE STAKEHOLDER-ENGAGEMENT CYCLE Issues and stakeholders change over time. When either an issue or a stakeholder “exits” from your organization’s sustainability landscape, go through an off-boarding process. Simultaneously, have your engagement team undertake a “debrief” regarding the (hopefully successful) engagement.

ACTION: Close the stakeholderengagement cycle. • Obtain feedback from stakeholders regarding their experience—were they adequately informed, listened to and engaged? • Thank stakeholders for their participation. • Implement any post-engagement strategies applicable to particular issues or stakeholders. • Capture lessons learned in writing. • Ensure that all action items have been completed.

ACTION: Gather the engagement team and conduct a specific post-engagement project review to • celebrate “wins” • understand whether resources were matched to needs • brainstorm improvement ideas for the next iteration This meeting, which should occur soon after the close of an engagement cycle, helps keep morale high and avoid resource-related mismatches in future initiatives.

SOLICIT STAKEHOLDER FEEDBACK As part of your overall stakeholder-engagement strategy, create an expectation of welcoming stakeholder feedback from the beginning and building mechanisms that enable that process. While not all stakeholders will take advantage of an opportunity to provide thoughts on their interaction with your organization, understanding how well you’ve done—from the user’s perspective—is to your advantage.

Stakeholder feedback comes in many forms, some of which you plan for and others of which are surprises. At the near end of the spectrum is a simple information-gathering activity (surveys and phone, web or in-person check-ins). You may find this approach appropriate and adequate in certain situations. At the other end of the spectrum is a feedback mechanism commonly known as “consultation,” an engagement-long process in which


affected stakeholders are provided opportunities to express their views on the benefits, risks, tactics and expected outcomes of the sustainability initiative. Consultation is very much a two-way process that must (a) begin early, (b) be transparent, (c) be inclusive and culturally sensitive and (d) include ways for participants to engage in a manner meaningful to them (which may involve participating in a different language than is the organization’s standard practice, or more verbal versus written communication).

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Stakeholder Engagement

USE METRICS AND MEASURE Create metrics that will measure your engagement activity. These metrics, while different from outcome metrics (which are particular to the issue you’re dealing with), will track the time and resources invested in stakeholder engagement. Combined with outcome-focused metrics, they can help you (a) determine the return on investment (ROI) of stakeholder-engagement initiatives and (b) improve your methodology on a continuing basis.

Create both quantitative and qualitative engagement-focused metrics.

QUANTITATIVE metrics that you can use to measure engagement activity include:

• number of stakeholder-engagement initiatives on an annual basis • number of outbound communications directed to specific stakeholder groups • number of in-person consultations with affected stakeholders • number of (and growth in) followers on engagement-specific Twitter feed

QUALITATIVE metrics for stakeholder-engagement activity include:

• narratives from organizational personnel and stakeholders about what they liked and didn’t like about the engagement initiative (perhaps survey-based) • narratives from users of stakeholder-based information about the adequacy, relevance, timeliness and usability of the information they received

• number of stakeholder groups in each of four mapping quadrants • number of organizational personnel active in stakeholder engagement



Case Studies


A search of the web will reveal volumes of case studies of stakeholder engagement in sustainability. Here are two for you to consider.

IFC’S ENGAGEMENT IN WATER ISSUES IN MONGOLIA: USING A SURVEY TOOL TO GUIDE STRATEGY Convened by the International Finance Corporation (IFC), the South Gobi Water and Mining Industry Roundtable aims to help companies address the South Gobi region’s watermanagement challenges. The roundtable’s goals are to strengthen the water-management practices of exploration and mining companies, and to improve relationships with local communities through participatory water-monitoring programs and improved information sharing.

WATER ISSUES IN SOUTH GOBI Mongolia’s South Gobi province, endowed with copper, gold, coal and other natural resources, is an arid region with scarce surface-water resources that is experiencing a major mining boom. Several mines built in the past decade have triggered population migration and the construction of large-scale supporting infrastructure, including power stations and transport corridors. Mineral exploration is expected to expand as the government issues new licenses to promote economic growth. The area is already experiencing water shortages due to shifts in climate, a growing small- and large-scale mining presence, degraded and abandoned water infrastructure, and widespread use of irrigated agriculture alongside the traditional livelihood of herding. The region’s challenges with water scarcity affect various stakeholder groups. Local citizens fear their water may be depleted or contaminated, thereby cutting off domestic use and harming their livelihoods as herders. Exploration and mining


companies need water for their operations and are increasingly aware that water needs to be managed as a shared resource, in recognition of the economic and social issues related to its use. In recent years, the government of Mongolia has passed several laws to increase and strengthen the regulatory environment, to improve water-resource management and to increase environmental protection. Still, until recently, two critical pieces of the water puzzle were missing: organized and coordinated involvement with companies operating in the region and systematic engagement with local communities. Despite a more rigorous regulatory environment, water-management practices still vary from company to company. While some companies use cutting-edge technical watermanagement practices and implement current industry best practices in the social management of water, not all companies have the same capabilities.

IFC PROJECT DESCRIPTION Since 2012, IFC has engaged with 13 exploration and mining companies operating in the Gobi region to improve the companies’ water-management and community-engagement practices. Project activities are developed in close collaboration with the mining companies through quarterly roundtable meetings. In 2013, IFC commissioned a community-perceptions baseline survey in the South Gobi region to assess the following issues: access to water, use of water and opinions on water management. Key findings reveal that communities: a) do not know how to test the quality of drinking water, b) do not trust the information companies deliver with regard to the

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Stakeholder Engagement


impact of mining on water, c) lack information on water availability in the South Gobi region and d) fear that the mining sector’s dependence on water will deteriorate grazing-land yields.

Standardize business policies and practices across companies on key technical and social issues related to water resource management through implementing the VCP.


Promote integration of technical and social watermanagement practices to identify and mitigate water risks.

Strengthen relationships with local communities through dialogue and participatory processes among companies, herders, local government and regulatory authorities.

Build capacity of community, government and industry stakeholders through training on the technical and social management of surface water and groundwater.

Trained more than 600 community, government and industry stakeholders on mining and groundwater systems.

Developed an advanced draft of a voluntary code of practice (VCP) on responsible watermanagement practices.

Surveyed the local population’s perception of the mining industry’s impact on water.


Finalize the VCP and develop an auditing and reporting mechanism for the voluntary code.

Deliver multi-stakeholder workshops to share key findings from the 2013 population perceptions survey conducted in South Gobi.

Design and deliver training focused on water monitoring, adaptive management approaches and guidance for designing participatory watermonitoring programs in Mongolia.

Develop and implement a communications and awareness-raising strategy for designing participatory water-monitoring programs in Mongolia.

Develop and implement a communications and awareness-raising strategy for the South Gobi Water and Mining Industry Roundtable.

Track and monitor behavior changes in local communities and mining companies following their participation in IFC’s training.


UNICEF’S STUDY OF ITS STAKEHOLDER-ENGAGEMENT PROCESS IN SRI LANKAN ECOLOGICAL SANITATION PROGRAMS UNICEF created a Sanitation Task Force to develop and implement strategies to improve sanitation practices and outcomes in Sri Lanka. As a part of that program, UNICEF engaged a consultant to review the practices it had used to engage stakeholders in the initiative. The consultant’s report thoroughly describes and analyzes the identification and engagement process, and it is available here:




Resources Here is a tightly curated list of resources where you can find additional information on stakeholder engagement. Some of these resources may also direct you to links to additional information.

A simple guide from the U.K. government can be found at: system/uploads/attachment_data/file/215006/dh_134407.pdf

Business for Social Responsibility (BSR) has created a practical guide that includes tools: http://www.bsr. org/reports/BSR_Five-Step_Guide_to_Stakeholder_Engagement.pdf

The International Finance Corporation (IFC) has a detailed treatment of stakeholder engagement related to its Sustainability Framework. See: external_corporate_site/ifc+sustainability/our+approach/risk+management/sustainability+framework StakeholderEngagement.pdf?MOD=AJPERES

A two-volume stakeholder-engagement set includes Volume 1 by Stakeholder Research Associates (SRA) Canada, and Volume 2 by SRA Canada, the United Nations Environment Programme and AccountAbility:

Deloitte’s consultancy has a concise treatment of stakeholder engagement in sustainability reporting: StakeholderEngagement_04042014.pdf

The International Council on Mining & Metals has a Stakeholder Research Toolkit built out with the cooperation of the University of Queensland (Australia):


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Stakeholder Engagement


Appendix Here are some templates/worksheets that might aid in your stakeholder engagement task: •

Downloadable here: are two Microsoft Excel templates related to stakeholder identification and engagement.





Robert W. Kuhn, Kuhn Associates Sustainability Advisors LLC

Dr. Joe Árvai Faculty Director, Erb Institute for Global Sustainable Enterprise

October 21, 2016

Dr. Ravi Anupindi Professor of Operations Management and Research, Stephen M. Ross School of Business Terry Nelidov Managing Director, Erb Institute for Global Sustainable Enterprise

© 2016 by the Regents of the University of Michigan

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