A strategic approach

to stakeholder

engagement.

Dr Leeora Black, Managing Director, Australia Centre fro

Corporate Social Responsibility

Richard Lambell, Senior Consultant, ACCSR

Brought to you by

- MASTER CLASS –

A STRATEGIC APPROACH TO STAKEHOLDER ENGAGEMENT

Presented by Dr Leeora Black

Managing Director, Australian Centre for Corporate Social Responsibility

The Australian GRI Conference on Sustainability and

Integrated Reporting 26 March 2012

• What is the ONE big question you have now about stakeholder engagement practices in your organisation/daily work?

YOUR BIG QUESTION

• When it comes to stakeholders, managers are short-sighted

• Managers need a 360-degree view of the stakeholder terrain if stakeholder engagement is to improve reporting, strategy and organisational performance

WHAT WE WILL COVER

One big idea

Source: Adapted from David Wheeler, Shulich School of Business, York University

Engage

Comply

Respond

Maximise Social, Environmental & Economic Value (Sustainability)

Avoid Harm

Enhance Reputation

CHANGING ORIENTATION TOWARDS STAKEHOLDERS

TRENDS IN STAKEHOLDER RELATIONS – HOW TO ENGAGE

From •Bilateral and transactional relationships.

•Engaging around organisational issues.

•Tactical and reactive.

•Emphasis on risk mitigation and reputation.

To • Longer term multilateral

relationships

• Engaging around organisational and societal issues.

• Proactive and collaborative.

• Emphasis on learning, innovation and mutual value creation.

STAKEHOLDER VIEW - TRADITIONAL

YOU

Unions

Employees

Regulators

Suppliers NGOs

Communities

Customers

NEW VIEW

Source: ACCSR. Report on the Stakeholder Survey for the NSW Minerals Council. April 2011

DEFINITION OF A STAKEHOLDER

Individuals, groups or

networks who can affect or

are affected by, an organisation.

DEFINITIONS: STAKEHOLDER

“Can affect or be affected by ...” Impacts and issues Issues arise in response to a perceived gap between expectation and reality Stakeholders get organised around issues. .... Stakeholders come in packages called issues! Issues flow through networks

COMMON MISTAKES AND BLIND SPOTS

• Managers tend to focus on corporate-centric issues rather than pubic issues

• Managers tend to conflate what is important to the company with what is important to stakeholders

.... And create blind spots for themselves and the company

THE STRATEGIC LIMITATIONS OF CHECKLISTS

Examples of checklists: • Lists of stakeholders for and against project • Lists of issues that need immediate attention or not

Dynamic interactions are ignored • Interactions of issues and stakeholders are ignored • The role of ‘Bridging stakeholders’ is overlooked

High quality stakeholder relationships AND Motivation to collaborate

PUBLIC ISSUES

To engage effectively on public issues, we need

WHY RELATIONSHIPS MATTER

Relationship Social Impacts

High quality stakeholder relationships are the key to creating positive social impacts

Leverage for change is in the relationship side of cycle High quality relationships produce more social capital and are a foundation for social license to operate

WHAT IS SOCIAL CAPITAL?

“... the stock of active connections among people: the trust, mutual understanding and shared values and behaviors that bind the members of human networks and communities and make cooperative action possible.” Cohen and Prusak, 2000

SOCIAL CAPITAL AND SOCIAL LICENSE TO OPERATE

Social Capital

Motivation to collaborate

Shared goals for the future

Trust (Listening & promise-keeping)

Legitimacy

Economic (Benefits me)

Socio-political (Benefits the region)

Honest,

transparent communication

Openness

Information quality & quantity

Believable Respect for people & norms (Consistent & fair)

Building blocks of social license to operate

MODEL OF SOCIAL LICENSE TO OPERATE

Psychological identification - The community has very high trust in the industry and sees itself as sharing responsibility for the company’s success. Stakeholders will advocate for the company when necessary. Approval – The industry has established both legitimacy and credibility, and the community approves of the industry. Acceptance - The community listens to the industry and considers its proposals. If, by their own standards, they have no reason to doubt the industry’s credibility, they may allow a project to tentatively proceed. Withholding/withdrawal - The rejection level of a social licence is the worst case scenario. This can manifest in complaints, blockades and public action against individual sites, companies or the industry as a whole.

HIGH SOCIAL LICENSE TO OPERATE → LOW SOCIO-POLITICAL RISK

Level of Social license

Socio-Political

Risk

Symptoms

Withheld/ Withdrawn

High Shutdowns, blockades, boycotts, violence/sabotage, legal challenges

Acceptance/ Tolerance

Medium Lingering/recurring issues & threats, outside NGOs, watchful monitoring

Approval/ Support

Low Company seen as good neighbour, Pride in collaborative achievements

Psychological identification

Very low Political unity against critics, sense of shared future, co-management

STAKEHOLDER PLANNING MATRIX

Low SLO/High Motivation to Collaborate:

FRUSTRATED COLLABORATORS

High SLO/High Motivation to Collaborate:

READY FOR COLLABORATION

Low SLO/Low Motivation to Collaborate:

UNLIKELY TO COLLABORATE

High SLO/Low Motivation to Collaborate:

FRIENDLY BUT INDIFFERENT

Level of social license (SLO) in relationships between company and stakeholders

Low Medium High

Stak

ehol

ders

mot

ivat

ion

to c

olla

bora

te w

ith c

ompa

ny

Low

Med

ium

H

igh

• Inadequate investment in relationship-building • Selective engagement • Failing to deliver on promises • Failing to understand internal structure of the community • Failing to listen and respect with over-reliance on legal

permits • Failing to maintain close contact when there are changes

of personnel in the company • Over-estimating the quality of the relationship

PITFALLS TO AVOID

• Understanding the quality of relations within the stakeholder network can give you:

• Insights for managing issues • Insights for strategy • And is the foundation for earning, maintaining and

strengthening your social license to operate.

KEY TAKEOUTS

www.accsr.com.au leeorablack@accsr.com.au Visit the ACCSR table during the conference! Meet ACCSR people at the conference!

THANK YOU

Good Luck!!!