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We need a new mindset for corporate sustainability that uses relationships with stakeholders to build business opportunities, not just manage risk, argues a new CSR report. The report, from the Doughty Centre for Corporate Responsibility at Cranfield University, suggests that organisations need to move from just talking to stakeholders, to involving them in business decisions.

The authors, Erik G. Hansen, and Hekio Spitzeck, both experts in CSR, analysed 51 companies’ responses to questions about their stakeholder relationships from the Business in the Community (BITC) Corporate Responsibility Index (2002-2008).

The researchers found that ‘integrating stakeholder feedback’, into marketplace issues jumped from being one of the least important issues in 2002 to almost the most important in 2007.

However, their report still found that the majority of stakeholder engagement (61%) was in a category called ‘dialogue or issues advisory’, ie/operational issues where stakeholders have little influence. ‘Strategic collaboration’ where stakeholders are heavily involved and have a large amount of power accounts for just 14%.

As part of their paper, the researchers identified the actual impact stakeholders have or their ‘stakeholder power’ in from ‘no impacts’ to ‘high impacts’. The high impacts are where stakeholders are involved in the design of new products or policies. For example, the UK’s Co-operative bank gave its stakeholders the power voting to approve or disapprove their ethical policy outlining where the bank does or does not invest.

It also examined the different ways businesses talked to their stakeholder groups – including employees, customers, NGOS, investors, industry peers, communities, Government, Unions and suppliers. The most often used approaches were surveys and polls, followed by dialogue groups, and then ‘collaboration and partnership’, which usually happens over a longer period of time. Unfortunately, in 31% of cases companies do not outline the impact of these activities, just noting that ‘discussions took place’ or ‘opinions were polled’. The most frequent impact when it is noted is on policy or programme development which shows that companies have progressed to using feedback to inform business decisions.

Over the last few years, different types of stakeholder groups have evolved to deal with specific business and CSR issues. These include advisory boards and stakeholder management committees. The latter involves direct stakeholder participation and is becoming increasingly common.

There are also cross-sector partnerships, based on a membership-scheme model aimed at improving sustainability of raw material sourcing, providing more transparent trade practices and more responsible products and services. These usually have a complex governance model and need to be clearly distinguished from industry-led initiatives. An example of this is the Responsible Jewellery Council which promotes ethical, human rights, social and environmental practices.

The report makes four key recommendations as a result of its analysis.

Firstly, it says organisations should use stakeholder engagement as part of their CSR strategy to actively change their practices, not just to reduce risk. For example, stakeholders can help to identify opportunities to develop new products and services and make decisions about markets that improve the ‘fit’ of a company’s core business. For example, Innocent – the UK smoothie company, polled their customers to decide whether or not to sell their drinks at McDonalds. They ran a trial in 2007 but this was not taken forward.

Secondly, it advises businesses to look outward for advice and not just inward. This involves delegating significant decision-making power to stakeholders by allowing them to design and vote on key corporate policies.

Thirdly it suggests a willingness to work cross-industry when CSR-related challenges cannot be solved by single businesses. The example given was the Roundtable on Sustainable Palm Oil.

Lastly, it states that senior leaders have to make CSR part of the corporate mindset and deeply ingrain it into corporate culture.

This report is a really valuable indication of how the CSR landscape has developed over the last few years. It points out that as pressure increases from regulators and markets for corporations to play a bigger part in social and environmental changes, voluntary mechanisms are in businesses’ interests. Better to make the move to change yourself, so it benefits your business, than be forced into something detrimental.

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Original Source: www.justmeans.com/New-report-CSR-letting-stakeholders-make-business-decisions/34422.html