Geneva Switzerland, 05 July 2021: Today, the World Business Council for Sustainable Development (WBCSD), in collaboration with DNV have launched a report exploring how leading approaches to stakeholder engagement, materiality and risk management can be brought together to support board-level decision-making.
The COVID-19 pandemic has emphasized the need for companies to move beyond shareholder primacy and consider the purpose of the organization, its social license to operate and the impacts that it has on both society and the environment.
As these and creating company value relies on good relationships with employees, customers, suppliers, capital providers, governments and civil society, the research dove into board´s engagement with stakeholders. Key findings covered in the report include:
- Board level stakeholder engagement is still very limited
- Senior management are typically responsible for engagement
- Boards should take a more active role
- Engagement supports businesses to identify key ESG-related risks
- Materiality assessments can help businesses understand a board range of stakeholder views
- The role of the board in stakeholder engagement varies between businesses.
The survey received responses from over 100 directors, executives and functional leaders and this quantitative data was supplemented with one-to-one interviews with directors and management to understand what is happening in practice.
Mario Abela, Director Redefining Value at WBCSD said ‘Business needs to recognize the interconnectedness of its operations with key stakeholders to move beyond the model of shareholder primacy. WBCSD’s Vision 2050 highlights the need for a mindset shift to drive the transformations urgently required on the purpose of business, resilience and operating regeneratively to create long term sustainable growth. Sustainable business models depend on the quality of relationships between a company and its key stakeholders. It is not an adjunct to running a successful business but an essential element.
Jason Perks, Senior Director Sustainability & ESG at DNV said ‘Although Board-level engagement is still somewhat limited, it is clear from our research that stakeholder engagement is key to helping business better understand ESG-related risks and opportunities. This is vital to creating and protecting long-term value. It is time for business to use tools such as materiality assessments and stakeholder engagement to ensure boards are informed and engaged with their stakeholders on ESG topics to ensure future-fit strategic decision-making.’
This research highlights the need for more strategic work in this area to strengthen the extent to which stakeholders are considered in boardroom decision-making but there are some actions that companies can consider to ensure engagement is effective and integrated across the organization.
Read the full report here.