This article looks into common concerns amongst stakeholders. The first part analysed the concerns amongst customers, employees and shareholders. In most businesses these will be the three most important stakeholder groups. You can find a link to the first part below.
This part looks into the concerns amongst three other groups of stakeholders. These are suppliers, NGO’s and governments.
Companies are increasingly demanding higher standards of environmental and social performance from their suppliers. This includes vigorous vetting on environmental social and governance issues. Similar to investors this is a stakeholder group where risk reduction is a primary concern.
Companies are carrying out this vetting for a number of reasons. They are doing this because of a threat to their own reputations. We are operating in a new paradigm. Before, companies were responsible for their own operations and their own workers. Now, with the proliferation of subcontracting and the rising in importance of environmental and social issues, companies are responsible for the activities of their suppliers.
Companies are also looking to work with suppliers who can help them improve their own performance. This has therefore placed an emphasis on opportunity maximisation amongst this stakeholder group. Lots of sectors are incredibly competitive and if you are not able to provide low carbon good and services, there is a good chance a competitor of yours is.
Methods such as pre-qualification questionnaires have become commonplace. This can include caveats that suppliers who reach a certain threshold of sales have accreditations such as the ISO 14001 standard for environmental management systems. Also, for industries with a history of scandals in the supply chain such as footwear and apparel, it may be required for suppliers to submit to random visits and periodic auditing to ensure compliance.
Overall, suppliers are a stakeholder group where sustainability is a primary concern and where environmental and social issues are rising in importance.
NGO’s are a stakeholder group whose importance continues to rise. There may be some hard-nosed business executives who would question whether NGO’s count as stakeholders at all. But if you adhere to the definition of a stakeholder as “a person with an interest or concern in something, especially a business.” Then NGO’s are not only a stakeholder, but a very important and influential grouping.
NGO’s who campaign on social and environmental issues perform an important watchdog function in society. Many of them possess an enormous amount of technical expertise which they can bring to bear on their particular areas of interest. They can act as a counterweight to politicians and government agencies which can fall foul to the influence of corporate lobbyists.
NGO’s can launch attacks against businesses through both the mainstream and social media. Mud sticks and it can take a great deal of time for businesses to repair their damaged reputation. NGO’s can also launch boycotts which can have a more direct impact on businesses bottom lines.
Some NGO’s take a more cooperative approach and work with businesses to help them set up roundtables to improve the social and environmental performance of particular sectors.
Overall, NGO’s are organisations that care deeply about their particular area of interest. Their concerns are primarily around avoiding greenwash and making sure that sustainability is implemented in practice and not just in rhetoric.
Some readers may dispute the way I have ranked governments as only the 6th most important stakeholder group. But there is a reason for this.
Governments are not monolithic. They react to the concerns of all of the stakeholder groups that I have previously mentioned.
They also wear many hats. On the one hand, governments are organisations that possess an enormous buying power and so they can influence businesses via that channel.
On the other hand, they rely on taxes which are raised from the private sector so they have an interest in ensuring a healthy and vibrant economy.
Governments are also made up of politicians who are accountable to their constituents and so they react to the concerns that emanate from the populace.
Governments also have to act upon international treaties that they are signed up to.
So, as we can see, governments are organisations with limited means but a seemingly unlimited list of parties seeking to influence their decision makers. As such they are interested in preventing businesses from inflicting social and environmental harm on society, but they also have an interest in fostering a hospitable environment for businesses to grow.
Governments can seek to influence the priorities of businesses with regard to social and environmental issues with regulations, taxation and the threat of such actions.
Overall, governments are a stakeholder group that has many contradictions with respect to sustainability and corporate responsibility.
What you need to know
This article was the second in a two-part series which looked into common concerns amongst stakeholders.
The first part looked into the concerns of customers, employees and shareholders.
This part looked into the concerns of suppliers, NGO’s and governments.
For suppliers, this is a group which is focussed on risk reduction as they need to minimise any risk that they may pass on to partners in the supply chain.
NGO’s are primarily concerned with results and preventing sustainability from being something that exists only on paper. NGO’s perform a function of holding businesses to account either cooperatively or uncooperatively.
Governments are a stakeholder group with a wide range of concerns with respect to sustainability and corporate responsibility. They are able to exact influence via a number of channels and can be a vehicle for enormous change.
Thank you for reading,
By Barnaby Nash
Please share your thoughts in the comments section below or reach out to me on social media. What do you think of the stakeholder concerns that I laid out in this article?
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