What you need to know about stakeholder relationships in integrated reporting

The <IR> Framework has seven guiding principles. The third guiding principle articulates the importance of stakeholders as the ultimate recipients of the value created by organisations.  

Who are your stakeholders?

Stakeholders are the people that matter most to your business. Each geography, sector and organisation will have different stakeholder groups. It’s crucial to map who these individuals or groups are.  This can be done by evaluating their current or potential impact on your ability to create value. Common stakeholders may include:

Employees, customers, trade unions, regulators, government, banks, communities, the media and civil society.

What does the framework say about stakeholders?

“An integrated report should provide insight into the nature and quality of the organisation’s relationships with its key stakeholders, including how and to what extent the organisation understands, takes into account and responds to their legitimate needs and interests.”

Let’s break that down

We want to report on the

– nature , or type of relationship, and the

– quality, or how strong the relationship is

We want to do this for key stakeholders, including how and to what extent the organisation takes into account and responds to their legitimate needs and interests. In other words, what does the organisation do to understand, respond to and integrate stakeholder feedback into how the organisation functions.

And remember

A relationship is a two-way street. It involves value created and value gained. But it also involves impact made or value lost. 

If you are extracting value from a particular stakeholder group without giving back… the quality of that relationship will be negatively impacted, which will ultimately affect your organisation’s ability to create value. Fostering strong relationships relies on developing clear lines of communication that enable meaningful engagement.

How can we engage with our stakeholders?

An organisation needs to determine the level of engagement best suited to them and their stakeholders. Quality over quantity is the general rule. Directing communication at a group of people does not grow a relationship. It’s only when we listen to truly understand that the concerns and legitimate needs of stakeholders surface. This provides an opportunity to spot important risks ahead of time, as well as any opportunities, and respond timeously.

How do we report on our stakeholder relationships?

Each company does it differently, depending on the maturity of their stakeholder engagement programmes and systems. Often, the level of detail companies want to disclose guide reporting. 

We’ve included some best practice examples for reporting on stakeholder relationships to give you food for thought.

Redefine integrated report 2017

Redefine lists all of their key stakeholder groups and details the issues raised by each group, as well as the strategic responses to these issues. It links this to business risk and related opportunity. An internal, five-star scale shows the quality of this relationship.

This approach, while excellent, does not consider the nature of the relationship with stakeholders. The nature of the relationship is, however, addressed later in the report. The nature of the relationship is detailed by categorising each stakeholder group’s levels of influence on Redefine, the company’s impact on them, and the level to which they collaborate, involve or consult with stakeholders. They have also included movement in the nature of the relationship year-on-year.

Oceana integrated report 2017

Oceana links the various stakeholders to their contribution to value creation and associated priority interest for the organisation. This is mapped against the ways Oceana engages – detailing specific stakeholders that fall within the original stakeholder grouping and how specific engagements take place.

Kumba integrated report 2017

Kumba maps the specific engagement channels to key stakeholders and show the key interests, concerns or expectations. They then show the effectiveness of the engagement through a coloured scale.

Still not sure how to go about reporting on your stakeholder relationships? Let Alchemy Creative Studios make it simple info@alchemycs.co.za

This is the third article in a series of seven relating to the <IR> Framework guiding principles. Return to our blog to read more on these principles.