Incorporating Stakeholder Engagement Into Governance

Namhla Saba

15 years: Chartered Accountant & ESG Specialist

Let's get into the thick of it. Join Namhla Saba as she explores the purpose and principles of stakeholder engagement in governance.

Corporate Governance

Let's get into the thick of it. Join Namhla Saba as she explores the purpose and principles of stakeholder engagement in governance.

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Incorporating Stakeholder Engagement Into Governance

13 mins 7 secs

Key learning objectives:

Identify the purpose of stakeholder engagement
Outline principles for stakeholder engagement

Overview:

A study conducted by the World Business Council for Sustainable Development highlights a chasm between board knowledge of stakeholder engagement and practice. Stakeholder engagement must have a defining purpose, which means the organisation needs to determine: why it wants to engage stakeholders and which objectives will be achieved through the engagement. Usually companies enter into stakeholder engagements for strategy or operational purposes.

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Summary

What are the principles for stakeholder engagement?

From AccountAbility's AA1000 Accountability Standards 2018:

1. Organisations should have a formalised commitment from the board and senior management to hold themselves accountable to their stakeholders.

2. The organisation should incorporate inclusive stakeholder engagement processes in crucial governance structures such as strategy and decision making across the organisation, geographically and at each management level.

3. The organisation must ensure its board has established and clarified the scope of core objectives of stakeholder participation.

4. Organisations must include the themes and feedback lessons, where applicable, in the relevant policies, operational procedures, and systems.

5. The organisation must ensure the necessary competent resources are allocated and made available for stakeholder engagement.

What is the purpose of stakeholder engagement?

Stakeholder engagement must have a defining purpose, which means the organisation needs to determine: why it wants to engage stakeholders and which objectives will be achieved through the engagement. There are two main reasons organisations enter into stakeholder engagements:

1. Organisations engage to develop and improve their overall strategy, such as introducing new business products or pivoting into new geographies.

2. Organisations identify and improve organisational operations, such as introducing new incentives, increasing product quality or changing product packaging.

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Namhla Saba

Namhla Saba, Founder and Director of a firm advising corporations, funds, and NPOs on ESG and social development, has over 15 years of experience in social and governance issues across sectors like financial services, mining, and infrastructure. She leads community stakeholder engagement projects for clients seeking to maintain their "social license to operate" in developing markets like South Africa, bridging relational and information gaps between corporations, employees, customers, and communities.

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