CSR and Engagement

Avuso et al. argued that in order to align with stakeholders’ interests and create long-term value, organizations need to develop, apply, and maintain the necessary management competences and capabilities to deal with stakeholder concerns over time.[1]  According to Draper, structured CSR dialogue, often referred to as “engagement”, is essential to identifying and responding to stakeholders’ expectations, dealing with their key concerns and ensuring that there is a consensus about the nature of the working definition for CSR and the vision and purpose of the company with respect to social responsibility.[2]  Hohnen and Potts described stakeholder engagement as the formal and informal ways of staying connected to the parties who have an actual or potential interest in or effect on a company’s business (i.e., the company’s “stakeholders”) and noted that “engagement” implies understanding their views and taking them into consideration, being accountable to them when accountability is called for, and using the information gleaned from them to drive innovation.[3]  Stakeholder engagement is related to the fundamental principle of CSR that calls for companies to acknowledge that their businesses do not and cannot exist in isolation and rely heavily on their relationships with customers, employees, suppliers, communities, investors and others.

The focus of stakeholder engagement changes as the company proceeds along the path of CSR adoption and implementation.  At the beginning, establishing and maintaining stakeholder engagement and deepening collaboration with key stakeholders allows the development of knowledge and know-how on specific issues faced by the organization.  As the process continues, stakeholder engagement becomes a catalyst for future improvement and helps to shape stakeholders’ attitudes toward the company and its CSR efforts, hopefully reducing skepticism and incentivizing stakeholders to see the companies as allies in their own sustainability efforts.  Once stakeholder trust has been secured, companies can feel more comfortable in relying on stakeholders to contribute to shoring up weaknesses in the CSR program.[4]

Companies have begun to adopt formal policies relating to stakeholder engagement and community development, particular in those instances where the company’s operations can reasonably be expected to have a significant environmental impact on the surrounding communities (e.g., oil and gas production and other extractive industries).  These policies grow out of the realization that while the business activities are regulated, and the company is expected to adhere to the requirements imposed by law, dialogue with and support from local communities is just as essential to the overall success of the enterprise as being legally compliant.  Engagement with the community as a key stakeholder also provides opportunities for the company to participate in the improvement of conditions within the community and overall economic development and wellbeing in the area.

For more information on the topic of this article, see the author’s book Responsible Business: A Guide to Corporate Social Responsibility for Sustainable Entrepreneurs, which is available here , and materials distributed through the Sustainable Entrepreneurship Project. 

[1] S. Ayuso, M. Rodriguez and J. Ricart, “Using stakeholder dialogue as a source for new ideas: a dynamic capability underlying sustainable innovation”, Corporate Governance, 6(4) (2006), 475.

[2] S. Draper, “Corporate responsibility and competitiveness at the meso level: key models for delivering sector-level corporate responsibility”, Corporate Governance, 6(4) (2006), 409.

[3] P. Hohnen (Author) and J. Potts (Editor), Corporate Social Responsibility: An Implementation Guide for Business (Winnipeg CAN: International Institute for Sustainable Development, 2007), 76-84. See also Stakeholder Engagement: A Good Practice Manual for Doing Business in Emerging Markets (Washington DC: International Finance Corporation, 2007) and From Words to Action: The Stakeholder Engagement Manual (Cobourg, Ontario, Canada: Stakeholder Research Associates in collaboration with AccountaAbility, and the United Nations Environment Programme, 2005).

[4] F. Maon, V. Swaen and A. Lindgreen, Mainstreaming the Corporate Responsibility Agenda: A Change Model Grounded in Theory and Practice (IAG- Louvain School of Management Working Paper, 2008), 60.