Improving on the Stakeholder Engagement Criterion in DJSI

Building solid stakeholder relations to prevent prickly situations
Improving on the Stakeholder Engagement Criterion in DJSI
Publ. date 31 Jan 2014
With the increase in power held by local stakeholders due to developments such as social media, mobile technologies and the globalization of local issues, an effective stakeholder engagement approach is now more vital than ever to companies. Reflecting this changing position, RobecoSAM introduced an enhanced framework in the Dow Jones Sustainability Index questionnaire for evaluating companies’ stakeholder engagement activities.

In the 2014 edition of RobecoSAM’s Sustainability Yearbook, the investment group offers an overview of the new Stakeholder Engagement Framework and highlights some of the key findings from this year’s assessment.

The relevance of stakeholder engagement as such is viewed from the angle of risk as well as opportunity. Constructive relationships with local stakeholders such as labor unions, regulators or local communities may prevent extra costs, revenue loss or reputational damage from business interruptions such as strikes, boycotts, theft or sabotage. On the other hand, progressive stakeholder engagement processes create a license to operate, help build trust and strengthen the brand, ultimately resulting in increased sales, retaining existing customers and attracting new customers.

Stakeholder Engagement framework: governance, implementation and review

The framework focuses on three elements: governance, implementation and review; and looks at how companies strike a balance between the top-down corporate stakeholder engagement policy and how it is implemented at the local level. In terms of governance, the ideal situation consists of a group-wide policy or procedure which is publicly available, clear ownership for the stakeholder engagement process and an accountability mechanism allowing stakeholders to escalate issues which are not properly being addressed.

Implementation relates to how the stakeholder engagement strategy is actually implemented at the local level, preferably consisting of clear responsibilities and incentives for local managers who should also possess the right skills to participate in the engagement process, stakeholder engagement KPIs and a stakeholder prioritizing approach, such as the Stakeholder Salience model.

Finally, RobecoSAM looks at how companies review and measure the success of their past stakeholder engagement activities. A mechanism or ‘feedback loop’ should be in place to make sure local subsidiaries can share lessons learned with the rest of the group and prevent the same mistakes from repeating themselves.

Learnings from 2013: writing a policy is easy, implementing one is not

One year in, RobecoSAM observes that companies scored best on the top-down governance section, while experiencing challenges in the implementation and review area. Stakeholder profiles and stakeholder maps are valuable -but not yet common- tools for managing high-priority local stakeholders, and local findings have a hard time being reported back to the headquarters. In conclusion, RobecoSAM pledges to continue to develop and refine its framework to encourage companies to raise the bar and continuously improve their stakeholder engagement approach.

Improving your company’s Dow Jones Sustainability Index score?

Is your company invited to the 2014 Sustainability Assessment and looking to improve last year’s performance or participating for the first time? Contact Nikkie Vinke, consultant, at nikkie@finchandbeak.com or +31 6 28 02 18 80 if you are looking for help or an extra hand with your Dow Jones Sustainability Index submission.

About Nikkie Vinke

Multidisciplinary advisor in ESG benchmarking, sustainability strategy development and execution. | nikkie@finchandbeak.com

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