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Rethinking Stakeholder Management

By August 3, 2023September 12th, 2023No Comments

Sustainability presents distinct and problematic issues for stakeholder management. ESG/sustainability is in the crosshairs of the culture wars, which strongly suggests your stakeholders may also have polarized views. And prior claims by some of net-zero status due to carbon offset overstatements have escalated the concerns about greenwashing and eroded the trust that is so central to stakeholder management.

But the largest issue may be the approach to stakeholder management itself. In a nutshell, it is risky to think of stakeholder management as a promotional exercise when most companies’ internal programs are still working things out and the external dynamics – regulations, volatile voluntary carbon markets, if and how consumer sentiment will translate to real buying habit changes, rapidly evolving cleantech and climate tech – are still in flux.

The tried-and-true approach is to move from a promotional to a transparent footing for stakeholder management. It is the best way to foster a level of trust and, where possible, advocacy. But it won’t be easy because there is a high level of uncertainty and there will be setbacks and failures along the way that can complicate a fully transparent approach.

Ideas about Productive Transparency

The first observation is that there can be significant variation in your stakeholders: not just in the role they play, but also in the views they carry, the nature of their influence, and the real magnitude of influence they can exert on your company.

A living segmentation, based on at least these four variables – role, perspectives, nature of influence, and magnitude of influence – can help focus energy where it has the most impact and avoid areas that don’t accrue meaningful risk.

Yes, it is important to engage everyone in some capacity and communicate from the same platform. But segmentation enables tailored engagement – from managing some stakeholders on a continual basis to keeping some stakeholders informed less frequently – can match your level of investment with the ability to build trust with those able to make the biggest difference.

This segmentation should be revisited at least every six months as realities and, therefore, approaches change.

Once segmentation is complete, attention turns to how best to engage to optimize resources while building trust; in other words, how to execute productive transparency. Several methods come to mind:

  • Build an engagement strategy: Communications can rapidly digress and get bogged down into a set of tactical engagements as different challenges command different responses. Anchor stakeholder management in a core strategy with clear goals, milestones, etc to efficiently orchestrate engagement.
  • Continuously engage: Effective stakeholder engagement is not a one-time event but a continuous process that spans the lifecycle of a sustainability initiative. Regular and ongoing dialogue keeps stakeholders informed and engaged, maintaining and growing their commitment and support.
  • Appreciate different perspectives: Often, your stakeholders are a microcosm of the outside market with a wide array of experiences, perspectives, and expectations. Your stakeholders can teach you how to empathize and productively engage.
  • Engage resistance: In a polarized climate, you can expect resistance no matter which direction you go. Engage and embrace it – it clarifies the type of objections and issues you can expect in the wider market and those stakeholders can become your fiercest allies if they perceive you take them seriously.
  • Share the not-so-good news too: Sustainability is going to be a bumpy, windy road. Things will go wrong and your stakeholders likely know that. Share the challenges, risks, and issues to those in your segmentation you will manage most closely to foster empathy, solicit ideas, and build trust as it brings those stakeholders closer to your reality.
  • Manage resources: Stakeholders likely don’t know or care whether they are exhausting resources. But the only way to allocate the most resources to the most important stakeholders is to continuously free up time.

Stakeholder management needs to transition from promotion and tactical engagement to a strategic view of productive transparency to build trust, and where you can, advocacy.

We would love to get your thoughts on this and see how we can help in your stakeholder management efforts.