Evolving Engagement:

From Licence to Operate to Licence to Succeed

By Kate Newbury-Helps

Engagement has long been understood as a core element of corporate sustainability strategy and leading companies have been working with stakeholders for many years. Stakeholder engagement has been behind many sustainability success stories over the last two decades.

Think of Nike addressing sweatshops in their supply chain, thanks in part to a close partnership with the Fair Labor Association among others. Or Unilever and Greenpeace establishing a dialogue to address palm oil sourcing after the latter drew attention to unsustainable practices. Some companies have shifted from negative reactive to proactive positive engagement – for example, large pharmaceutical companies engaging with development organisations through partnerships such as public-private partnership GAVI to address major global health challenges.

As the world changes, so too must corporate engagement. Trust in business has steadily declined and stagnated over the last five years: as the Edelman Trust Barometer shows, just 52% of the population now trust business to ‘do what is right’. Yet expectations of business to act on sustainability grows. As the Sustainable Development Goals gain traction, there is a spotlight on which issues business has the power to influence. Calls continue to mount for sustainability and business strategy to become one and the same.

The expectations of consumers continue to raise particular questions for brands and the value chains behind them. They seek products which are produced fairly, without damaging the environment. Spending patterns are shifting accordingly. As highlighted by the recent Globescan-SustainAbility Leaders Survey, young people are moving away from traditional ways of engaging with private sector on sustainability such as volunteering or influencing employers in favour of more direct forms of action including investment, entrepreneurship and advocacy.

Hyper-transparency challenges how institutions engage with their constituencies. Connected devices and data availability enable consumers to demand greater visibility of business practices and expect information in real time. It is hard for business to control the timing, content, or interpretation of the information that is disclosed, as seen in the #BoycottStarbucks or #deleteuber movement last year. Issues emerge and move quicker than ever, such as the action on single use plastics over the past year, with 11 major FMCGs reacting by committing to 100% recyclable or reusable plastic packaging by 2030 or sooner and the elimination of plastic straws from many venues.

Business must raise its game and make its engagement more sophisticated. We see two key opportunities for business:

1. Embrace more diverse and emergent voices

The best answers to “what will the next microplastics be?” will be found through smart engagement. Interacting with divergent and disparate voices – be they the leaders of social movements, representatives of the next generation of consumers and employees, or experts in local issues. Businesses who have engaged with stakeholders for an extensive period of time can find themselves in the ‘comfort zone’. Engaging with different stakeholders offers an opportunity for challenge and fresh thinking. Seeking out smaller, more local voices and groups can add a lot to a global discussion of more representative voices.

Companies ensuring engagement with a spectrum of stakeholders, from those with whom they might collaborate closely to those who will act as a critical friend, often find disagreement can be constructive and divergent opinions offer opportunities to learn. Our experience suggests it is far better to engage stakeholders and understand the rationale behind a perspective, rather than rule out interaction with certain groups on principle.

2. Supporting relationships that can bring business benefits and social impact

Engagement ties to business performance in many ways: resilience, cost-reduction, increasing sales and securing reputation. Yet companies must strengthen the productive links between stakeholder engagement and business strategy. Business growth plans depend upon consumers believing in the business and its brands and broader stakeholders supporting, or at least not discouraging, them.

To get there, engagement must resonate and be carried out across the business, not be confined to the territory of those with ‘sustainability’ or ‘corporate responsibility’ in their job titles. The complex issues with which business grapples touch the outside world, and external insights can deliver real value. Engagement is a critical tool for identifying emerging issues but its real power lies in using external (and internal) intelligence to support the creation of commercial solutions to some of our most testing environmental and social challenges. Stanley Black and Decker is just one example of a company that is using engagement to better understand market needs, particularly the requirements of disadvantaged groups. It is using this information to design products and services that are not only better for society and environment, but generate a good return for the business.

Currently, stakeholder engagement focuses on achieving a ‘licence to operate’. By embracing more diverse voices, connecting engagement to core strategy, using engagement as tool to focus the business on commercial solutions to societal challenges, and by building a network that can help support a corporate purpose with social relevance businesses might secure a ‘licence to succeed’.

About the author

Kate Newbury-Helps

@kate_newbury

SustainAbility Analyst based in London working across the technology and food sectors. Loves innovation, travel and music.