Shifting from stakeholder engagement to stakeholder trust

In an era of hyper-transparency and political and social disruption, companies are re-evaluating their purpose in society. There are growing calls from government and civil society for corporations to become partners in supporting a more inclusive economy and sustainable environment. More than ever before, companies face competitive pressure to integrate new ideas and voices into their work and demonstrate that their operations add value to the communities in which they operate. It is no longer sufficient to hold an annual convening to seek the perspective of stakeholder representatives.

This transformation requires more than a robust process or the use of a new engagement technology. It involves a much broader perspective on the purpose of stakeholder engagement and the incorporation of more diverse stakeholder voices, and it involves an understanding of the strong links between stakeholder input and corporate strategy.

Businesses today are facing unprecedented challenges. Fragile, just-in-time supply chains may come under increasing disruption from climate change, pandemics, terrorism, dynamic migration patterns, and a resurgence of political risk. The neoliberal consensus on the benefits of globalization and the free movement of capital is stumbling—as are emerging market economies. But the shift to a domestic focus on economic and social challenges won’t address emerging global challenges. Older multilateral institutions such as the UN and the World Bank are also under competitive pressure from new initiatives such as the Asian Infrastructure Investment Bank (AIIB), as well as alternative approaches to development proposed by private foundations and other rising non-state actors. Public trust in governments and business is diminishing. Activists are adopting more sophisticated strategies to attack their targets, which now include broader supply chains and investors. Competition is also becoming more dynamic, and businesses need to balance anticipating disruption with focusing on core services, customer loyalty, and stakeholder trust.

Stakeholder engagement is one of the primary tools companies have to ensure that their activities are inclusive and benefit society. While engaging external actors on risk and reputation will remain important going forward, companies can use meaningful stakeholder engagement to achieve much, much more. 

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