Stakeholder strategy

It’s true that taking stakeholder impacts seriously is at the heart of sustainable business. But it would be naive to imagine expanding the business model to include all stakeholders. A company can’t possibly manage every single stakeholder affecting or affected by its activities, even if it could identify them.

You have to choose which stakeholders are important to your success. This in turn means you have to identify who your stakeholders are in the first place, upstream, mid-stream and downstream. And you have to define what you mean by ‘success’. For example, you may decide that you should no longer reward and promote your people on the basis of how good they are at making external stakeholders carry your share of costs, risks and harm…

Once you’ve defined your key stakeholders and your criteria for success, then comes the hard part: negotiation with them. When you empower a stakeholder, internal or external, you accept some give-and-take reciprocity. Empowered stakeholders add value but come at a price. This is described with clarity and pragmatism by John Browne, ex-Chairman of BP, in a 2013 article written with Robin Nuttall of McKinsey.

What makes this article a poignant as well as instructive read is that Browne was the instigator of BP’s ‘Beyond Petroleum’ PR campaign, thereby getting himself and his company into hot water, charged by Greenpeace and others with hypocrisy and greenwashing…

At the time JB, though a genuine visionary, had still to learn the lesson of his 2013 McKinsey article: that authentic corporate engagement – and negotiation – with stakeholders is a prerequisite for making progress on sustainability integration.