Step Three – Active Engagement with Stakeholders in the Reporting Process

As discussed in Chapter 2, in order to discharge S&EAA, organisations must provide an account of social and environmental activities to those to whom it is responsible, or in other words those who have a right to know. However, as noted in Chapter 3, evidence from prior research suggests that the organisation may not be best placed to determine for what it is to be held responsible. Therefore Step 3 of the normative model requires active engagement with stakeholders to determine organisational responsibilities and ensure that stakeholder needs are addressed. It is interesting to note that whilst each of the cases could clearly identify their target audiences, they had more trouble identifying who might be the key users of the reports with the interviewees from Org C noting, “how many people actually read our report, hard to say”, and Org D “it’s difficult to gauge.” Orgs F and G reiterated this, and the interviewee from Org H commented:

“That’s a really good question, that’s a really, really good question and I often come back to [a poem by Mark Twain] that says, I fired an arrow into the air, it fell to ground, I know not where, I’ve lost a lot of them like that. And that’s a bit what sustainability reporting is like. You go to all this effort writing this beautiful report and agonising about which pictures you use, […a]nd you know

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in the end, you wonder whether anybody’s read it at all. Except the editing team and there’s not a whole lot of evidence that I’ve ever received in the six years of doing this that anyone else ever has (Org H).”

Where identified, users were commonly seen as being shareholders, investment fund managers and analysts (Orgs A, E, F, G, H & I), existing and potential employees (Orgs B, F, H & I), community partners (Org E), and “[p]robably peers. We all look at each other’s I think (Org E)” “for benchmarking purposes (Org F, Interviewee 1)”. The interviewee from Org I also identified government and customers as main users, while the interviewee from Org G commented “I don’t know that customers would particularly be reading it but I think for customers it would be a, oh this organisation has one of those things, there’s a part on their website that says sustainability, okay, that makes me happy, I don’t need to go in and read it necessarily, and the interviewee from Org H made a similar comment with respect to clients, noting:

“it’s widely used in our business proposal process as part of the answer to questions that, contained in tenders around, you know, what’s your attitude to sustainability, what have you ever achieved and stuff like that. [...] So, do they read it, who knows, but it certainly answers a question they’ve asked us. So, I guess that’s kind of like reading it (Org H)”.

Several of the cases had attempted to obtain feedback regarding the readership of the reports (Orgs D, F, G & H). However these attempts were largely unsuccessful with the interviewee from Org G noting “like every year you put feedback, we’ve had feedback forms, we’ve had email addresses and you know, no-one, that gets spammed”, and Org H: “You know one of the things we crave is feedback, particularly intelligent, critical, informed feedback. We get almost none of it despite our many in tangent efforts. A lot of people say, oh it’s fantastic, you know, it’s great, best thing ever produced. And you say, yeah, you know, what was in it? Oh, I don’t know, nice colours.” Org C reiterated these comments: “So it’s really quite interesting. So when you ask me the question, I think you asked early on, why do you do this, and we think we do this because stakeholders want to know but I’m not really seeing evidence (Org C)”.

As noted in Chapter 3, engagement involves two-way dialogue. One-way communication methods such as feedback mechanisms and surveys do not constitute engagement activities.

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Whilst most of the cases had implemented some form of feedback mechanism (Orgs B, C, D, E, F, G, H & J), or undertook internal (Orgs A, B, C & F) or external (Orgs C, E, F & J) surveys, engagement in the form of active two-way dialogue was less common. The interviewee from Org D noted that in preparing their most recent report:

“[W]e’ve done some interviews with some of those stakeholders as to what they would like to see in the report. Before in the previous years we’ve sort of made an assessment intuitively or from what we read about what they would like to see in it from some interviews we have with them, what they expect to see in our sustainability report but this year we’ve gone a bit more, formalised the process a little bit more. I wouldn’t say it’s reached its conclusion but we’ve actually engaged with them and said, what do you think of the report, what areas would you like to see more of, less of and what areas would you like to see us focus on (Org D).”

As discussed in Chapter 3, stakeholder engagement is necessary to determine for what it is the organisation is to be held responsible, and it is important that the outcomes of engagement are fed back into S&ER to ensure that stakeholder needs are met. Stakeholder interviews were also conducted by Orgs E, F, G, H, I and J “to try and identify what we should be talking about (Org H)”. However in the case of Org H these interviews were restricted to internal “interviews with senior execs and sometimes staff as well (Org H)”. As discussed in Chapter 3, the internet offers the ability for organisations to engage in real time two-way dialogue with multiple stakeholders in dispersed geographic locations, and as noted by the interviewee from Org E there is an expectation from stakeholders to not only have information more frequently updated, but also “in a form that best suits them which they can interact with (Org E)”. However, only the interviewees from Orgs E, F and G noted that they use online social media to engage with stakeholders, with both Orgs E and F using Facebook, although “[t]he Facebook thing, there’s no dedicated sustainability stream or anything but we do use that when we can (Org E)” “if issues come up from stakeholders in that (Org F, Interviewee 2)”. Org E also used an online blog, as did Org G, with the interviewee also noting:

“But what we sort of, did for the last two years, is we ran a sustainability webcast, so we were kind of one of the first in Australia to kind of have a focus,

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a specific focus webcast on our sustainability performance and so that was done upon the release of the report and there was investors, and we thought we’d get a lot of niche ethical investors but also our main analyst for our sector as well as media and so our CEO ran through all our main headline results and then there was an opportunity for questions and that was, it was really robust, there was a lot of questions and you know, I hadn’t really sat in on the normal investor webcast before but they were all sort of, oh my God, normally they don’t ask questions and this was like a really good opportunity for them to kind of poke and pry and get a bit more understanding (Org G)”.

Interviewee 1 from Org F noted that “we have gone through [...] a systematic process of stakeholder engagement and a materiality process to identify responses to issues which they raise”, and that “the proposition is that stakeholder engagement should occur when it needs to occur. [...] So, it’s devolved into the business (Org F, Interviewee 1)”, which was also the case with Org J, with the interviewee stating:

“I guess I’m of the view that it shouldn’t just be a sustainability process [...] We’ve got a government relations team who has strong engagement with local, state and federal government as well. They’ve often able to kind of collect up what they’re hearing through their issues reporting that they do on a monthly basis. So it’s quite rich. It’s quite, it’s not just like, we just do one survey and that’s it. We actually focus on each of those stakeholder groups and kind of work through a tailored process of trying to understand what are those material issues. We then pull that together and work closely with our risk teams and also our strategy leads because, my view, our view, is that sustainability materiality is absolutely got to be informed by a risk matrix and strategy. So we work through that and prioritise based on their feedback (Org J)”.

Specific engagement mechanisms utilised by Org F included focus groups and an external advisory council consisting of “a number of key sustainability thought leaders in the country who meet on strategic issues with our CEO. [Y]ou know, having that voice directly with her, which is a really strong mechanism (Org F, Interviewee 2)”. Org G used two external advisory councils:

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“which generally includes NGO representatives. What we tend to do each year is give a draft of the report to those guys. So whether it’s the whole report or just their particular chapter sort of depends and get them to provide any comment but we’re kind of at the point now that that was really useful a few years ago but our reporting is good now and they’ve given their feedback, we’ve taken on the things that we can, it’s sort of at the point of, we can’t really make much more changes or the things that they want, we’re like, yeah that would be awesome, we’d love to have that data too but it’s just not possible, it’s not effective or it’s a competitive thing that we can’t put in the public domain. So we sort of still do that process but I’m not sure that it’s creating massive change anymore, but it did (Org G)”.

Org E had plans to implement an external advisory council and in addition to the engagement practices discussed above also held a workshop “with internal stakeholders asking them, you know, to really be proxies for their stakeholders [where] they came to represent the stakeholders that they liaise with closely (Org E)”. The types of stakeholders involved in engagement activities ranged from “general community and customers” (Org E) to “industry associations” (Org I), “NGO representatives” (Org G), and “government” (Org J). However with the exception of Org C more passive communication methods such as surveys tended to be directed towards employees, and these stakeholders were found to be the most likely to respond to more general requests for feedback (Org C), with the interviewee from Org H noting that “[w]e ask our contract managers to seek feedback from our clients. That’s never worked at all. I don’t know whether it’s because our contract managers haven’t asked or our clients have refused to read it or have refused to give us any feedback but they all end up with the same answer which is, no feedback (Org H).”

Those cases that did engage with stakeholders did so for the purposes of determining materiality to stakeholders, and thus engagement went some way to determining the content of the reports, with the interviewee from Org C, which communicated with stakeholders predominantly via passive communication methods commenting:

“I’m always surprised when I lay it out at the start of the year, I sort of provide guidance around each section being X number of pages and then I go out with

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my briefs to say, provide this content for this section and then I realise there’s no chance in hell, I’m never going to reach two pages or three pages for that section because there’s just so much to say. So, and that’s perhaps a little bit more stakeholder buy-in, in terms of what is really material is what’s needed but we’re not getting it (Org C).”

Conversely it appeared in the case of Org B that there was information that was material to stakeholders that was omitted from their reports, with the interviewee noting “we’ve had questions from stakeholders coming and saying, oh I’ve heard you’ve got an operation in Zimbabwe, what’s your policy on AIDS and stuff like that. I’m like, well, we don’t even mention Zimbabwe in our whole report because that facility is so small that the, like it just doesn’t roll up, the data doesn’t roll up (Org B).”

That some organisations are engaging in dialogue with stakeholders to determine materiality suggests that despite a lack of clarity amongst the cases regarding the users of their reports, stakeholders do have some interest in the information reported. Therefore it is important that these stakeholders are able to rely upon the information reported. One way of indicating that the information is reliable is through the provision of external assurance for S&ER, which is the fourth step in the normative model and is discussed in the following section.