Post on 13-Feb-2017
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CORPORATE SOCIAL RESPONSIBILITY & BUSINESS ETHICS
Session 2 : The companyand the stakeholders
François MANGIN2015-2016
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The company and the stakeholders
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Session 2 Learning objectivesBy the end of the session, each student is able to: Explain what a stakeholder is and the role stakeholders play in the Sustainable
Development agenda; In a given situation, identify, qualify and map stakeholders Present and explain the configurations of stakeholder management a
company can engage in, and list the specific stakes of each one, Present and explain the method and the tools for engaging stakeholders in
strategy design and in the projects to be implemented by the company; Explain and use the concepts that allow to identify the way a controversial
situation is structured, and to predict its developments; Present the stakes of stakeholder engagement in the public decision-making
processes ; Explain and identify the main techniques of lobbying that stakeholders use, as
well as the way for a more responsible lobbying; Critically assess companies’ stakeholder engagement and lobbying practices.
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Session 2 outline
1. Stakeholders: concept, definition et roles2. The company and its stakeholders3. Dealing with the stakeholders: configurations, strategies and
tools– Designing the strategy– Implementing a project– Facing a controversy
4. The State and its stakeholders: – Public decision-making and private interests– Lobbying: stakeholders in action
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1
StakeholdersConcept,
Definition & Roles
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Stakeholder
Person, group, organization:• Whose interests are
impacted by the operations or by a project
• That has an influence on the operations or on the project
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Impacts & reactions
OperationsProject
Impacts
Affected interests
Reactions
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Activity or Project: X
Stakeholder InterestsImpacts of
the activity or project Stance / activity or
projectPositive Negative
Vedanta
Orissa State
…
Analysis grid
Generic stakes:• Eliminating/minimizing negative impacts
• Increase/maximizing positive impacts
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Rolesof the stakeholders
• Representing interests• Increasing the perception and understanding of the
impact of the operations or of the project Adding decision criteria Improving decisions
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Interests& representation• Non represented interests
– Shareholders– Suppliers
• Collectively represented interests– « Ad-hoc » associations – Consumers associations, NGOs…– Business associations, unions…
• Commons (e.g.: biodiversity)– NGOs…
• Who represents the general interest ? (to be continued…)
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Areas of actionfor stakeholders
• Entering into dialogue with:– Public bodies – Companies
• Seeking information for assessing impacts• Advocating and creating public awareness
– Campaigns– Involvement in controversies
• Legal representation and lawsuit– Standing (locus standi)– Class action – Implementing soft law through lawsuits
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Class action
A procedural device that permits:• one or more plaintiffs to file and prosecute a
lawsuit on behalf of a larger group, or "class"
• to claim damages that will be paid to each member of the class, even if they were not personally party to the proceedings.
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Synthesis:
• A stakeholder represents an interest that is affected by the operations or a project and/or can influence it.
• Stakeholder engagement is a key component of SD and CSR by giving to the public and corporate decision-makers the means to take more sustainable and responsible decisions.
• An important stake: giving voice (including by lawsuit) to some up-to-now neglected stakeholders.
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2
The company and its stakeholders
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One concept, 3 perspectives
Dealing with
demands
•The manager must deal with other demands than those of shareholdersProcuring
Resources
•The company depends of external resources to pursue its strategyContributi
ng to the socialgood
•The company must take into account its externalities
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Typical stakeholders
Company
ShareholdersExternal auditors
Standards Setters
Banks & Creditors
Investors
Prescriptors
Customers
Users
CompetitorsSuppliers
Sub-contractors
Funders
Experts
Medias & social
networks
Lobbies
Working population
Employees
Unions
Local authorities
Side residents
Legislators Regulatory bodies
Courts
Citizens
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3 major categories
Stakeholders to whom the company has legal, financial or operational
responsibilities
Stakeholders who are affected by the
company’s decisions and
activities
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Closeness & Frequency
• Members of the company• Employees• Managers• Works Council,
Health & Safety Committee
InternalStakehold.
Close and frequent relationships:
• Customers• Suppliers…
ExternalStakehold.
Infrequent and loose relationships
• Nearby residents• Local government• Medias
DistantStakehold.
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Company’s dependency
SecondaryStakeholder
Low or moderate dependencyNGOs, consumers associations, communities, government, medias…
PrimaryStakeholder
Critical dependencyShareholders, managers, employees, suppliers and customers, et clients, providers of licenses to operate, creditors…
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Stakeholders
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Engagingstakeholders
• Who? – stakeholder selection• Why? – objectives of the relationship• How? – means and medias• Which level of involvement in the decision-making
process?• Which level of influence on the decisions?
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Stakeholder engagement
Employés
•Dialogue avec Rep. du personnel•Forums libre expression•Enquêtes de satisfaction•Formation
Patients
•Panels de patients•Panels d’assoc. de patients
Prof. de santé
•Groupes de travail•Réunions scientifiques•Études cliniques•Enquêtes de satisfaction
Régulateurs
•Études cliniques•Négociation des prix et des remboursements
Fournisseurs
•Sensibilisation aux droits de l’homme, conditions de travail et environnement•Évaluation
Concurrents
•Participation aux instances professionnelles du secteur
Agences de notation
•Réponses aux enquêtes et aux questions
Investisseurs
•Réunions d’analystes•Réponse aux questionnaires•Roadshows•Interactions avec agences proxy et agences d’évaluation ESG
Actionnaires individuels
•Conseil consultatif•Réunions spécifiques (F)•Assemblée générale•Salons (F, USA)
ONG•Initiatives mixtes•Réponse aux questionnaires•Participation à des forums•Enquêtes de satisfaction
Citoyens
•Forums de consultation
Communautés locales
•Panels de riverains•Dialogue avec autorités locales
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Types of relationship
InformationConsultation Dialogue
Negotiation Association
IntegrationMandatory Further Readings on MoodleCritical Friends: Engaging stakeholders
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Compliance or Commitment?
Rational CommitmentRegular and deep relationships
with internal and external stakeholders
Dialogue with critical stakeholders
Radical activismEmployees are members
of the BoardPartnerships with some
critical stakeholders
Social MimetismInfrequent consultation with some non critical external
stakeholders
Legal ComplianceInformation of stakeholders to whom the company has legal,
financial or operational responsibilities
Riskmanagement
Commitment
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Synthesis:
• Stakeholders engagement is a fundamental part of CSR/SD, to prevent externalities and making better decisions.
• Beyond the principle of “dialogue”, the way stakeholder engagement is implemented is a key indicator of a strong and genuine commitment in CSR/SD.
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3
Contexts of interaction
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3 configurations
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3.1Stakeholders and the design of the strategy
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Aligning CSR strategy with the strategy
Stakes and Impacts Assessment
Choice of areas for action
ProjectsObjectivesIndicators
Implementation
Control and Outcomes’
Measurement
Communication and CSR Reporting
Stake-holders
Stake- holders
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Selecting the stakeholders
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MaterialityAnalysis
Method that compares the importance of CSR/DD issues:• to the stakeholders’ eyes• to the company’s eyes
and represents the positions in a materiality matrix.
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Positioning then selecting the issues
Responsible Critical
Not pertinent Strategic
Stakeholders’ opinion on
the importance of
the issues
Company’s assessment on the importance of the issues
• Stakeholder Consultation• Benchmarking international companies• Media Review• Analyzing external questionnaires from
extra-financial agencies and investors
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The company’s view:
5 criteria for selecting the CSR/SD issues: A. Issues with short-term financial consequencesB. Issues in alignment with the strategic commitments of
the companyC. Issues generally considered as pertinent by the industryD. Issues sufficiently important to the stakeholders’ eyes
for creating their present or future involvementE. Issues that will be subject to standards in the future
D’après: Zadek & Merme: Redfining materiality - Accountability, 2003
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Compliance or Commitment?
Rational CommitmentEnlarged sphere of influenceCSR issues with some impact
from/on the core business
Radical activismLarge sphere of Influence
CSR issues that will request major changes of the core
business
Social MimetismLimited sphere of influence
Anecdotal CSR issues with no impact from/on the core
business
Legal ComplianceMinimalist CSR Reporting
(if mandatory)
Riskmanagement
Commitment
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3.2 Implementinga project
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Specific stakes
• Technical issues• Assessing the impacts of the project• Reducing/Compensating the negative impacts
• Political stakes• Finding allies• Defusing oppositions
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Impacts, reactions… & influence
Project
Impacts
Affected interests
Reactions
Resources
Allies
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Stakeholder InterestsImpacts
Resources InfluenceStance
Positive Negative Present Required
Side residents
Local authorities
Political opponentsChamber of Commerce
Environmental Activists
…
Stances analysis
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Stakeholder mapping
Using two differentiation criteria and drawing a matrix to :• identify high priority stakeholders• define the relationship to establish
• Objectives• Means
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Typical matrix
SH SHSH
SH
SH
SH
SH
DifferentiationCriteria #1
High
Low
Differentiation Criteria #2
HighLow
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Power/Dynamism matrix
Low risk stakeholders
Unpredictable but manageable stakeholders
Predictable riskstakeholders
High risk &hardly manageable
stakeholdersPower onthe decision-maker/theproject
Aptitude for action
HighLow
High
Low
D’après Gardner, Rachlin and Sweeney (1986) Handbook of Strategic Planning, Wiley
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Power/Interest matrix
Marginal stakeholders:no effort needed
Stakeholdersto keep informed
Stakeholdersto keep satisfied
Critical stakeholders: establish continuous and
satisfying relationships
Interest for the issue
HighLow
High
Low
Power onthe decision-maker/theproject
D’après Mendelow, A. (1991) ‘Stakeholder Mapping’, Proceedings of the 2nd Int’l Conference on Information Systems, Cambridge, MA
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Influence/Support matrix
Silent OpponentsMonitor the influence
SupportersKeep satisfied, try to
enlarge their audience
Negative LeadersTry to convince, but
not reinforce
PromotersSupport and empower
Influence on otherstakeholders
Stance on the project
SupportOpposition
High
Low
D’après Anderson, Brsyson & Crosby (1999): Leadership for the Commun Good, University of Minnesota, Saint Paul ,MN
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Risks
• Purely political approach, without reassessing the impacts or/and improving the compensations
• Perceptions of the project leader vs reality– Biased stakeholder selection– Low understanding of the prevailing stakes– Deficient assessment of the power and influence of
allies and opponents• Fast changing stances of stakeholders• New stakeholders involved
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Compliance or Commitment?
Rational CommitmentImplementation of tailored
compensation programs and changes in the project to
reduce impacts
Radical activismReassessment and even
withdrawal of the project after extensive impact reassessment
Social MimetismImplementation of ready-
made compensation actions with no change in the project
Legal ComplianceFormal compliance with
consultation regulations… and no taking into accounts of its
results
Riskmanagement
Commitment
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Mondavi Case
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3.3Facing a controversy
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Specific stakes
• Context:– Project becoming highly controversial– Industrial accident, scandal…
• Political stakes• Defusing criticism and opposition• Controlling the escalation risks• Containing or deflecting attacks
• Communication stakes• Dealing with media and social network involvement• Crisis communication
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Medias & publics
OpponentSH
Criticizing SH
SupportiveSH
PartnerSH
General public
Medias & Social
Networks
Attentive public
Interested public
Identifiyingpublic
NeutralSH
Neutral SH
D’après Padiloleau: La lutte politique quotidienne, in l’Etat au concret, 1982
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Respondingto controversies
• Mobilizing• New stakeholders• Medias & Social networks• Alliances and Coalitions
• (Re)defining the situation– Providing an interpretative framework
• Sense giving & sense making– Scaling up by repositioning the situation in more global (and
often pre-existing) debates, that will help to mobilizing new allies
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Mondavi’s project:Job creation?Promotion of Aniane’s terroir and wines?Economic developmentTourism?
Small winegrowers andyoung applicants eviction?
Victory of the branded wineover the terroir wine?
Submission to the US big business?Loss of national sovereignty?
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Synthesis:
Configuration:
•Objective:•Stakes:
•Stakeholder selection
•Method
•Level of control
•Tools
Strategic Design
•Designing a CSR strategy•Creating consensus and involvement•By the decision- maker•Rational and open•Predictable High
•Materiality matrix
Project• Implementing the
project• Anticipating &
involving opinion leaders
• By the decision -maker depending on the situation
• Prospective and political
• PredictableHigh but can decrease
• Mapping & Public relations
Controversy• Getting out of a
controversy• Defending oneself
against chargesFinding allies
• Depending on the situation
• Reactive & Defensive
• UnpredictableVery low
• Mapping & Lobbying
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4
The State andthe stakeholders
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4.1
Public decision-making and individual interests
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2 perspectives on the general interest
• The general interest is greater than the sum of individual interests. It is of a different nature.
• Higher Civil Servants are the protectors of the general interest
• They have the expertise to assess and make decisions
• Civil society and intermediate bodies are kept away from public decision
• Symbol: the “Grands Corps de l'Etat” and the rejection of “lobbies”
• The general interest is, at some point, a compromise between the interests.
• Civil servants did not have a monopoly on the expertise nor the definition of the public interest
• They solicit civil society and intermediate bodies for information and to take account of all the consequences
• Symbol: the parliamentary committee hearings and lobbies
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Grenelle de l’environnementa political innovation in France
5 stakeholder groupsState, local authorities, Business, Unions, NGOs
Steps and means• Public & stakeholders consultations• Negotiations of the agendas• Legal implementation
– Grenelle 1 Bill (Aug 2009)– Grenelle 2 Bill (July 2010)
• Voluntary commitments
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Engaging stakeholders
• Call for contributions and inquiries before launching a legislative process or a project
• Steering consultative committees
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4.2
Lobbying Stakeholders in action
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Lobbying
Contribution of specific interests to the elaboration of public policies and to the legislative process, aiming:• to improve public understanding, visibility and
the legitimacy of their activities and interests;• to provide policy-makers and stakeholders with
information to advise them of the consequences and the effective scope of legislative proposals and policies.
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Lobby
Representative of interests who informs and influences the public
decision-makers, in order to have them taking into account
these interests
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Tools & techniques
DocumentationImpact studiesExpertise
ArgumentsScale up!
CommunicationOpinion makersMedias & social networksPublics
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Arguing• Putting forward the general interest • Overstating
– the impact magnitude (e.g. implementation issues, costs)– the number of affected stakeholders
• Scaling up– Will ease the identification and mobilization of other
stakeholders, yet not involved• Hiding vested interests behind the general
interest or specific but more legitimate interests– Staying behind larger interests– Putting the smallest and weakest in the forefront
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At what step?
• Early (pre-law/decision) phases– Preparatory works/Hearings– Law proposals/projects– Commissions– Amendments
• Post-law/decision phases– Constitutional review (for a law)– Implementation regulation (time for entry to force, detailed
provisions): executive decrees, transposition of European directives…
– Legal remedies…
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Triggeringthe public decision-making process
Initiate a debate for getting the legislature or the government to change the law
• Campaigns• Legal action
– Voluntary offence– Lawsuit– Remedy of unconstitutionality, of non-compliance with the
European Union rules…• Controversies
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For a democraticlobbyingTransparencyTraceability of the legislative process
Integrity in the relationshipcontrolling conflict or interests & influence pedding
Fair accessMandatory Further Readings on MoodleDossier: Lobbying landscape in France & AXA policy.
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Synthesis:• Companies and business are legitimate stakeholders for the
public-decision making.• All stakeholders (including NGOs) are using lobbying techniques in
order to defend and promote the interests they are representing.• The real stake is to establish a level playing field for all
stakeholders.• Two issues are remaining:
• What is the representativeness threshold? • What is the general interest, who defines it and how?
Mandatory Further Readings on MoodleEmilien Matter et Xavier Schmitt. « La société civile, entre devoir d’alerte et droit au chantage ». Slate.fr, 3 avril 2012