Stakeholder approaches to sustainability

Question 1

What do corporate sustainability scandals lead to?

Answer 1

lead to a loss of public trust and corporate legitimacy

Question 2

What is legitimacy?

Answer 2

Legitimacy is a generalised perception or assumption that the actions of an entity are desirable, proper or appropriate with some socially constructed system or norms, values, beliefs and definitions.

Question 3

How to stakeholders monitor organisations?

Answer 3

Different stakeholder monitor organisations to greater degree, re-evaluating their legitimacy - corporations try to manage these relations, with stakeholders.

Question 4

What stakeholder theory?

Answer 4

this was developed by R. Edward Freeman in 1984 - new narrative in which businesses are no longer understood in a vacuum but are socially embedded.
It is useful to view organisations, opening possibilities to re-orientate relations between business and society and to understand corporate sustainability efforts.

Question 5

How are businesses socially embedded?

Answer 5

organisations exist within a set of relationships, interactions, and interdependencies.

Question 6

What is the relational approach to value creation?

Answer 6

Stakeholders relations are at the heart of the value creation of companies - they should be managed for the benefit of all stakeholders, not just stakeholders.

Question 7

What is the role for management in stakeholder theory?

Answer 7

Role of management is to consider right and interests of stakeholders, not only of stakeholders.

Question 8

What does the traditional management model involve?

Answer 8

It involves the firm centred in the middle, then investors (shareholders), customers, suppliers and employees branching off it.

Question 9

What does the stakeholder theory model involves?

Answer 9

it involves the firm centred in the middle then, government, competitors, customers, employees, civil society, suppliers and shareholders branching off it.

Question 10

What is the descriptive stakeholder theory?

Answer 10

attempts to ascertain whether and how corporations actually do take into account stakeholder interests.

Question 11

What is the instrumental stakeholder theory?

Answer 11

attempts to answer the question of whether it is beneficial for the corporation to take into account stakeholder interests

Question 12

What is the normative stakeholder theory?

Answer 12

attempts to provide a reason why corporations should take into account stakeholder interests.

Question 13

What theory links all three types of stakeholder theory?

Answer 13

Integrative stakeholder theory.

Question 14

What is a stakeholder?

Answer 14

Any group or individual who can affect or is affected by achievement of the organisations objectives.

Question 15

What is the narrow definition of a stakeholders?

Answer 15

business, large or small is about creating value for those groups without whose support, business would cease to be viable (primary stakeholders)

Question 16

What is the broad definition of stakeholders?

Answer 16

a stakeholder is any group or individual that can be affected by the realisation of an organisations purpose (secondary stakeholder)

Question 17

What is a primary stakeholder?

Answer 17

These are key to the organisations long term survival. They can be formal owners with decision making rights.

Question 18

What is a secondary stakeholder?

Answer 18

These stakeholders influence of affect or are influenced or affected by the organisation. They may have stakes in the company, be affected by its actions or have a psychological attachment. However they don’t have formal decision making rights.

Question 19

What other actors can have legitimate claims on the corporation?

Answer 19

• legal ‘stakes’ binding contracts e.g. suppliers, customers
• economic ‘externalities’ are unintended consequences for others often in the form of harm or rights violations e.g. a factory pollutes a river which harms nature and communities downstream.
  Only be ensuring acceptance from their context and stakeholders, can companies ultimately retain certain degrees of freedom for action.

Question 20

What are some examples of stakes?

Answer 20

consumers, employees, governments, shareholders, nature, suppliers, media and non government organisations.

Question 21

How do consumers affect businesses?

Answer 21

consumers affect businesses through - consumer demand, willingness to pay, consumer resistance and boycotts.

Question 22

How do businesses affect consumers?

Answer 22

consumers are affected by businesses through e.g. product availability, pricing quality, product safety and sustainable products.

Question 23

What is a sustainable consumer?

Answer 23

86% of consumers expect businesses to help tackle climate change and social justice challenges.
50% of consumers in NA, Europe, and Asia say they would pay more for products designed to be reused or recycled.
Green/responsible consumer identities. Consumers often do not behave sustainably despite intentions.

Question 24

How do NGOs affect businesses?

Answer 24

Through policy, advocacy work, multi-stakeholder initiatives and partnerships, activisms.

Question 25

How do businesses affect NGOs?

Answer 25

Through provision of fundraising and resources in the policy landscape

Question 26

What happened in the Nestle and Baby milk formula scandal in 1970?

Answer 26

The 1974 'war on want' relased the 'baby killer' report. Nestle aggressively marketed infant formula as a substitutes for breastfeeding in the global south. Social sustainability issue - poor sanitation, unsafe water, over dilution of formula and lower nutritional value - malnutrition, starvation, waterborne diseases and increased costs. Responses in 1980s by NGOs, consumers, courts and UN - campaigns by the international baby foo action network and save the children. Boycotts and legal processes were targeting Nestle. Campaign supported by doctors, medical associations, WHO.

Question 27

What is stakeholder mapping?

Answer 27

identifies primary and secondary stakeholders which gives you an overview o the stakeholders but which stakeholder should a company prioritise.

Question 28

What two questions is mapping based on?

Answer 28

1. Interest - how much are stakeholders interested in a project (stakes() 2. Influence - what influence do stakeholders have (opportunities and challenges)

Question 29

What is active management interaction?

Answer 29

Proactive engagement rather than only responding to stakeholder demands. Moving from stakeholder influence towards stakeholder participation. Involving stakeholders in dialogues and consultations.

Question 30

What is accountability and transparency?

Answer 30

Compliance with laws and regulation. Adhering to standards, sometimes developed with stakeholders. Reporting regularly on stakeholder engagement and sustainability.

Question 31

Stakeholder relations at Novo Dordisk?

Answer 31

An increases in stakeholder numbers and commitment to corporate sustainability (adding NGOs, academia etc). Increased focused on stakeholder interconnectedness. Novo Nordisk is no longer in the centre. Moving from influence to participation and engagement in dialogue.

Question 32

What are the opportunities of stakeholder theory for sustainability?

Answer 32

- Stakeholder theory is a useful lens to study the complexities of business decision making embedded in social, economic and environmental system by focussing on stakeholder relations. - Achieving long term positive stakeholder value is an objective of corporate sustainability. - Sustainability as a 'value; is often contested but may have potential of achieving synergies based on shared interests and shared values amongst stakeholders. - Proactively managing stakeholder relations through dialogue and participation is recommended.

Question 33

What are the challenges of stakeholder theory for sustainability?

Answer 33

- understanding the influence or power of stakeholders can help businesses to prioritise. - From a societal perspective, power imbalances among stakeholders can also be a challenge as not all interests are heard equally. - Conflicting interests - stakeholder dialogues can lead to conflict and not only to consensus amongst actors. - Many sustainability issues are political an take place in a globalised world beyond national jurisdictions.