King III - Chapter 8: Governing stakeholder relationships

Overview
Chapter



08


 

The stakeholder-inclusive approach to corporate governance is not a new concept in the King reports and effective stakeholder engagement is recognised as essential to good corporate governance. The days when boards could merely pay lip service to concerns such as corporate responsibility, ethical business practices and sustainability are over.

Stakeholder relationships provide a platform for the board to take into account the concerns and objectives of the company’s stakeholders in its decision making, which is fundamental to the process of integrated reporting

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King III provides guidance and recommendations on how stakeholder relationships should be dealt with.
  • Identifying material stakeholders and assessing the related risks and opportunities they present
  • Developing and implementing stakeholder strategies and policies
  • Developing a mechanism for constructive stakeholder engagement with all of their material stakeholders
  • Adopting communication guidelines for stakeholders covering the content of the report, publishing policies and the nature of the interaction with stakeholders.
Although stakeholder management is recognised by many as being an important aspect of business – especially with regard to corporate citizenship and reputation – companies on the whole have struggled with aspects of implementation, tending to respond in a crisis mode especially when interactions fall outside of the traditional scope of employees, customers and investors.

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A comprehensive strategy for broad-based stakeholder engagement should be developed, based on a sound understanding of stakeholder issues. Practical management of stakeholder issues will in turn need to be based on reliable management information and the ability of corporate leaders to make sound, balanced judgement calls, when responding to legitimate concerns.

Mechanisms for effective stakeholder engagement need to be developed to support:
  • Comprehensive risk and opportunity assessments
  • The development of a business strategy that supports the long-term sustainability of the company
  • The company’s ability to meet the objectives of the integrated report.
  1. Do we have a stakeholder strategy and policies in place? If so, are they adequate or do they need revamping? If not, do we have the in-house knowledge to draft documents that will deliver value?
  2. Have we identified our material stakeholders?
  3. Do we know and understand the issues, risks and opportunities associated with our various stakeholders?
  4. Are our current forms of stakeholder communication effective?
  5. Do we have the necessary reliable information to make informed judgement calls when balancing the legitimate interests of various stakeholder groupings?
  6. How do we actually engage with all our stakeholders in practice?
How we can help you
Integrating stakeholders’ concerns and opportunities within the decision-making process has become a strategic necessity in business. PwC brings together specialists from different disciplines, including from the social and environmental fields, to offer tailored stakeholder advisory services to meet the specific requirements of individual clients.
  • Socioeconomic impact assessments
  • Facilitation of stakeholder dialogue
  • Development of stakeholder strategy and policy documents
  • Development of stakeholder communication guidelines
  • Report writing
  • Report assurance – combination of ISAE3000 and AA1000AS, the latter of which deals specifically with stakeholder concerns.