Mastering stakeholder engagement in a changing climate

In today’s rapidly evolving landscape, stakeholder engagement stands as one of the biggest challenges facing businesses. With growing demands for transparent information, businesses must navigate the expectations of various groups including governments, investors, and customers. To do this successfully, they need to ensure they have a clear and concise strategy that is adapted to the various stakeholders.

Starting with governments who are traditionally quite wary of private investment. Capitalism, when properly guided, can deliver the transition needed for a sustainable future but this requires collaboration between the public and private sectors, with governments providing access to capital. The transition also demands a skilled workforce, and governments can support this by ensuring access to resources and education that align with the changing demands of the industry.

It is also crucial to depoliticise ESG, particularly following the real backlash that we are seeing today in many regions. Governments and businesses must work alongside each other to create buy-in by demonstrating the many positive impacts and opportunities that the transition can have on local communities. And this is not a one size fits all solution, it needs to be adapted to fit the various cultures and contexts across the globe.

Investors are another key group that businesses need to engage with. They are increasingly demanding more information, especially regarding climate-related initiatives. To address these concerns, companies need to bridge the gap between climate-related initiatives and financial returns. While climate change is often perceived as intangible, businesses can make it more concrete by demonstrating how sustainability efforts align with profitability. This involves not only highlighting the risks but also outlining the opportunities. Investors want to see realistic assessments of where these opportunities lie, particularly when it comes to adapting infrastructure and building sustainable business models.

Customers, too, are becoming more demanding, expecting businesses to engage with them authentically and transparently. Stakeholder engagement with customers is about listening, not just presenting opinions. Businesses need to listen closely to what their customers care about, find points of conflict, and work toward solutions that resonate with their values. Transparency is key in this process, as customers expect businesses to be upfront about their sustainability practices while staying true to their brand’s authentic identity. Understanding the needs of local communities and finding ways to connect with them also enhances engagement.

Supply chains are another crucial component of the stakeholder ecosystem. Businesses can’t manage what they can’t measure, and technology plays a vital role in tracking and improving sustainability metrics. By enabling small and medium-sized enterprises (SMEs) to generate high-quality data, businesses can ensure that sustainability efforts are more deeply integrated into their supply chains. This data can be used to inform not only customers but also the broader public on the progress being made toward sustainability goals.

Ultimately, businesses need a clear and concise narrative to guide their strategies. Sufficient time should be allowed for transitions, and businesses should highlight both financial and non-financial opportunities to their stakeholders. Influence is a powerful tool in today’s business world, and those businesses that effectively engage their stakeholders will not only thrive financially but also lead the charge in building a sustainable future.

By Sophie Colton, Consultant at H/Advisors Maitland