AA1000 Stakeholder Engagement Standard
Revision Process
The world's first standard for stakeholder engagement

Foreword

In the AA1000 AccountAbility Framework Standard published in 1999 AccountAbility first introduced the principle of Inclusivity. Guidance on how to design and conduct stakeholder engagement was included in the Framework Standard to support the concept of inclusivity. This initial guidance evolved into the Exposure Draft of the AA1000 Stakeholder Engagement Standard, which was published in October 2005. This was the first international standard on stakeholder engagement. This 2010 revision of the AA1000 Stakeholder Engagement Standard is the second edition of the AA1000 Stakeholder Engagement Standard. It builds on the revisions to the AccountAbility Principles published in the AA1000 AccountAbility Principles Standard (2008) and on advances in engagement practice over the last five years.

The AA1000SES (2010) was developed using a broad-based, multi-stakeholder process. Feedback from the AA1000SES Exposure Draft (2005) pilot program, desk research on other initiatives and evolving practice, and results from a widely broadcast e-survey were used to develop a preliminary draft of the revised standard. This draft was debated during face-to-face consultations in [XX] countries with a comprehensive range of stakeholders as well as a series of workshops with specific stakeholder groups. All of the input received was considered by the AccountAbility Stakeholder Engagement Technical Committee, which then prepared a revised draft standard for public review. There were three periods of public review of 60-90 days each. All public review took the form of collaborative drafting with full transparency using wiki software. Between each of these periods of public review and following the final period, the AccountAbility Stakeholder Engagement Technical Committee reviewed and revised the draft. The final draft was agreed by the AccountAbility Stakeholder Engagement Technical Committee and submitted to the AccountAbility Standards Board which approved it for publication. The evolving nature of learning in the standards field means that the process of developing standards is ongoing. By continually engaging with AA1000 standard users and stakeholders, AccountAbility is able to reflect learning in the form of additional guidance and revisions to its standards. AccountAbility invites you to share your AA1000 Stakeholder Engagement Standard experiences with us so that we can continue to improve the AA1000 Series.

Introduction

Accountability is acknowledging, assuming responsibility for and being transparent about the impacts of your policies, decisions, actions, products and associated performance. It obliges an organisation to involve stakeholders in identifying, understanding and responding to sustainability issues and concerns, and to report, explain and be answerable to stakeholders for decisions, actions and performance. It includes the way in which an organisation governs, sets strategy and manages performance.

The basic premise is that an accountable organisation will take action to:

•  establish a strategy based on a comprehensive and balanced understanding of and response to material issues and stakeholder issues and concerns;

•  establish goals and standards against which the strategy and associated

•  performance can be managed and judged, and

•  disclose credible information about strategy, goals, standards and performance to those who base their actions and decisions on this information.

These actions provide the basis for establishing, evaluating and communicating accountability.

Stakeholder engagement is required to achieve each of these actions accountably. The value of stakeholder engagement lies in its ability to build relationships that enable an organisation to more completely understand and evaluate risks and market drivers, to make the best decisions in light of these risks and drivers, and to implement effectively with confidence in the license to operate and a receptive market. 

Stakeholder Engagement is a means to achieve Responsible Competitiveness. When linked to the central mission and objectives of the organisation it increases the probability of getting right and thereby reduces the probability of getting it wrong. It is a string indicator of management quality. 

Stakeholder engagement has always been crucial to an organisation’s performance. Traditional forms of engagement, such as member engagement, citizen voting, investor road shows, employee dialogue and negotiation, have long been institutionalised through policies, norms and regulation. It is through these approaches that organisations have been accountable to stakeholders, and have engaged them in contributing to the organisation’s success. This is true for commercial enterprises entering new markets or facing changing societal expectations. It is equally true for public bodies, and civil society and labour organisations developing new constituencies and approaches to service and advocacy. And while the imperatives of CSR and sustainable development reinforce the need to engage with stakeholders to realise specific organisational goals, as well as to meet broader social, environmental and economic challenges such as the Millennium Development Goals, they only prove to highlight the core imperatives of organisational success. Stakeholder engagement, is now recognised as a fundamental accountability mechanism. Engaging with the people and organisations who are affected by or can affect an organisation’s activities and responding to these concerns makes organisations perform better. It increases their knowledge, their legitimacy, and the values that are affirmed or created by the dialogue enhance their reputation and moral stature.

Effective and strategically aligned stakeholder engagement can:

•  Lead to more equitable and sustainable social development by giving those who have a right to be heard the opportunity to be considered in decision-making processes

•  Enable better management of risk and reputation

•  Allow for the pooling of resources (knowledge, people, money and technology) to solve problems and reach objectives that cannot be reached by single organisations

•  Enable understanding of the complex business environment, including market developments and identification of new strategic opportunities

•  Enable corporations to learn from stakeholders, resulting in product and process improvements

•  Inform, educate and influence stakeholders and the business environment to improve their         decision-making and actions that impact on the company and on society

•  Build trust between a company and its stakeholders

For this to happen, stakeholder engagement needs to be designed and implemented in a credible and effective manner. The AA1000 Stakeholder Engagement Standard (AA1000SES) provides a clear basis for doing this. It is a generally applicable, open-source framework for designing, implementing, assessing, communicating and assuring the quality of stakeholder engagement. It builds on, and is consistent with, AccountAbility’s AA1000 Series, particularly the AA1000 AccountAbility Principles Standard, launched in October, 2008.

The overall purpose of stakeholder engagement is to drive strategic direction and operational excellence for organisations. It enhances learning, and feeds and drives innovation and improved performance.  Arriving at stakeholder engagement that drives strategy is a journey as described in the figure below.

1. Purpose of the AA1000SES 2010

The AA1000 Stakeholder Engagement Standard (AA1000SES) is a generally applicable, framework for improving the quality of the design, implementation, assessment, communication and assurance of stakeholder engagement.

It provides a defined process of engagement and participation that that will enable comprehensive and balanced involvement that will result in strategies, plans, actions and outcomes that address and respond to issues and impacts in an accountable way.

The AA1000SES is applicable to the full range of engagements, from strategic to operational. It is applicable to both internal and external engagement and for both public and private organisations. 
The AA1000SES is not designed to underpin formal legal engagements between organisations and stakeholders (e.g. elections, formal negotiations between employers and employees). It may, nevertheless, usefully inform and support these engagements.

The AA1000SES is primarily intended for use by stakeholder engagement practitioners. However, management responsible for the commitment to inclusivity and for engagement strategy and implementation will also benefit from it, as will participants in engagement. 

Users of other standards in the AA1000 Series will find AA1000SES useful in understanding and evaluating adherence to the principle of Inclusivity.

As well, AA1000SES can be used to support a wide range of other standards that recommend or require stakeholder engagement. It may be applied for example to support quality and knowledge management, transparency and reporting, and governance and accountability.

2. Commitment to Inclusivity

2.1 Align with the AA1000 AccountAbility Principles

To align its stakeholder engagement strategy with the AA1000 AccountAbility Principles Standard (2008) an organisation must first make a commitment to inclusivity.

Inclusivity is the participation of stakeholders in developing and achieving an accountable and strategic response to sustainability. It is the commitment to be accountable to those on whom the organisation has an impact and who have an impact on it, and to enable their participation in identifying issues and finding solutions. It is about collaborating at all levels, including governance, to achieve better outcomes.

Inclusivity requires a defined process of engagement and participation that provides comprehensive and balanced involvement and results in strategies, plans, actions and outcomes that address and respond to issues and impacts in an accountable way.

At the same time, the foundation principle of Inclusivity is necessary for the achievement of Materiality and Responsiveness. Together the three principles support the realisation of accountability. Inclusivity is the starting point for determining materiality. The materiality process determines the most relevant and significant issues for an organisation and its stakeholders. Responsiveness is the decisions, actions and performance related to those material issues.

The commitment to inclusivity should be formalized in a way consistent with the governance of the organization. This may require a specific policy statement or the inclusion of the commitment in vision, mission or value statements.

2.2 Link to decision making and performance

The commitment to inclusivity should make it cleat that stakeholder engagement is an integral part of strategy development of management systems. The formalized commitment must require all relevant decision making systems and processes, as well as systems and processes that provide input into decision making, to be revised so that they integrate stakeholder engagement. Thus, for example, systems used to define strategy, to establish objectives and targets or to identify risks that will influence decisions must include stakeholder engagement.

3. Purpose of Engagement

3.1 Establish the Engagement Purpose

Stakeholder engagement is driven by a purpose. Typically there are two broad categories of purpose: strategy and operations. That is, stakeholder engagement takes place to develop or improve strategy or to help identify and achieve operational outcomes.

The purpose is a general statement of need. For example, an organisation may need to engage with stakeholders because its product design strategy is no longer working.  It needs to adjust its product design strategy because it is losing market share. It will then engage with stakeholders to understand better why its designs are no longer attractive and what stakeholders’ changing interests and expectations are. The purpose of the engagement will be to redefine product design strategy. The result of the engagement will be a new design strategy. At an operational level the organisation may find that it is receiving many complaints from the community it operates in because of noise levels coming from its factory. It will then need to engage with its stakeholder to better understand the nature of the problem and community expectations in order to adjust and improve operational management. The purpose of the engagement would be to develop a mutually acceptable solution to the noise problem.

The statement of the purpose of a stakeholder engagement often begins with phrases such as:
•  “To manage the risks associated with…”
•  “To develop a new approach to…”
•  “To learn more about…”
•  “To collaborate in addressing…”
•  “To improve our relationship with…”
•  “To find an agreement on…”
•  “To develop our policy on…”
•  “To inform our decision on…”

Stakeholder engagement always occurs to serve a purpose. The purpose is not stakeholder engagement. Stakeholder engagement serves the purpose. It is important not to jump directly into engagement but to think first about why you want to engage, what issues you need to engage on, and what you want to achieve. The purpose of the engagement will be defined by the strategic or operational value that it will add and must therefore be linked to organisational strategic or operational management.

To refine the understanding of the purpose the organisation should identify the material issues associated with the purpose and then define the engagement scope and objectives.

The figure below shows how stakeholder engagement, based on a commitment to inclusivity, links into and supports strategy and operations.  Once the purpose is established, the engagement can be planned, prepared for and implemented. After the engagement has occurred, the results are analysed and acted on – either by revisions to strategy or to operations. At the same time the engagement process is reviewed and improved.

3.2 Identify material issues associated with purpose

The organisation should identify the material issues associated with the purpose of the engagement that will need to be addressed during the engagement. Many of these issues will be clear from the purpose discussed above. However, there are issues that may not be immediately obvious that nonetheless need to be identified and addressed.

This range of material issues goes beyond the limited definition of materiality used in financial accounting standards, which are often interpreted conservatively to mean only those issues that are likely to have a measurable short-term impact on the financial health of an organisation. This definition of materiality does not consider broader economic, social, environmental issues and leaves the organisation open to unanticipated risks and unable to identify new opportunities. Without some way of identifying and assessing material non-financial as well as financial issues stakeholder engagement risks getting caught up by the short-term dynamics and moods of public opinion. A key challenge then is to identify those issues which are material to the organisation’s long-term success.

The organisation should have in place a methodology to identify material issues associated with its activities, products, services, sites and the subsidiaries, for which it has either management and legal responsibility or the ability to influence associated performance outcomes (e.g. effects of product use). The organisation should review the material issues determined using this process to identify those that are associated with the purpose of the engagement. If a materiality determination process is not yet in place or has not been implemented, the organisation should consider establishing such a process and implementing it to support the engagement. These material issues will be important to the engagement and may be reconsidered as a result of it.

An issue or concern should be considered material if it influences or is likely to influence the decisions, actions and behaviour of stakeholders and/or the organisation itself. The determination of material issues should be guided by the following:

• Policy-related performance – those aspects of an organisation’s performance linked to its stated commitments and policies.

• Short-term financial performance and legal compliance – those aspects of performance including significant potential or actual legal and regulatory impacts that have a direct financial effect on the organisation.

• Peer-based norms – aspects of performance or behaviour adopted and generally considered legitimate by peers (e.g. competitors) of the organisation, irrespective of whether the organisation itself has a related policy.

• Stakeholder concerns and behaviour – those concerns that affect the decisions and behaviour of stakeholders, both towards the organisation and in relation to the needs of sustainable development.

• Societal norms – those aspects of performance demonstrably relevant to stakeholders and likely to be relevant to future stakeholder decisions and behaviour, including aspects of performance that are already regulated, or subject to more or less effective non-regulatory scrutiny and likely to be legally regulated in future.

In determining materiality, an organisation should consider relevance and significance in relation to each of these elements. Relevance should be assessed in relation to each element of the five part materiality test listed above. In determining levels of significance the organisation should establish thresholds using relevant and appropriate tools, standards, indicators and criteria.

3.3 Define engagement scope, aims and objectives

Scope

The organisation should define the scope, aims and objectives for the engagement. The scope is defined based on the purpose and the associated material issues. When defining the scope of the engagement the organisation should establish:
•  what parts of the organisation the engagement includes – the whole of the organisation or a single business unit or operation;

•  what geographical regions the engagement includes – worldwide operations or those of a single country or region;

•  what activities, products or services the engagement includes – everything the organisation produces and does, or specific activities, products and services;

•  what material issues the engagement will address – all material issues associated with the identified part of the organisation, geographical region and activities products and services, or a single issue because of its importance (e.g. human rights or the disposal of toxic waste)

•  what time frame the engagement will address – will it look at long term strategic issues or to find the solution to a current concern.

In developing its scope, the organisation should determine its ability (i.e. the extent to which it is willing and able – including available human, technical, financial capacity) to respond to stakeholders in a coherent and adequate manner and in a way that meets the purpose for engaging. The organisation should assess its ability to respond to a range of possible engagement outcomes and expectations. As engagement takes place and as stakeholder engagement practice matures, the organisation should involve stakeholders in the design and implementation of its engagement strategy, objective(s) and scope.

Aims and objectives

To establish the aims and objectives of the engagement the organisation should first clearly understand the value the engagement will add. Will it result in, for example:
•  better informed stakeholders,
•  consensus-based decisions, or
•  collaborative solutions.

Will it, for example:
•  legitimize decision-making,
•  produce better decisions, or
•  build trust.

The aims and objectives will then be to achieve these benefits. The aims and objectives will then influence what the engagement looks like: the stakeholders the organisation chooses to engage, the mode of engagement, capacity that needs to be built and so on.

4. Plan

4.1 Map stakeholders

The organisation should establish a methodology, including systematic processes, to identify and map its stakeholders and to manage the relationship between them. Stakeholder mapping should take place at various levels. There may be an organisation wide stakeholder map that includes stakeholders who are relevant to the organisation as a whole. On the other hand there may be stakeholder maps developed for specific engagements and developed in response to the identified purpose of the engagement. Stakeholder maps for specific engagements may draw on the organisation wide stakeholder mapping but will typically also include stakeholders whose interest and expertise is more directly related to the purpose of the specific engagement.

However, all stakeholder mapping should follow a common process and should inform the overarching strategy for managing stakeholder relationships. The identification of stakeholders should be guided by the following criteria:

• Responsibility - stakeholders to whom the organisation has, or in the future may have, legal, financial and operational responsibilities in the form of regulations, contracts, policies or codes of practice (e.g. employees, local authorities).

• Influence - stakeholders with influence or decision-making power (e.g. local authorities, shareholders, pressure groups).

• Proximity - stakeholders that the organisation interacts with most, including internal stakeholders (e.g. management of outsourced employees, local communities), those with longstanding relationships (e.g. business partners) and those the organisation depends on in its day-to-day operations (e.g. local authorities, local suppliers, local infrastructure providers).

• Dependency - stakeholders who are directly or indirectly dependent on an organisation’s activities and operations in economic or financial terms (e.g. only employer in locality or sole purchaser of goods) or in terms of regional or local infrastructure (e.g. schools, hospitals). This also includes stakeholders who are dependent on basic needs the organisation is directly or indirectly responsible for the delivery of (e.g. medicine, water, electricity).

• Representation - stakeholders who through regulation, custom, or culture can legitimately claim to represent a constituency (e.g. NGOs, special interest groups including those representing the ‘voiceless’ - people or things unable to represent themselves, like the environment or future generations – trade union representatives, councillors and local community leaders).

• Policy and strategic intent - stakeholders the organisation directly or indirectly addresses through its policies and value statements (e.g. consumers, local communities, management of outsourced employees, franchisees), including those who can give early warning on emerging issues and risks (e.g. activists, civil society organisations, academia).

The process for identifying and mapping stakeholders may include:
• Convening a cross-functional group of people (e.g. legal, risk management, external communications, procurement, HR, and investor relations) with knowledge of the organisation, project, department or specific issue that you want to identify the stakeholders for.

• Categorising identified stakeholders according to the criteria under which they have been identified, to what extent and why.

• Grouping stakeholders into categories and then subcategories likely to share similar perspectives (e.g non-governmental organisations might include humanitarian organisations, human rights organisations, animal welfare groups and environmental groups).

Further, the organisation should establish systematic processes to:
• enable stakeholders not currently identified to voice their concerns or to identify opportunities (e.g. through open access mechanisms such as hotlines, local representatives, focus groups or surveys that reach beyond the engagement’s envisioned scope);

• where appropriate, provide for voices to be heard without fear of consequences, by making the process independent of its influence and control (e.g. whistle blowing policies or appointment of an ombudsman); and

• include mechanisms for representation of the voiceless (e.g. future generations, the environment). While the initial stakeholder identification and mapping may take place without the systematic involvement of stakeholders, as engagement takes place and practice matures, they should be involved in this process.

4.2 Profile and prioritise stakeholders

Profiling stakeholders

In order to design stakeholder engagement processes that work, you need a clear understanding of who your stakeholders are and how and why they may want to engage with you. You need to understand not only the stakeholder group but also the individual stakeholder representatives.

Organisations should develop a process to profile stakeholder groups as well as individual stakeholder representatives. The following should be taken into consideration:

•  Expectations - Try and be as clear as possible about both, the stakeholders’ general view on the issue, and their expectations towards you. Some stakeholders only expect you to have an open and honest conversation with them, others may expect you to make specific operational changes or adhere to a certain set of performance standards. Stakeholders will have their own specific view regarding an issue, about potential problems, their causes and solutions. Furthermore, stakeholders investing time in engaging with you will expect a ‘return on investment’ in terms of action and response. Compare the expectations to what you think you can and want to actually do about an issue, given your resources and strategic objectives (these ‘margins of movement’ are further considered in the next step.)

•  Knowledge of the issue(s) - Be clear about the representative’s knowledge of the issue. Some stakeholders know as much or even more about an issue than you. In such cases, you may wish to learn from them. Others know far less, and you may want to inform or educate them. This may be particularly important if their actions can have a strong direct or indirect impact on you, for example when they influence public policy regarding the issue.

•  Knowledge of the organisation – Engagement works best when the stakeholders have a comprehensive and balanced knowledge of the organisation. This may not always be the case at the beginning of the engagement. When it is not, part of the engagement plan should be to build understanding of the organisation.

•  Legitimacy of stakeholder representative - When engaging with an individual or an organisation you are often seeking for them to stand as representative of a larger group of stakeholders. Be clear about any assumptions or claims about who a representative speaks for. Are they an elected or recognised representative? Do they have legitimacy in terms of broad support or acknowledged expertise? Or are you seeking a representative sample opinion from individuals who reflect the broader make-up of the community?

•  Willingness to engage - Successful engagement requires willingness on both sides. If there is unwillingness, it is advisable to investigate the reasons for this. Sometimes, this may be due to circumstances which you can control and change. In other times, it is important to acknowledge the stakeholders’ right not to engage.

•  Possible impacts (negative or positive) of the representative - Be clear about the specific possible impacts of the stakeholder on your business. How can s/he contribute to your objectives? How can s/he stop you from achieving them? When doing this, you also need to consider her/his indirect impacts on you via other stakeholders. Some representatives’ potential impacts on you or on the stakeholder engagement process may be so significant that there is a definite necessity to engage them.

•  Cultural context - Consider the specific cultural circumstances of the engagement, e.g. language, customs regarding social interaction, gender issues. This may be very relevant to the methods you choose for engagement, as well as to the resource implications. The consideration of cultural issues should ideally be undertaken together with someone familiar with that culture, whether from within or outside the organisation.

•  Geographical scale at which they operate – What is the geographical scales at which the stakeholder operate. For example, organisations representing stakeholders’ viewpoints who are themselves large global organisations may not always have the necessary insights into the expectations of local level stakeholders. The geographical scale at which the representative operates, or is willing to operate, should match your engagement plans and objectives. Do you need someone who can engage on a global issue? This would require that the representative organisation possesses a significant degree of credibility, legitimacy and oversight for this. An issue like the environmental considerations in the building of a new plant, however, is more competently addressed with the local administration and/or community.

•  Stakeholders’ engagement capacity - Stakeholders must be treated as a scarce resource, which includes the respectful treatment of their attention and time. Smaller organisations may have very limited financial means and staffing capacity.

•  Relationships of stakeholders with each other - If you are intending to engage with different stakeholders at the same time, or maybe even involve them in the same activity or locality, it is important to understand their views of and relationships with each other. Tension between your stakeholders can, especially if they are not considered, have very negative influences on the outcomes of your engagements with them. Even when stakeholders are available and willing to engage with others, the outcome may result in conflict between competing stakeholder needs. Whilst conflict resolution is not always possible, the standard should address the importance of setting up official grievance and conflict management processes. A particular representative could be appointed on the basis that they are trusted, independent parties with no conflicting and/or vested interests. 

Prioritising stakeholders

Having profiled stakeholders, organisation should prioritise them, that is, determine which one it is most important to engage with and develop relationships with. To do this the organisation should identify the criteria it wishes to use to prioritise stakeholders, These may include criteria such as:  influence of the stakeholder, willingness to engage, significance of organisational impact on stakeholder.  the organsiation may need to consider more specific criteria for specific engagements. Stakeholder groups should then be ranked using these criteria.

By setting clear criteria for prioritisation the organisation is better able to steer the engagement away from being driven by un-strategic considerations such as the ‘noisiest’ stakeholders, the short-term focus of the media, or the comfort-zone of managers.

4.3 Select engagement method(s)

The organisation should select appropriate methods of engaging with its stakeholders.
In making this selection it is worth knowing what others are doing in relation to similar issues and/or stakeholder groups. It is helpful to know where there have been positive outcomes of stakeholder engagement, and where there are existing initiatives or associations addressing similar issues. 

Stakeholder engagement does also not have to be developed from scratch. In many cases issues cannot be addressed by an individual organisation. Sector-wide or multi-sector action may be the best option. Increasingly engagement is facilitated though networks and partnerships.

It is also essential to find out how you are currently engaging with your stakeholders. When selecting methods an organisation first needs to know how it is currently engaging and how it needs to improve its engagement to achieve its purpose.

The tools and methods of stakeholder engagement include processes already familiar to business such as market research surveys and focus groups, opinion leader research, conferences and workshops. Other, less familiar participation processes and facilitation techniques may also be useful; tools and techniques developed by practitioners in international development, public planning, democratic participation and online communities can be especially helpful in consensus building and problem solving with diverse groups of stakeholders.

There are a wide range of methods and tools available, each with advantages and limitations. Getting it right depends on picking the right combination of approaches and techniques for your particular situation and stakeholders. There is no single formula for making this selection; in each case it will depend on a number of factors:
• Your engagement purpose, scope, aims and objectives
• The current approach to and level of engagement with your stakeholders
• Expectations regarding the outcomes of the engagement
• Available resources to undertake engagements

In many cases, combinations or sequences of different approaches may be necessary for achieving your purpose.

Different methods of engagement are designed to achieve different aims and objectives. The table below looks at different methods of engagement in relations to different aims and objectives.
 

In general, low level engagements such as monitoring or informing may be considered as adequate for solving or addressing minor challenges to stakeholder and corporate behaviour and strategy, while engaging at a higher level has the potential to enable bigger changes and transformation, and the solving of more systematic and deep-rooted challenges in managing corporate impacts or sustainability issues.

However, this does not mean that, for example, providing information to your stakeholders can not lead to significant changes in your relationship with them and in their behaviour. In fact, effective engagements are usually a combination of approaches from different levels, and informing is an essential part of most higher-level engagements like consultation or collaboration.

A key difference between the low levels and the high levels of engagement is the degree to which you pool resources (knowledge, human resources, operation capacities, finances or influence on others) in order to achieve a shared objective. In general, the more fundamental the transformation is that you and your stakeholders want to make happen, the more important it is that you work together closely and make the best use of each others resources.

For example, if you simply want to address your stakeholders’ concerns resulting from their lack of knowledge about the health implications of one of your products, informing them may be sufficient. However, if you want to develop a company policy that successfully serves as a guideline to developing all products in a way that addresses stakeholders health concerns, then you may have to consult more thoroughly with a number of stakeholders in order to make sure that the policy meets the different expectations. Finally, if you want to encourage your whole industry to address consumer health issues in its products and marketing then you will have to collaborate with an even broader number of stakeholders (e.g. industry and consumer associations, governments, industry peers) – and often on a higher level – in order to make this happen. The methods of engagement that you and your stakeholders choose therefore depend on your purpose, aims and objectives.  The organisation should also assess and build on existing engagement mechanisms (e.g. customer hotlines or investor relations meetings).

When selecting engagement methods the organisation should consider stakeholder profiles and prioritisation as well as :
• governance implications
• sign-off and associated implications
• conflicts of interest
• time frame
• capacity implications

4.4 Establish implementation plan and schedule

The organisation should establish a stakeholder engagement plan and schedule make these available to its stakeholders. The engagement plan should allow the organisation to achieve its purpose and demonstrate how the commitment to ‘inclusivity’ will be met.

As engagement takes place and as stakeholder engagement practice matures, the organisation should involve stakeholders in the design and implementation of its engagement plans.
The engagement plan and schedule should include:
•  roles and responsibility of both organisation staff and stakeholders
•  the engagement purpose, scope, aims and objectives
•  engagement methods
•  expected outputs and outcomes
•  activities
•  timelines

When developing engagement plans it is also important to consider factors that can impede the ability of stakeholders to engage and to address these in the plan. Such factors may include:
• the accessibility of the location
• capacity to travel
• availability of technology (ICT)
• timing (e.g. avoiding monsoon season)
• the need for anonymity
• social hierarchies (e.g. caste, gender, wealth)
• local conflicts
• lack of shared understanding of expectations, customs, conventions
• religion
• culture-specific communication styles
• family and other responsibilities (e.g. harvest times, childcare)

5. Prepare

5.1 Identify and mobilise resources

The organisation should identify the resources required for successful engagement. Resources are required for the engagement process itself, but also to make the necessary changes in response to the outputs of stakeholder engagement. Engagement outputs may have significant consequences for an organisation’s operations and strategy. Therefore, it is important to consider the resource requirements of these.

The engagement plan and schedule should provide the basis for identifying resource requirements. The resources required for the engagement process will include the financial, human (including capacity building) and technological resources required for those working for the organisation as well as for the stakeholders invited to participate. Stakeholders may wish or need to be compensated for their time as well as for expenses incurred in order to participate in the engagement. Financial support should be designed in such a way that it does not represent a potential for conflict of interest.

The engagement should not proceed if the necessary resources are not committed by the organisation.

5.2 Build Capacity

The organisation should identify where there is need for both internal and external capacity to be built. The organisation should commit to responding to these needs in order to enable effective engagement. The organisation should consider involving external parties where this would benefit the engagement. It is also important to appreciate that some individuals and groups may find it difficult to take up your invitation to engage, or that circumstances may hinder them in fully contributing to the engagement processes. This could, for example, be due to language, literacy or cultural barriers, problems of distance or lack of time or gaps in their knowledge about a specific issue. Therefore, you may need to address capacity gaps of stakeholders to avoid their exclusion or to prevent them from disengaging. Building capacity is also about ensuring the organisations understands the stakeholders see and understand issues.

Engagement processes are likely to involve a broad variety of people with different levels of expertise and experience. Areas where capacity building may be relevant and beneficial include:
•  understanding and awareness of the issues, the organisation, the engagement process, local culture,
•  access to information,
•  language,
•  facilitation, and
•  access (adjusting the process to make participation possible, assisting with resources).

The following skills will contribute to the ability to engage successfully.
•  A knowledge of relevant approaches to stakeholder engagement.

•  Expertise and experience in the specific issues that are subject of the engagement as well as an understanding of the industry and political context.

•  A good understanding of the communities involved.

•  The ability to examine and interpret the outputs of stakeholder engagement in a way that captures the key facts and figures, as well as messages and insights.

•  Individual personality traits such as integrity, ability to focus on solutions, motivation, and creativity.

Organisations should consider the following when building capacity:
•  when providing financial support to stakeholders, do so on the basis of clear eligibility criteria and in a transparent manner;

•  never assume common levels of knowledge and similar understandings of concepts – be sure everybody involved understands the issues at stake;

•  provide enough time: stakeholders require time to understand new information and form opinions; good engagement also requires trust, which takes time to evolve.

5.3 Identify and prepare for engagement risks

The organisation should identify and prepare for engagement risks. Engagement risks may include:
•  Conflict between participating stakeholders
•  Unwillingness to engage
•  Stakeholder fatigue
•  Balancing weak and strong stakeholders
•  Disruptive stakeholders

The organisation should make contingency plans to deal with the most likely or damaging risks.

The organisation should understand the potential for conflict as fully as possible and should have detailed profiles available for facilitators. If conflict resolution is not possible because of entrenched positions the method of engagement may have to be changed or adjusted. Bilateral engagement may be more productive than a forum discussion. where there is the potential for conflict in an open forum, special care should be taken to selecting a facilitator who is neutral and credible to both parties.

It is not always possible to engage with key stakeholders because of their unwillingness to engage. This may require an adjustment of the aims of the engagement. Full consultation may not be possible but it may still be possible to keep the stakeholder fully and transparently informed. In multi-party it will be important to ensure the views of key stakeholder unwilling to engage are included in the discussion and debate.

The organisation should be aware that stakeholder are a valuable resource they should not take advantage of. Resource and capacity building support should be provided. The organisation should only engage with stakeholders when there is clear purpose and value in doing so. Stakeholders want to see a return on their investment in engaging.

Weak or marginalised stakeholders may have very valuable input to offer. The facilitator must ensure that balance of input is encouraged and maintained.

The organisation should establish clear ground rules for the engagement. These ground rules should be agreed by all participants. If a stakeholder disrupts an engagement in a way that clearly contravenes the ground rules the facilitator must intervene and re-establish the ground rules.

6. Engage

6.1 Invite stakeholders to engage

The organisation should develop a communications strategy to invite necessary stakeholders to participate using networks, relevant media, mailing lists or personal visits.

The organisation should invite stakeholders to participate well in advance and should provide the following information:
•  purpose, scope, aims and objectives of the engagement,
•  the engagement process and timelines,
•  the expectations of the engagement,
•  the expectations of the stakeholder invited to participate,
•  the name of an individual and not just an organisation, including contact information,
•  how to respond,
•  additional information that will be provided, and
•  next steps.

The organisation should keep a contact database of invitees and their responses. The organisation should be aware of cultural differences and customs when inviting people.

The organisation may need to organise the engagement around the availability of key participants.

6.2 Brief Stakeholders

The organisation should develop and provide the participants with briefing materials needed to ensure the success of the engagement. Briefing materials should be sent to participants in good time and take into account any relevant language, disability and literacy issues. The briefing materials should cover all relevant substantive issues and practical information. Be careful not to underestimate the time that people require to read and digest pre-information. You may also need to prepare participants with pre-meetings, more informal conversations or even training.

The organisation should address the following issues in the briefing materials;
•  the nature of the issues, why they are considered material and the risks and opportunities associated with them;
•  how the issues are currently managed within the organisation;
•  what policies and systems are already in place;
•  what the organisation can and wants to do about the issues.

This information provides the practical basis for building more robust and responsive stakeholder engagement processes.

6.3 Engage

At the beginning of the engagement, the organisation or its selected facilitator should establish procedural and behavioural ground rules and terms of reference for the participants in the engagement. the ground rules should be agreed by all participants.

It may be appropriate to make a provisional confidentiality agreement at the beginning of the engagement when it is not clear what will happen. This may be revisited at the end of the engagement and may be changed it if all agree to do so.

Some general ground rules for engagement could be:
• Avoid assigning intentions, beliefs, or motives to others. (Ask others questions instead of stating untested assumptions about them.)
• Honour each party’s right to “pass” if he or she is not ready or willing to speak.
• Allow others to express their opinions completely.
• Make sure that the opportunities for input are evenly distributed.
• Respect all confidentiality or anonymity requests that the group has agreed to honour.
• Adopt a solutions-oriented approach.
• Stay focused on the issue that is the subject of the agreement.

The engagement should follow the detailed engagement plan. Detailed guidance for the method(s) used should be available and followed.

During the engagement the organisation, or the facilitator working for the organisation, should be watchful for and immediately identify and address the root cause of any of the following attributes:
•  distrust, 
•  intimidation,
•  rivalries between individuals and organisations,
•  poorly defined issues or problems,
•  emotionally upsetting situation,
•  unhelpful complexity,
•  unhelpful digression,
•  unbalanced participation,
•  poor time utilisation.

A record should be kept of the engagement. the record should capture:
•  who participated,
•  details of the process and proceedings,
•  key interventions,
•  outputs including any significant interventions, and agreed commitments, actions or recommendations, and
•  agreed follow up including communications.

With the agreement of the participants the organisation may make audio, video or photographic records.

6.4 Summarise the engagement, its outputs and develop an action plan

Following the engagement the organisation should develop a summary of the engagement and its outputs from the records.

The organisation should also analyse the record of the engagement and its outputs and develop an action
plan that articulates how the organisation proposes to respond to the outputs of the engagement. The action plan should provide a response to all significant interventions, and commitments, actions and recommendations agreed during the engagement. 

The organisation may act on these proposals or it may choose to use them as the basis for continued engagement.

6.5 Communicate engagement outputs and action plan

The organisation should communicate the summary of the engagement and its outputs to the participants. The summary should be communicated in a timely fashion. It may also choose to communicate this summary more widely, bother internally and externally.

The organisation should make the full record of the engagement and its outputs available to those participants who wish to consult it.

The organisation should seek feedback on the summary of the engagement from the participants and revise it in response to any legitimate queries raised.

The organisations should also communicate the action plan to the participants of the engagement. It may also choose to communicate the action plan more widely, both internally and externally.

There are numerous ways to report back to stakeholders that you have engaged with or want to engage with:
• One-on-one conversations
• Follow-up telephone briefings
• Letters of thanks summarising results and next steps
• As part of regular reporting activities (e.g. in the corporate responsibility report)

7. Act review and improve

7.1 Bring engagement outputs into decision making and performance

The organisation should use what it learns from stakeholder engagement to inform its strategies and operations. Based on the proposals in the action plan the organisation should bring the engagement outputs into decision making and performance management by developing a complete, coherent and consistent management response to all material issues identified during the engagement. In particular the organisation should:
•  Ensure that decisions and actions take into account stakeholder needs, expectations and perceptions.
•  Establish and implement policies and performance targets aligned with the organisation’s commitments and strategy
•  Establish and implement action plans using indicators that are meaningful to both the organisation and its stakeholders and that are aligned with the organisation’s commitments and strategy.
•  Ensure that roles and responsibilities are well-defined and communicated.
•  Allocate adequate resources to enable achievement of policies, targets and commitments.

The management response should ensure that key enablers are in place, including:
•  Governance and management commitment;
•  Policy regarding the issue(s);
•  Performance indicators/measurements regarding the issue(s);
•  Clear assignment of internal responsibility to competent individuals;
•  Review and learning processes that ensure that the management of the issue is constantly adapted to changing circumstances and improved.

The development of these enablers is part of ongoing improvement processes.

Each organisation needs to find its own approach that fits into already existing management systems. The integration of stakeholder engagement into these management processes should encompass the following examples:

Board and management commitment to issue
•  Top management fully aware of the issue, the required resources, and understand linkages with business strategy and objectives, as well as the opportunities and the risks associated with engagement.
•  Senior level champions for specific issues can drive high level responsiveness. Internal allies can be very helpful in taking specific issues to top-level management, can be found across the company, for example risk managers, investor relations, the marketing department or quality management.
•  Executive remuneration can be linked with issue-specific metrics.
•  Key budget holders need to be involved in a conversation about necessary budgets and the availability of financial resources. Their understanding of these issues is crucial to their buy-in, and for securing the necessary resources.
•  Board and management shall also be encouraged to take a leadership role in championing the issue. They need to be involved in order to understand their responsibility for leading the process and driving the associated vision, mission, strategic considerations and developing a responsive internal culture and values.
•  Not all internal groups will be involved in the development of a first policy draft, but should be involved in shaping the final policy through, for example, stakeholder advisory panels or consultations .
•  The adoption of corporate responsibility standard, which draws on or has already been legitimised through stakeholder involvement.

Agreed policies or procedures regarding the issue
•  Policies developed through dialogues involving those responsible for implementation, those influenced by them, and those responsible for allocating the required resources for their implementation.
•  The timing of stakeholder interactions should allow them to feed into internal reporting, budgeting and management cycles.
•  Governance and management processes should include specific quality control mechanisms to control the quality of the organisational response.

Current engagement activities regarding the issue
•  Engagement activities aligned with the governance and management processes that direct the business.
•  Initial internal discussion about indicators and targets especially considered within the context of other business objectives and measurement systems can form a basis for discussion with other internal and external stakeholders.

Performance indicators and targets regarding the issue
•  Performance indicators, measurements and targets informed by stakeholder dialogue.
•  Integration of relevant skills into recruitment policies, job-requirements and performance-appraisals is essential. This should include both individuals with significant contact with external stakeholders as well as for managers with significant influence over internal stakeholders.

Internal responsibility and competency to address the issue
•  Staff involved have the required skills, personal characteristics and competencies to engage with stakeholders and address this issue.
•  A holistic approach to reviewing the whole engagement process, but on a smaller scale learning circles, discussion forums as well as learning networks within or between different companies or stakeholders are a useful mechanism.

Review and learning processes in regards to the issue
•  Processes in place to ensure review and learning to innovate and adapt organisational policy and processes.

7.2 Evaluate and audit engagement process

The organisation should establish processes and mechanisms to measure, monitor and assess the quality of its stakeholder engagement practice. The organisation should measure both the process and outcomes of the engagement. The organisation should establish key performance indicators for the process and critical success factors for the outcomes.

The key performance indicators for the process may be agreed during the engagement and should be based on the purpose, aims, objectives and engagement plan. The success factors for the outcomes should be identified during the process of developing the proposed action plan and the more detailed management plans. In some cases this may require further internal considerations of the outcomes, and often further engagements with stakeholders.

Monitoring and evaluation must also consider the aggregate of engagement activities in relation to the commitment to inclusivity. The organisation should analyse the full range of its strategic and operational engagements in relation to their overall contribution to the success of the organisation. Indicators should be developed that demonstrate the value added through the commitment to inclusivity.

The organisation should consider the extent to which measurement or assessment mechanisms exist and build on these.

The monitoring and evaluation process should be supported by periodic internal and external audits of both process and outcomes.

7.3 Reporting on the commitment to inclusivity

Reporting is an integral part of stakeholder engagement both in terms of feedback to those directly involved in the engagement and as a mechanism of informing those that were not involved.

Communicating to your stakeholders on the value and impact of engagement should go beyond reporting to stakeholders on specific engagements.  The organization should publicly report on the aggregate of its engagement activities to demonstrate how they contribute to value to the strategy and operations of the organisation.

Public reports can play a vital part in informing all kinds of stakeholders about organisational performance.

Organisations should have the public reports independently assured. Independent external assurance of public reporting will increase the learning from engagement and increase the credibility of the report.

7.4 Improve

The organisation should assess and re-define its stakeholder strategy periodically and following engagements. The organisation should also continually revise its overall engagement objective(s) and scope, as well as its engagement plans and related records.

As stakeholder engagement takes place and stakeholder engagement practice matures, the organisation should involve stakeholders in the assessment and re-definition of its stakeholders and stakeholder strategy.

Annexes

A. Definitions

Assurance - The term usually describes the methods and processes employed by an assurance provider to evaluate an organisation’s public disclosures about its performance as well as underlying systems, data and processes against suitable criteria and standards in order to increase the credibility of public disclosure. Assurance includes the communication of the results of the assurance process in an assurance statement.

Inclusivity - For an organisation that accepts its accountability to those on whom it has an impact and who have an impact on it, inclusivity is the participation of stakeholders in developing and achieving an accountable and strategic response to sustainability.

Materiality - Materiality is determining the relevance and significance of an issue to an
organisation and its stakeholders. A material issue is an issue that will influence the decisions, actions and performance of an organisation or its stakeholders.

Responsiveness - Responsiveness is an organisation’s response to stakeholder issues that affect its sustainability performance and is realised through decisions, actions and
performance, as well as communication with stakeholders.

Stakeholder - Stakeholders are those groups who affect and/or could be affected by an organisation’s activities, products or services and associated performance. This does not include all those who may have knowledge of or views about the organisation. Organisations will have many stakeholders, each with distinct types and levels of involvement, and often with diverse and sometimes conflicting interests and concerns.

Stakeholder Engagement - The strategies and processes used by the organisation to engage with relevant stakeholders and the results of the engagement.

B. References

A list of references and useful resources for those wanting to expand their knowledge will be included.

C. The AA1000 Series

The AA1000 Series is comprised of three standards:
AA1000APS (2008) AccountAbility Principles
AA1000AS (2008) Assurance Standard
AA1000SES (2005) Stakeholder Engagement Standard

The series is supported by Guidance Notes and User Notes. The Guidance Notes provide information on how to apply the standards. The User Notes provide examples of the use of the standards.

D. The AccountAbility Stakeholder Engagement Technical Committee

TBC

E.  About AccountAbility

AccountAbility (www.accountability21.net) is a global non-profit network with representatives in London, Washington, Beijing, Geneva, Sao Paulo and San Francisco. It was established in 1995 to promote accountability innovations that advance sustainable development. AccountAbility works with business, government and civil society organisations to advance responsible business practices and the governance of collaborations between public and private institutions. AccountAbility’s leading-edge accountability innovations include: the AA1000 Series Standards, the Partnership, Governance and Accountability framework, and the Responsible Competitiveness Index covering the links between responsible business practices and the competitiveness of over 100 countries,. AccountAbility is convenor of the MFA Forum, an international alliance of business, international development agencies, NGOs and labour organisations working on the links between national competitiveness and labour standards in global supply chains. AccountAbility and the Centre for Corporate Citizenship at Boston College are co-founders and convenors with IBM and GE of the Global Leadership Network, an international network of leading businesses committed to building alignments of corporate responsibility to business strategy by advancing joint learning and relevant analytic tools and benchmarking.