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

Foreword

In the AA1000 Framework Standard published in 1999, AccountAbility first introduced the principle of inclusivity. Inclusivity is the participation of stakeholders in developing and achieving an accountable and strategic response to sustainability. Stakeholder Engagement is a tool that organisations use to help them achieve inclusivity.

To support the achievement of inclusivity, guidance on how to design and conduct stakeholder engagement was included in the 1999 AA1000 Framework Standard. By 2005, this early guidance had evolved into the AA1000 Stakeholder Engagement Standard, the first international standard on stakeholder engagement to be published.

This is the 2nd edition of the AA1000 Stakeholder Engagement Standard. It builds on the revisions to the A1000 AccountAbility Principles Standard (2008) and on advances in engagement practice over the last five years.

The AA1000SES (2010) is now part of a suite of stakeholder engagement tools developed by AccountAbility. The suite of tools includes:

AA1000SE Standard – published as a set text and approved by the AccountAbility Stakeholder Engagement Technical Committee. It includes:

• Principles and requirements for quality stakeholder engagement;
• Guidance that clarifies and further explains the requirements.

AA1000SE Manual – published as a set text and developed by experts with support from broad public consultation. It includes:

• How to develop the case for stakeholder engagement;
• Step-by-step guidance, templates and worked examples for
• organisational engagement;
• project-based engagement; and
• public sector engagement.

AA1000SE WikiHub – a real-time, open-access collaborative database of useful information and guidance on stakeholder engagement developed and policed by stakeholders, with some moderation. At the outset it will include:

• A database of performance indicators that organisations have developed and used to evaluate the quality and value of stakeholder engagement;
• A database of worked examples and cases in three sections: organisations, projects and public sector;
• A resource of country and regional adaptations addressing the local context and dynamics;
• A resource of sector adaptations addressing sector specific issues and dynamics;
• A database on how AA1000SES relates to and can be used with other standards, codes and guidelines;
• A database of other relevant tools and approaches to stakeholder engagement.

The AA1000SES (2010) was developed using a broad-based, multi-stakeholder process. This began in 2006 when a year long pilot study was conducted using the 2005 edition of the AA1000SES. Feedback from the pilot program along with desk research on other initiatives and evolving practice, and the results of 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 20 countries with a comprehensive range of stakeholders. 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. AccountAbility invites you to share your AA1000 Stakeholder Engagement Standard experiences with us so that we can continue to improve the AA1000 Series.

Introduction

Stakeholder engagement is now an accepted part of running any organisation. Its value lies in its ability to build relationships that enable organisations to more completely understand and evaluate risks and opportunities, to make the best decisions in light of these risks and opportunities, and to act with confidence that the market is receptive and has granted them a license to operate.

Stakeholder engagement is not new. It has long been recognised as crucial to an organisation’s performance and success. Traditional forms of engagement such as customer surveys and focus groups, open houses, investor road shows and employee suggestion boxes, are well known and used across organisations. Smart organisations have always found ways to engage stakeholders in ways that have contributed to their success. This is true for public bodies and civil society as well as for commercial enterprises.

Engagement has been used to help develop better strategy and to design better products and services; it has been used to understand and develop acceptable responses to issues arising from new infrastructure projects; and it has been used to develop better public policy and service offerings. And while the imperatives of sustainable development reinforce the need to engage with stakeholders to better understand and respond to broader social, environmental and economic challenges, it is understood that responses to these challenges must also result in organisational success.

Stakeholder engagement is now recognised as a fundamental accountability mechanism. 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.

Engaging with the people and organisations that are affected by or can affect an organisation’s activities, and responding to their concerns makes organisations perform better. It increases their knowledge and their legitimacy. The values that are affirmed or created through engagement enhance reputation and trust. 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 operating environments, including market developments and cultural dynamics;
• Enable learning from stakeholders, resulting in product and process improvements;
• Inform, educate and influence stakeholders to improve their decisions and actions that will have an impact on the organisation and on society; and
• Build trust in organisations and their stakeholders.

For these benefits to be realised, stakeholder engagement needs to be designed and implemented in a credible manner. The AA1000 Stakeholder Engagement Standard (AA1000SES) provides a basis for this. It is a generally applicable, open-source framework for designing, implementing, assessing, and communicating 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.

Stakeholder engagement is a journey. As the figure below indicates, the starting point is often pain alleviation and not the search for innovation, improved performance and sustainable competitiveness. Something bad has happened and there is significant external pressure that needs to be addressed urgently. The organisation finds that it needs to engage, it needs to be more transparent, its needs to respond directly to stakeholder concerns.
Organisations that find that engagement has led to a successful resolution to a problem when they were under pressure then look for ways to use engagement as a preventive rather than reactionary mechanism. They begin to use it systematically as part of risk identification and management. They discover that a better understanding of their stakeholders results in an easier and more receptive operating environment. Performance improves.

They then discover that it can contribute just as much to strategic as to operational improvement. Engagement can be a tremendous source of innovation and new partnerships. Leading companies are discovering that a growing percentage of innovation is coming from outside the organisation and not from within. They realise that stakeholders are a resource and not simply an irritant to be ‘managed’. At this level, stakeholder engagement drives strategic direction as well as operational excellence.

1. Purpose of the AA1000SES 2010

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

It describes how to establish the commitment to stakeholder engagement, the purpose for engagement and the process that will deliver quality engagement. It emphasises that stakeholder engagement must result in valued outcomes and be reported on in a credible way.

It has been designed to enable comprehensive and balanced engagement 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. It can be used for time-limited, project-based activities as well as for ongoing organisational purposes.

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.

AA1000SES may also 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.

The AA1000SES contains requirements and guidance to clarify the requirements. The requirements are stated in italics, the guidance is in normal text.

While the AA1000SES has not been developed to provide the basis for a certification program, the requirements have been stated as auditable criteria. This will improve monitoring and evaluation of an organisation’s stakeholder engagement as well as its reporting on stakeholder engagement.

2. Commitment to Inclusivity

2.1 Commit to the AA1000 AccountAbility Principles

The organisation shall make a formal commitment to the accountability principles as defined in the AA1000 AccountAbility Principles Standard (2008). This commitment shall be communicated throughout the organisation.

The three accountability principles are: Inclusivity, Materiality and Responsiveness. 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 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.

The principle of Inclusivity is also necessary for the achievement of the other two accountability principles: Materiality and Responsiveness. 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 organisation. This may require a specific policy statement or the inclusion of the commitment in vision, mission or value statements.

In doing this be sensitive to cultural context and any other values or principles that the organisation has committed to.

2.2 Integrate with organisational strategy and operational management

The organisation shall include stakeholder engagement as an integral element of all

• strategy development policies and procedures; and
• risk identification and management policies and procedures.

To ensure stakeholder engagement is truly embedded, all policies and procedures for setting strategy and managing operations should be revised to include the requirement to use stakeholder engagement where appropriate.
This includes integrating it with risk identification and management. Enterprise risk management is now a common practice. Enterprise risk management policies and procedures are improved with the addition of stakeholder engagement. This is especially the case if an organisation is using enterprise risk management as a mechanism for determining material issues and appropriate responses.

2.3 Integrate with governance

The organisation shall include stakeholder engagement as an integral element of all relevant decision making policies and procedures.

All relevant governance policies and procedures, as well as all policies and procedures that affect the inputs into governance, should be revised so that they integrate stakeholder engagement. Governance policies and procedures are relevant when they are associated with an issue or action that will have a material impact on a stakeholder or will affect the way in which a stakeholder has an impact on the organisation.
The figure above illustrates how the policies and procedures to integrate stakeholder engagement in strategy and operational management decisions and actions are overlaid on the commitment to the accountability principles.

3. Purpose of Engagement

3.1 Establish the purpose of the engagement

The organisation shall identify those decisions, actions, issues, questions and challenges that will benefit from stakeholder engagement. The organisation shall define the purpose for each engagement. The purpose shall establish what needs to be achieved.

Stakeholder engagement always serves a purpose. It is important not to jump directly into engagement without first thinking about why you want to engage, what issues you need to engage on, and what you want to achieve. 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.

Depending on the level of engagement, the organisation may involve its stakeholders in defining the purpose of the engagement.

The purpose of the engagement may have to be adjusted based on the views of stakeholders during the engagement.

3.2 Establish the scope of the engagement
The organisation shall define the scope for the engagement. The scope shall include:

• what parts of the organisation the engagement includes;
• what geographical regions the engagement includes;
• what activities, products or services the engagement includes;
• what material issues the engagement will address;
• the time frame the engagement will address.

When considering the parts of the organisation to include the organisation should consider whether the engagement will address the whole of the organisation or a single business unit or operation.

When considering the geographical regions to include the organisation should determine whether the engagement will address worldwide operations or those of a single country or region.

When considering the activities, products or services to include the organisation should consider whether the engagement will address everything the organisation produces and does, or specific activities, products and services.

When considering the material issues the engagement will address the organisation should consider whether to 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).

When considering the time-frame the engagement will address the organisation should consider whether it will look at long term strategic issues or current concerns.

Depending on the level of engagement, the organisation may involve its stakeholders in defining the scope of the engagement.

The scope of the engagement may have to be adjusted based on the views of stakeholders during the engagement.

3.3 Identify the material issues associated with the purpose and scope

The organisation shall identify the material issues associated with the purpose and scope of the engagement.

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

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 and 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.

Depending on the level of engagement, the organisation may involve its stakeholders in defining the issues material to the engagement.

The issues material to the engagement may have to be adjusted based on the views of stakeholders during the engagement.

3.4 Establish the aims and level of the engagement

The organisation shall identify and agree on the aims and level of the engagement. The aims and level shall be based on the purpose, scope and the associated material issues.
The aims and level of the engagement define the nature of the relationship the organisation aims to develop with its stakeholders. The levels, aims and relationships are described in the table below.

In developing the aims and level of engagement, 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 purpose and scope.

To establish the aims and level of the engagement the organisation should first clearly understand the level of engagement required to achieve the agreed purpose. Will the purpose require, for example:

• better informed stakeholders,
• consensus-based decisions, or
• collaborative solutions.

The aims and level should be selected to achieve the requirements of the purpose.

4. Engagement Process

4.1.1 Map stakeholders

The organisation shall establish a methodology to identify and map its stakeholders. Stakeholders shall be mapped for each engagement.

Stakeholder mapping is related to the purpose of the engagement. Stakeholder maps for specific engagements may draw on 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 may be guided by the criteria such as the following:

• 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.

4.1.2 Profile and prioritise stakeholders

Profiling stakeholders
The organisation shall systematically profile its stakeholders. Each profile shall establish:

• Expectations
• Knowledge of the issue(s)
• Knowledge of the organisation
• Legitimacy of stakeholder representative
• Willingness to engage
• Possible impacts (negative or positive) of the representative
• Cultural context
• Geographical scale at which they operate
• Stakeholders’ engagement capacity
• Relationships of stakeholders with each other

The organisation shall systematically prioritise profiled stakeholders and determine which ones it is most important to engage and develop relationships with.

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 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. 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.
• 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.

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 organisation may need to consider more specific criteria for specific engagements. Stakeholder should 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.

4.1.3 Select engagement method(s)

The organisation shall select the methods of engaging with its stakeholders that are best suited to the purpose and aims of engagement.

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. In making this selection the organisation should consider:

• Your engagement purpose, scope, aims and level;
• The profiles and prioritisation of stakeholders
• Your current approach to and level of engagement;
• Expectations regarding the outcomes of the engagement;
• Available resources to undertake engagements
• Time-frame for different methods
• Governance implications
• Sign-off and associated implications
• Conflicts of interest
• Capacity implications
• What others are doing in relation to similar issues and/or stakeholder groups
• 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 and social media can be especially helpful in consensus building and problem solving with diverse groups of stakeholders.

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

The table below looks at different methods of engagement in relation to different levels of engagement.

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).

4.1.4 Determine boundaries of transparency

The organisation shall establish the boundaries for transparency in relation to what it will share with its stakeholders and what its stakeholders will share with others. It shall clearly communicate these boundaries to its stakeholders.

Effective engagement depends upon a shared understanding of the issues. This requires that all participants have access to the same information. If an organisation, for what ever reason, is not willing to share the information needed for successful engagement on an issue it should not initiate that engagement. To initiate an engagement is to generate expectations about transparency, involvement and response. If these expectations are not met the image and reputation of the organisation will suffer. Trust will be undermined.

There may be legitimate reasons for not sharing information. The information may be non-material, commercially sensitive or misleading. The organisation may choose to go forward with the engagement and share the information they wish to keep confidential under the protection of a confidentiality agreement. This will allow those engaged full access to the information. But it will not allow them to share it outside of the engagement.

Organisations should also decide to what extent participants may share information on the engagement itself. There are a range of options:

• Full transparency including attribution;
• Full transparency without attribution (Chatham House rule);
• Limited transparency agreed by the participants; and
• Limited transparency controlled by the organisation.

4.1.5 Establish implementation plan and schedule

The organisation shall establish a stakeholder engagement plan and schedule and 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)

4.2 Prepare

4.2.1 Identify and mobilise resources

The organisation shall identify and gain approval for 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.

4.2.3 Build Capacity

The organisation shall identify where internal and external capacity needs to be built. The organisation shall commit to responding to these needs in order to enable effective engagement.

Engagement processes are likely to involve a variety of people with different levels of expertise and experience. It is 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.

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.

The organisation should consider involving external parties where this would benefit the engagement.

4.2.3 Identify and prepare for engagement risks

The organisation shall 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 stakeholders 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.

4.3 Engage

4.3.1 Invite stakeholders to engage

The organisation shall develop a communications strategy to invite necessary stakeholders to participate.

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 should consider using a range of means to invite participation, including: social networks, relevant media, mailing lists or personal visits.

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

4.3.2 Brief Stakeholders

The organisation shall develop and provide the participants with the briefing materials needed to ensure the success of the engagement. Briefing materials shall be made available to participants in good time and shall take into account any relevant language, disability and literacy issues. The briefing materials shall cover all relevant substantive issues and practical information.

Briefing materials provide the practical basis for building more robust and responsive stakeholder engagement processes.

Be careful not to underestimate the time that people require to read and digest 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.

Briefing materials should be presented in a format that is accessible and that clearly highlights the key issues. Summaries should be provided where this would prove useful.

The organisation should also consider involving stakeholders in the development and identification of briefing materials.
4.3.3 Engage

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

The engagement shall follow the engagement plan and the guidance for the method(s) used.

During the engagement the organisation, or the facilitator working for the organisation, shall 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.

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

4.3.4 Document the engagement and its outputs

The organisation shall document the engagement and its outputs.

The documentation should capture:

• the purpose and aims of the engagement;
• the methods used;
• who participated,
• who participated;
• the timeframe;
• a verbatim record (not always necessary but may be useful - permission may be required);
• a summary of stakeholder concerns, expectations and perceptions;
• a summary of key discussions and interventions;
• outputs (e.g. queries, proposals, recommendations, agreed decisions and actions)

4.3.5 Develop an action plan

The organisation shall analyse the engagement and its outputs and develop an action plan that articulates how the organisation will to respond to the outputs of the engagement. The action plan shall provide a response to all outputs of the engagement.

It is not essential that the organisation do everything that is proposed or recommended. It should however respond to every output, giving reasons for it chosen decisions and actons.

The action plan should

• Ensure that decisions and actions take into account stakeholder concerns, expectations and perceptions, as well as key discussions and interventions;
• Ensure that roles and responsibilities are well-defined.

4.3.6 Report on engagement outputs and action plan

The organisation shall report to participants on the engagement, its outputs and the action plan. This shall be communicated in a timely fashion.

The organisation may provide a full record of the engagement or a summary. If it provides a summary it may wish to make the full record available to those who request it.

Organisations may use any suitable means to report back to participants, such as

• Written reports
• One-on-one conversations
• Follow-up telephone briefings
• Providing access to information on web portals.

The organisation may also choose to communicate this information more widely, both internally and externally. The organisation should seek feedback on the summary of the engagement from the participants and revise it in response to any legitimate queries raised.

4.4 Act, review and improve

4.4.1 Implement the action plan

The organisation shall implement the action plan.

Based on the action plan the organisation should implement the agreed policies, strategies, objectives and targets.  The organisation should ensure that it has allocated adequate resources.

Management should ensure that key enablers are in place, including:

• Governance and management commitment;
• Relevant policies;
• Strategies, objectives, targets and performance indicators;
• Clear assignment of responsibility and the necessary competencies;
• Review, learning and improvement processes.

4.4.2 Monitor, evaluate and audit engagement

The organisation shall systematically monitor, evaluate and audit its stakeholder engagement. The organisation shall monitor, evaluate and audit

• Commitment
• Purpose
• Process (planning, preparing, engaging, acting, reviewing and improving)
• Outcomes
• Reporting

For each of these areas, the organisation shall establish indicators that are meaningful to itself and its stakeholders.

Monitoring and evaluation should be based on the criteria in this standard. Each individual engagement should be monitored and evaluated. The information from individual engagements should then be aggregated and evaluated at group level. Indicators should be developed taking the need for aggregation into consideration.

Organisations should consider the use of participatory monitoring and evaluation methods.

The monitoring and evaluation of outcomes (the results of decisions and actions) should be integrated with overall sustainability performance monitoring and evaluation.

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. Assurance of public reporting on stakeholder engagement can serve as independent external audits of stakeholder engagement.

Organisations should consider monitoring and evaluation is relation to the level of achievement rather than in relation to pass / fail criteria.

4.4.3 Report on engagement

Organisations shall publicly report on their stakeholder engagement.

Communicating to your stakeholders on the value and impact of engagement should go beyond reporting back to stakeholders who participated in specific engagements.  The organisation 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.

Organisations should integrate public reporting on stakeholder engagement with other forms of public organisational reporting.

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.

4.4.4 Improve

The organisation shall continually improve its stakeholder engagement.

The criteria in this standard, and associated indicators used by the organisation, provide the means to identify areas for improvement.

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.

Organisation -  an entity, company, corporation, firm, enterprise, site, authority or institution, or part or combination thereof, whether in corporate or not, public or private, that has its own functions and administration.

Output – The immediate result of an activity.

Outcome - The observable short-term and medium-term changes resulting from an output.

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. Supporting materials

D. 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.

E. The AccountAbility Stakeholder Engagement Technical Committee

F. About AccountAbility

AccountAbility www.accountability.org 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.