Comment: Sustainable Business without active stakeholder engagement - a contradiction in terms

Attending this year’s Berlinale film festival I was surprised to discover that many films addressed the negative impacts corporations can have on people and communities.

This ranged from Promised Land where an energy company employed questionable means when purchasing drilling rights from a rural US town to Tough Bond which tells the story of an African glue producer whose product is abused by street children. The Rocket tells of a tribal village in Laos relocated due to the construction of a dam.  Other titles following a similar trend included GMO-OMG, The Act of Killing and Powerless. 

In that same week I became aware of a study into sustainability in 152 German companies. It showed the decline of participative forms of stakeholder engagement. The study says that although most companies observe and inform their stakeholders, less than 20% of those studied, engage with them more intensively as a matter of principle.

If today’s film industry see it as common practice for businesses to impact negatively on communities, why is it that so many companies still have inadequate processes for listening and cooperating with their stakeholders or the communities directly affected by their actions?

The study authors surmise that the majority of companies find intensive forms of engagement too risky and costly. In my view, this is too simplistic. The benefits of actively engaging external stakeholders, individuals and groups affected by business operations are clear. Companies become aware of operational, legal and reputational risks early on and therefore avoid small incidents escalating into huge problems. Well managed stakeholder involvement can build trust, identify sustainable innovations and potentially discover new business opportunities.

The European Union defines CSR as “the responsibility of enterprises for their impacts on society”. Today’s business environment is increasingly complex and fluid. To become aware of these impacts and adequately address them is impossible without direct and trustful interaction with affected groups.

If more companies were to embrace this and act accordingly, one day we could see films where corporations are not solely portrayed as villains.