Be creative

Recently, stakeholder engagement seems to have slipped from the corporate agenda.

That’s understandable: companies, by and large, have had other things to worry about. First, the COVID-19 pandemic. Then war in Ukraine, followed by a steep rise in world energy prices, and conflict in the Middle East. Now, the rush to comply with the EU’s new Corporate Sustainability Directive (CSRD).

But perhaps it’s time for a revival.

What’s required is a more creative approach. And, at the heart of the CSRD (and its accompanying European Sustainability Reporting Standards - ESRS) is a key concept that will help: impact.

First, let’s make a distinction.

Companies engage stakeholders every day. Customers call help lines. Employees attend town-hall meetings. Procurement departments negotiate with suppliers. This is all part of running a responsible business.

But we’re talking about partnerships – where companies and stakeholders join forces to create something new.

Faustian bargain

Often, companies work with NGOs because they want to enhance their reputation and credibility. NGOs meanwhile work with companies primarily because they want access to funds. According to C&E Corporate’s latest Non-Profit Partnership Barometer, this Faustian bargain accounts for more than 90% of current company-NGO partnerships[1].

That’s not to say these partnerships don’t do a lot of good. They can also make sense strategically – as a way of attracting new customers, for example.

But we need to go a step further: NGOs have resources that companies don’t. Often it’s knowledge or access to a particular market or group of people. The sweet spot is where this coincides with a company’s commercial interests.

Take Swiss Re and Oxfam as an example. Together, they have developed insurance for poor, small-scale farmers in Ethiopia. Oxfam wanted farmers to have insurance against risks to their crops from climate change – while, for Swiss Re, the benefit was access to a new, growing market.

Open mind

Such partnerships are not easy. As a company, you need an open mind – and a willingness to cooperate with organisations that, in the past, may have been critical of your business.

But how do you find the right partner?

It’s about impact: where, as a business, can you have the most impact? And which NGO can help you achieve that impact? This is where the CSRD/ESRS comes in.

Under the ESRS, companies will have to follow a similar train of thought – i.e., what is my impact on people and the environment? What are the risks and opportunities for business, resulting from that? And what actions can I take to address these?

Partnering with an NGO could be the answer, especially for companies operating or with supply chains in emerging countries. After all, who knows these countries better (or has better access) than NGOs and development banks?

Moreover, with CSRD, companies are now having to look outside their own ‘walls’. In many cases, they’re seeing that their biggest impact (positive and negative) is actually in the goods and services they buy, or in the use that’s made of their products – i.e., upstream or downstream, not in their own business operations.

We’ve picked out three examples of company-NGO partnerships (see opposite). None is particularly new – the most recent dates from 2022. But these partnerships show what can be achieved with a more creative approach. They give stakeholder engagement a real purpose, have positive impact on social issues, and – for the companies involved – can help reduce risk and open up new markets and revenue streams.