By Ian Edwards
There is an adage in crisis management that goes something like this: You don’t get to decide whether your company is in a crisis, your stakeholders do.
That means, regardless of how much control you might have over a situation, what your constituents think -- and how they might act based on those assumptions -- likely trumps your confidence. As a corporate executive, you might not believe the outrage is equal to the threat. However, you’ll respond in ways to manage the expectations of your stakeholders and your corporate objectives.
If that is a case, then we might ask Nature or The Future, from their perspectives, whether our current challenge with climate change or biodiversity loss or resource scarcity constitutes a crisis, since both have a stake in the outcomes. It’s not as crazy as it sounds, has precedent and could be a way to engage in more effective sustainability in society.
As a starting point, modern sustainability practice lacks the voices of these two critical audiences, and stakeholder theory – a mainstay communications strategy in managing day-to-day business growth, markets and overall stability – is broad enough, and creative enough, to include them.
With scant exception, modern sustainability only takes care of real-time stakeholders. Slow transitions to renewable energies from fossil fuels minimize the cost and inconvenience to present-day stakeholders without fully accounting for the cost and inconvenience to future stakeholders, who must deal with global warming from human enterprise. Resource extraction, driven by overconsumption by this generation of stakeholders, pays little or no respect to the finite reserves of nature’s capital.
The classic definition of a stakeholder, as defined in the early 1980s works of Edward Freeman, is “any group or individual who can affect or is affected by the achievement of the organization’s objective.”
Explains Freeman more recently: “The 21st century is one of ‘managing for stakeholders.' The task of executives is to create as much value as possible for stakeholders without resorting to tradeoffs. Great companies endure because they manage to get stakeholder interests aligned in the same direction.”
Categories like employees, customers, regulators, competitors and vendors rank as stakeholders who need tending. In execution, “stakeholder relations” means understanding their concerns, addressing their needs and ensuring that they remain loyal to the brand. Happy stakeholders are a boon to business, perhaps even viral success. Unhappy stakeholders can strike, boycott and vote with their wallets.
Importantly, there are many other variants of the stakeholder definition, and in the 1990s, academics began to extend the definition beyond people.
In a 1995 paper that called the lack of recognition of nature as a stakeholder a serious omission, Mark Starik, then a professor of strategic management at George Washington University, asked, in all seriousness: "Should trees have managerial standing?" Another study, from 1997, points to the aftermath of the 1989 Exxon Valdez oil spill in Alaska as an early example of nature gaining stakeholder status. “We can show that several stakeholder groups had urgent and legitimate claims, but they had little or no power to enforce their will in the relationship,” say the authors of Toward a Theory of Stakeholder Identification and Salience. “Included in this category were local residents, marine mammals and birds, and even the natural environment itself. For the claims of these dependent stakeholders to be satisfied, it was necessary for dominant stakeholders – the Alaska state government and the court system – to provide guardianship of the region's citizens, animals, and ecosystems.”
In modern sustainability practice, this translates best as materiality assessment, a well-known sustainability tool that can measure business impacts through stakeholder expectations – though Nature and the Future are notably absent.
In 2013, KPMG and its colleagues produced the report Identifying natural capital risk and materiality, which asks an important question: Could the definition and understanding of the concept of materiality be evolving to incorporate new issues, inclusive of more stakeholders, and over greater time horizons?
The study found none of the 10 companies it reviewed, like Tyson Foods and Mondi, included future generations in its materiality. Meanwhile, the report concluded, “a company taking a longer view when assessing its material issues will be more likely to identify natural capital as a material issue.”
For its part, the Global Reporting Initiative is explicit about the need to broaden consultation.
“Stakeholder engagement … identifies the interests of stakeholders who are unable to articulate their views (such as future generations, fauna, ecosystems),” advises GRI’s G4 implementation guide. “[Reporting organizations] should identify a process for taking such views into account in determining materiality, including the interests of stakeholders with whom it may not be in constant or obvious dialogue.”
In society, we accept the need for proxies and advocates. An advocate can speak for a child in official proceedings, thereby ensuring that the child’s rights are observed and best interests maintained. Who speaks for Nature and the Future?
“We borrow environmental capital from future generations with no intention or prospect of repaying,” asserted the United Nations’ original sustainable development document, Our Common Future, in 1987. “They may damn us for our spendthrift ways, but they can never collect on our debt to them. We act as we do because we can get away with it: future generations do not vote; they have no political or financial power; they cannot challenge our decisions.
In 2007, Hungary created the Parliamentary Commissioner for Future Generations as a platform for environmental sustainability.
Meanwhile, the German NGO World Future Council promises “to do everything in our power to help sustain life on the Earth with all its beauty and diversity for future generations.” It submitted recommendations for Ombudspersons of Future Generations to the 2012 Sustainable Development Governance conference hosted by Stakeholder Forum.
As for Nature, she has the backing of Hollywood.
“I’ve been here for over 4.5 billion years, 22,500 times longer than you,” says Mother Nature, given a chilling, dispassionate voice by Julia Roberts in the brilliant "Nature is Speaking” PSA series produced by Conservation International in 2014. “I don’t really need people. But people need me. Yes, your future depends on me. When I thrive, you thrive. When I falter, you falter. Or worse. But I’ve been here for eons. I have fed species greater than you. And I have starved species greater than you. My oceans. My soil. My flowing streams. My forests. They all can take you. Or leave you. How you choose to live each day – whether you regard or disregard me – doesn’t really matter to me. One way or the other, your actions will determine your fate. Not mine. I am Nature. I will go on. I am prepared to evolve. Are you?”
Extending stakeholder theory to include nature and future generations puts sustainability squarely into an existing business process that would be done anyway.
Asking what nature or the future might “think” about a business impact brings materiality to a new level that perhaps changes the priorities and the direction of present-day operations. The implications for both strategy and sustainability become much clearer when key stakeholders, like the planet that creates our wealth and the future generations with less and less a share of it, are at the table.
Image credit: Flickr/Alice Popkorn