Stakeholder engagement debate takes off at Unisa's Centre for Corporate Citizenship

Conversations on Corporate Citizenship is a platform for discussion that was created by the CCC in partnership with the African Institute of Corporate Citizenship. Previous conversations hosted NickyNewton-King, Deputy Chief Executive Officer at the Johannesburg Stock Exchange (JSE), and Phil Armstrong, a recognised South African expert in the field of corporate governance, who is also the Managing Director of Edward Nathan & Friedland (ENF) Corporate Governance Advisory Services (Pty) Ltd.

All these events are held at the Unisa Graduate School of Business Leadership (SBL)'s premises in Midrand, and are organised by the SBL. This event, which was held on July 17 2003, was aimed at providing constituency representatives and business leaders with an opportunity to engage in informal discussions amongst themselves to promote dialogue around the topic of stakeholder engagement and cross-sector partnerships. Participants from various sectors attended the event.

Mr Derick de Jongh, the CCC Director facilitated the programme, with Reverent Sunette Pienaar, General Manager of Heartbeat, a centre for community development whose mission is to alleviate the suffering of orphaned and vulnerable children by facilitating change in communities, as the keynote speaker. This conversation was centered on how companies engage stakeholders at various sectors, and the criteria for defining these stakeholders. Participants engaged in rigorous deliberations on the manner in which companies engage stakeholders from across the board.

Speaking at the seminar, De Jongh said that stakeholder engagement in South Africa is necessary in order to create a truly transformed nation. He argued that it is a fundamental principle to include stakeholders at all levels in decision-making processes. He accentuated that the process of engaging stakeholders is imperative in good corporate governance.

In an article published in the Business Day, De Jongh was quoted as saying historically, organisations considered their stakeholders to be their clients, staff and shareholders, but neglected to include their suppliers, the community and government. He said that most large organisations engage with government at the highest level, but many smaller businesses do not have a clear understanding of government imperatives. "For transformation to succeed, business must align its efforts with these national imperatives by engaging proactively with government," he says.

During her presentation, Rev Pienaar asked: "How do we involve a child at boardroom level because these are the most important stakeholders of our communities?" She argued that companies should consult with various stakeholders over key environmental and social factors, to enhance mutual understanding and co-operation in a way that positively affects decision-making processes.

Another interesting aspect that was interrogated is the definition of stakeholder engagement, which differs according to each sector. Stakeholders are generally defined as those who affect, or are affected by, the business operations. They may include employees, shareholders, customers, joint venture partners, governments, local communities, and civil society at large.

The legitimacy of stakeholders from a business perspective was also debated. Most companies have a clear definition of who their stakeholders are and how legitimate they are. According to the Accountability Primer 2003, stakeholders are those that affect and are affected by the organisation, and are also core to the mission and values of the organisation. This matter is further complicated by the fact that each of the three sectors; government, private sector, and civil society hold different views on what constitutes stakeholder engagement. The fact that all three sectors have different driving forces complicates the matter.

"We engage with business because of their expertise, for example in marketing, if a company gets publicity within a framework of a social responsibility programme, then we also benefit from that campaign," Pienaar said.

One of the challenges faced by NGOs and civil society in general was that business utilizes them as vehicles for marketing and branding. "We feel that we are facilitating a brand for companies." In measuring their successes, companies should go beyond just seeking exposure for their contribution. They should measure the return on their investment in terms of the nature of the social impact that they are having on a particular sector.

Prof N Barney Pityana, Principal & Vice Chancellor at Unisa will talk about the way in which the Global Reporting Initiative (GRI) was implemented in South Africa, and the relationship between the GRI and corporate governance at the next conversation on for August 14 2003 at the SBL. For further information contact Deanna Vogét on 011 652 0332.