Stage 1 · Effectiveness Criterion 1
Embedded Commitment
The company has a policy commitment to ongoing stakeholder engagement, and embeds it in its governance, culture, and management strategy.
Management should make a public commitment to undertake meaningful engagement with affected stakeholders, and embed this commitment into its core business operations. Embedding entails devising meaningful engagement procedures, integrating them into internal policies, objectives, and targets, and assigning senior staff clear responsibilities to ensure this commitment is applied across operations (TNFD 2023, 25–27; OECD 2017, 29; IFC 2007, 99–100). It should also set clear expectations with its suppliers and business partners that they do the same, and be prepared in high risk situations to engage with affected stakeholders beyond tier one of their value chain. Publicly communicating this commitment sets internal and external expectations and helps to drive accountability.
A Rights Holder Viewpoint
When a mining company operating in Peru came to talk to the community surrounding the operations, community members sensed that the company’s representatives lacked both decision-making authority and much understanding of the local context. Their concerns were confirmed when the company later recommended cultivating a grain that was unsuitable for the region’s environmental conditions. This experience left stakeholders feeling that their time had been wasted and their input ignored, underscoring how disregarding local environmental knowledge compounds the risk of poor engagement.
A publicly available statement – either as part of other social sustainability policies or as a stand alone – outlining the company’s commitment to ongoing stakeholder engagement and social dialogue and how it is embedded across its management systems. If no statement exists, investors should ask the portfolio company about it. The statement should include the following elements:
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Recognition of the legally protected status of certain groups:
The company should recognize the protected status of Indigenous Peoples, ethnic, racial, and religious minorities, refugees and asylum seekers, and civilians during armed conflict under international human rights and humanitarian law.
Indigenous Peoples, under the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) and the Indigenous and Tribal Peoples Convention, 1989 (ILO 169), have rights to self-determination, land, territories, and resources, including the right to Free, Prior and Informed Consent (FPIC). A corporate commitment to FPIC means that the company recognizes that Indigenous Peoples are entitled to approve or reject activities that may affect their rights or territories.
Other groups that face persecution or systemic discrimination—such as the Rohingya in Myanmar, Uyghurs in China, or Roma in Europe—are also protected under international law. Refugees and asylum seekers are protected under the 1951 Refugee Convention and national asylum laws, which guarantee rights such as non-refoulement and access to basic services. Civilians living in areas of armed conflict—international, non-international, and military occupations—are afforded certain protections under international humanitarian law or the “laws of war” (see Effectiveness Criterion 3).
Companies are expected to uphold these protections regardless of the strength of national enforcement (TNFD 2023, 21; OECD 2017, 47–49). Even where these instruments have been transposed into national law, following the law alone may not be enough to secure positive outcomes or to reduce negative impacts on affected stakeholders and related business risks. -
Assignment of policy implementation and oversight responsibilities
A senior manager is accountable for the implementation and oversight of the stakeholder engagement commitment, including respect for freedom of association and collective bargaining. Senior level responsibility strengthens internal accountability while ensuring alignment across activities and reinforces a cohesive organizational approach (IFC 2007, 100–101).
A public commitment alone does not shift company culture – senior leaders, including the board, must champion engagement with rights holders as a core business practice. Embedding this commitment also requires experienced, dedicated staff to lead engagements, and allocating the necessary resources. Whether by selecting a well-trained team or providing needed training on human rights, companies must ensure staff have the expertise, resources (i.e. budget allocations), and authority to conduct effective engagement and follow through on commitments (IFC 2007, 99–102; OECD 2017, 52; TNFD 2023, 26). The resources needed will depend on affected stakeholders’ interest as well as the location, culture, economic development, and other socio-cultural factors. - Setting clear expectations for business partners and suppliers that they undertake meaningful and ongoing stakeholder engagement. To ensure alignment across business operations, the company should share its stakeholder engagement policy with business partners and suppliers, making clear its expectations and strategic approach. While direct engagement with these partners may not be necessary in most cases (unless there is a high risk of abuse), relevant clauses of the policy should be integrated into contracts and binding agreements in order to establish clear standards (OECD 2017, 30–31; TNFD 2023, 26).15 Where needed, partners should also receive training on the company’s engagement approach.
- A commitment to operating an effective operational-level grievance mechanism. An operational-level grievance mechanism, as set out in UNGP 31, should be established to serve as a reliable, effective, and ongoing channel for rights holders to raise concerns before they escalate. To ensure it is used, it should be co-developed with stakeholders to reflect their needs and expectations (TNFD 2023, 26–27), and include transparent procedures for how grievances are received, processed, and resolved.
15See Responsible Contracting Project and the Interfaith Center on Corporate Responsibility (ICCR) and Responsible Contracting Project, “Responsible Contracting,” Investor HREDD Precision Tools, March 2024, https://www.investorhreddtools.org/responsible-contracting.html.
- A commitment to freedom of association, collective bargaining, and worker safety. Respecting worker rights—backed by non-retaliation guarantees and accessible grievance mechanisms (see Effectiveness Criterion 5)—drives higher productivity, reduces conflicts and disputes, and boosts job satisfaction, all of which strengthen operational decision-making.16 Business partners should be aware of this commitment, and relevant clauses of the policy should be integrated into binding contracts and agreements to ensure that workers in supply chains have equal protections to a company’s direct workforce.17
16“Industrial Relations Toolkit,” ITCILO, accessed May 25, 2025, https://www.itcilo.org/courses/industrial-relations-toolkit.
17See Responsible Contracting Project and the Interfaith Center on Corporate Responsibility (ICCR) and Responsible Contracting Project, “Responsible Contracting,” Investor HREDD Precision Tools, March 2024, https://www.investorhreddtools.org/responsible-contracting.html.
Companies operating in CAHRAs should publicly commit to ongoing stakeholder engagement that takes into account conflicts across their value chain. Because the potential for harm is heightened during conflicts, companies need to strengthen engagement efforts in a manner that ensures that rights holders are not exposed to additional risks.
This commitment should include consulting rights holders when evaluating whether to remain in or exit a conflict zone, decisions that can directly affect their safety and well-being. As business and human rights standards set the expectation that companies should respect human rights and the environment and take steps to avoid causing or contributing to harm, consulting affected stakeholders can play a key role in meeting these responsibilities.
When operationalizing this commitment and assigning oversight responsibilities, companies should make sure that information from actors aligned with one side of the conflict does not dominate decision-making to avoid blind spots.
