Embed in management systems

1. Embedded Commitment: Has a clear commitment to ongoing stakeholder engagement for their entire value chain, and embeds it in the Company's governance, culture and leadership.

Identify and prioritize Stakeholders

2. Inclusive: Ensures it is listening to a full range of rights-holders across the value chain.
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3. Assess saliency: Prioritises stakeholder engagements where its operations ​have the potential to cause most harm, and those with the greatest potential to have impact upon their business. ​

Conduct appropriate  activities

​​4. Informed Participation: With input from rights holders and taking into account the context, establishes an on-going two-way process that ensures informed participation of stakeholders, overcomes obstacles, and provides capacity building, as needed.  

5. Trust and Accountability: Establishes a set of principles and practices to build rights holder trust and accountability:  e.g. no bribery, effective grievance mechanism aligned with UNGP 31

Ensure follow through

6. Stakeholder-informed Action Plan: Analyzes information obtained through stakeholder engagement, and formulates a detailed action plan that clear shows it is rights holder informed.

7. Monitoring and Continuous Improvement: Establishes and maintains a robust stakeholder engagement M&E system that includes regular review by rights holders and independent particles.

8. Publicize: Provides detailed and publicly available account of the lessons from the M&E system and how the Company is acting upon them.

Go to Nuts & BOlts

effectiveness criteria 3

Stakeholder Engagement Home > Four Pillars > ​ Effectiveness Criterion 2

2. Comprehensively identifying the full range of rights holders across the value chain. ​​​

What this means
​​The Company should have in place a well-designed, thorough and ongoing process for identifying affected stakeholders that accounts for all individuals or groups directly or indirectly affected by its activities, the anticipated impact of the project, as well as local conditions and contexts  TNFD (p. 18). 

• Missteps
• What to look for
• Engagement questions

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During fieldwork, rights holders who were the objective of stakeholder engagement shared these experiences, which resulted in inadequate stakeholder engagement: 

1. The community had already built its Consultation Protocol, which reflects the self-identification of its spokespeople and the different vulnerabilities within the community. The company ignores the Protocol and seeks to find the community's spokespeople, often disregarding the Protocol's definitions.
2. The company made contact with a person who is not recognized by the community as the group's spokesperson. The community is left with the impression that the company researched who would be the dissenting voices most receptive to its interests in order to be able to claim to have engaged in dialogue with the community.
3. The company seeks dialogue with only one of the communities impacted by the activity, the one located near its facilities. However, as its activity spreads across the territory, especially due to the impact on the river, by failing to seek dialogue with other communities along the river that are directly affected, it ends up breaking the rule of seeking the involvement of all those affected.

Investors can ask the company if it has a clear plan for how it identifies​ affected or potentially affected stakeholders, including workers or local communities in its value chain or business relationships. The plan should include:

• Acknowledgement that some affected stakeholders may not be aware that they are stakeholders until negatively impacted by the operation OECD (p. 44); TNFD, (p. 28). 
  Stakeholder groups are not homogenous. The most vulnerable members and those who hold the least power within a group typically face the most severe impacts while at the same time profiting the least from the benefits brought by a project. In designing participation, it may be necessary to include specific safeguards for these sub-groups and to prioritise them despite lack of influence within the wider community OECD, (pp 47-48). It is important to keep in mind that not all stakeholders in a particular group or subgroup will necessarily share the same concerns or have unified opinions or priorities IFC (p.13). 
• Understanding of the legally protected status of some groups
  The company should be aware of the protected status of Indigenous Peoples under international law (UNDRIP, ILO 169). The company needs to pay attention to these frameworks, that enshrine rights to self-determination, their land, territories, and resources and the right to a Free, Prior and Informed Consent (FPIC).   
  
  Even where these rights have been transposed into national law, following the law alone may not be enough to secure the positive outcomes of effective stakeholder engagement or to reduce negative impacts on stakeholders and related business risks. The Company is expected to honour human rights, regardless of whether the legal protection in its country of operation is weak TNFD (p. 21) OECD (pp 47-49).  
• A means to identify and select legitimate stakeholder groups’ representatives.
  In many situations, organizations will not engage directly with all rights holders of a particular group but rather through their representatives TNFD (p. 29). 
  
  If representatives are not well selected or verified, the views of all stakeholders may not be represented, which can damage relationships and undermine the objectives of stakeholder engagement. The company needs to ensure that representatives act in the interest of constituents, including vulnerable groups, and re-evaluate the dynamics throughout the project lifecycle. OECD, (p. 49-50).  Verification of legitimate representation can be obtained by directly talking with a sample of project-affected people IFC (p. 20). 
  
  ​Representatives can be formal (trade unions, local governments) or informal OECD (p. 49-50).​  Non-governmental organizations (NGOs) and community-based organizations (CBOs), particularly those who represent communities directly affected by a project, can be important stakeholders for companies to identify and engage on a proactive basis IFC (p. 24). 
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  Investors can ask companies whether they have answers to the following questions OECD (pp 49-50) and their response to the findings:  
  • Are rights holders involved in choosing their own representatives?  
  • Do the rights holders recognize diversity within their groups?  
  • Would the rights holders like the Company to engage with proxy representatives (e.g., civil society organizations or appointed neutral agents such as professional negotiators or counsel)? 
  • Are potential risks – e.g.,  representatives that use their position for personal gain; representative conflict of interest or agenda not endorsed by the community; or representatives that do not actively or competently engage in the process – accounted for?
  • Are the representatives or interlocutors independent of the enterprise?  

Local government authorities may have long-established relationships with local and national stakeholder groups, and therefore their involvement as partners in establishing contacts and in convening and facilitating discussions IFC (p. 23) can contribute to the success of a project beyond obtaining licences. At the same time, a sole reliance on governments can lead to a misunderstanding of stakeholder voices (e.g., Rio Tinto Jukkan Gorge case). In some cases, involving local governments can even put human rights defenders at risk, and caution and due diligence is needed when determining to what extent to involve local governments.

• Awareness of the particular vulnerabilities and barriers to engagement of some groups or subgroups of stakeholders.  
  To ensure that the engagement process is both inclusive and informed, once all affected stakeholders have been identified, it is crucial to assess and address their vulnerabilities and potential barriers to engagement. Moreover, since impacted stakeholders, their needs, and their barriers to participation may change over time, companies should reassess their needs throughout the lifespan of a project or operations TNFD (p. 28) OECD (p. 49).

• How do you identify your affected stakeholders?
• In identifying rights holders have you taken account of the whole value chain – both upstream and downstream?  

• Have you considered all relevant categories of stakeholders?  

• Particularly where the risk of harm is potentially high, what vulnerabilities and barriers to engagement have you identified that may create a risk of some voices not being heard? 
• How have you approached the challenge of identifying the right stakeholders’ representatives?