Embed in management systems

1. Embedded commitment: The company has a policy commitment to ongoing stakeholder engagement, and embeds it in its governance, culture, and management strategy.​

Create a Tailored Engagement Plan​

2. Inclusiveness: The company listens to a full range of rights-holders across the value chain and has a process to identify legitimate representatives.
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3. A Focus on Those Most at Risk​:  The company prioritizes engaging with the rightsholders who are most likely to be harmed by its operations​, and therefore where early engagement is critical.​​

Conduct appropriate  activities

​​4. Informed Participation: The company establishes ongoing, two-way communication with affected rights holders that provides affected stakeholders with relevant critical information well in advance of key decision points.

5. Trust and Accountability: The company establishes procedures, tailored to the context, to build rights holder trust and accountability for its actions.​

Ensure follow through

6. Stakeholder-informed Action Plan: The company analyzes information obtained through affected stakeholder engagement and collaborates with rights holders to formulate an action plan.

7. Monitoring, Transparency, and Continuous Improvement​: The company establishes and maintains a transparent and stakeholder-informed monitoring and evaluation (M&E) system.​

effectiveness criterion 6

our approach

financial materiality

Stakeholder Engagement Main Page > Four Pillars > ​Effectiveness Criterion 5

5. Trust and Accountability

The company establishes a grievance mechanism and other procedures, tailored to the context, to build rights holder trust and accountability for its actions. 

what this means

questions for portfolio companies

What to look for

Issue & SEctor considerations

for workers

High risk situations

The company should have in place:

• A tailored grievance mechanism and management plan that does not hinder stakeholders’ access to legal remedies.
  A company's grievance mechanism should align with its broader stakeholder engagement policy and business integrity principles, and be designed with input from rights holders to ensure its legitimacy and effectiveness.[1] It should be overseen by an independent, neutral entity and tailored to the local context and culture. The mechanism must also be clearly written, easy to understand, widely communicated, and accessible in both format and language.
  
  
• A tailored process for engaging affected stakeholders that is stakeholder informed.
  Companies should communicate to affected stakeholders the purpose and procedures of engagement, as well as timelines. They must also explain how they are ensuring that rights holders are free from intimidation and retaliation for participating in engagement, and their rules of confidentiality. As noted in EC 1, all of this should be rights holder informed, and the company should remain continuously open to feedback. 
  
  
• A means to build capacity of affected stakeholders to enable their full and effective participation in the engagement process (TNFD 2023, 37; AA 2015, 24).
  Affected stakeholders often lack the necessary legal and technical resources to engage with companies on equal footing. They may not be familiar with corporate terminology, timelines, or priorities, which can lead to lost opportunities for companies to obtain valuable insights. Experienced companies recognize these barriers and the challenges stakeholders face in overcoming them. To address these gaps, companies should consider providing tailored training, legal and technical support, or logistical assistance—such as covering transportation costs to the engagement site and childcare —to ensure affected stakeholders can participate meaningfully.[2] To avoid conflicts of interests, companies can participate in pooled funds to provide affected communities with access to independent legal and technical support, an approach that is gaining momentum.[3] Investors might also consider contributing to these funds, where available - or help to establish them where they are needed - as critical risk reduction measures. 
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• A process to identify shortcomings of the engagement process and to address negative impacts as they arise.
  When deficiencies in the stakeholder engagement process are exposed or unforeseen harms occur as part of the process, it is important to identify the reasons behind them and adjust the stakeholder engagement plan accordingly. The company should pinpoint the origins of the issues, such as in communication, procedures and structures (OECD 2017, 81-83).

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[1] “The Fourth Pillar Initiative” (Fourth Pillar Initiative, May 2024), 5-6, https://fourthpillarinitiative.org/.
[2] “Key Considerations,” Ipieca, September 25, 2024, https://www.ipieca.org/resources/meaningful-engagement-practitioner-guidance/section-2-making-engagement-meaningful/key-considerations.
[3] See Shauna Curphey, Joanne Bauer, and Rebecca Iwerks, “How to Address the Corporate Community Engagement Gap: The Case for a Pooled Fund for Legal and Technical Support” (Rights CoLab, Namati, Just Ground, September 18, 2024), https://rightscolab.org/how-to-address-the-corporate-community-engagement-gap-the-case-for-a-pooled-fund-for-legal-and-technical-support/.