4 Pillars and 7 Effectiveness Criteria of Stakeholder Engagement
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Engagement with affected stakeholders lies at the heart of HREDD, but doing it well is complex. This Stakeholder Engagement Guide is designed to help investors evaluate how well their portfolio companies engage with affected stakeholders or rights holders - the people most at risk from business activities. Grounded in leading standards, it introduces four Pillars and seven Effectiveness Criteria.
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What this tool offers
This Guide is designed for concentrated and diversified investors seeking to assess how well their portfolio companies engage stakeholders. Each Effectiveness Criterion provides the following:
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What this means Explains how each effectiveness criterion contributes to meaningful and impactful stakeholder engagement. |
A rights holder viewpoint Real-world examples of common missteps in stakeholder engagement to highlight what can go wrong. |
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Questions for portfolio companies Targeted questions investors can use when engaging with portfolio companies to assess the quality of their stakeholder engagement and social dialogue. |
What to look for Indicators within company documents and communications—both internal and external—that signal the company’s effective integration of each pillar. |
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Issue and sector considerations Where relevant, sector- or issue-specific considerations—especially those affecting workers in the direct workforce and value chain—to highlight risks or dynamics that might otherwise be overlooked. |
High risk situations Guidance on adapting stakeholder engagement in conflict-affected and high-risk areas, where heightened human rights and environmental due diligence (hHREDD) is expected. |
Grounded in leading standards
An analysis of the following stakeholder engagement standards and the organization of their content into four pillars serve as the foundation for this Guide:
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✓ TNFD’s Guidance on Engagement with Indigenous Peoples, Local Communities and Affected Stakeholders (2023)
✓ OECD’s Due Diligence Guidance for Meaningful Stakeholder Engagement in the Extractive Sector (2017) ✓ AccountAbility's AA1000 Stakeholder Engagement Standard (2015) ✓ IFC’s Stakeholder Engagement Guide: A Good Practice Handbook for Companies Doing Business in Emerging Markets (2007) |
Click here to learn about our approach.
The Financial Materiality of Stakeholder Engagement
The tragedies of the 2013 Rana Plaza factory collapse and the 2020 destruction of the Juukan Gorge cultural site in Australia are emblematic of how poor engagement with affected stakeholders can lead to societal and environmental harms that carry financial consequences. Both cases led to public outrage and a reckoning for the companies and investors involved. Early meaningful engagement with rights holders isn’t just a human rights best practice—it’s a strategic advantage that helps companies:
Identify and
prioritize risks |
Design more effective mitigation & grievance mechanisms
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Avoid legal, reputational, and operational costs
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Build trust and long-term stabililty
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Click here to learn about the financial materiality of stakeholder engagement.
