There’s No Sustainability Without Stakeholders

The foundation of a successful sustainability journey lies in fostering strong relationships with stakeholders. These groups, encompassing investors, customers, employees, and communities, to name a few, have a powerful influence on a company's strategy and competitiveness. Stakeholder pressure can be a powerful force for change, allowing for better decision-making. For instance, we have often seen customer boycotts pressuring companies to improve their environmental practices, or employee activism leading to more sustainable operations.

Let’s take a look at examples of how each of these stakeholders can influence business.

Investors are no longer solely concerned with short-term profits. Today, they increasingly prioritise sustainability matters when making investment decisions. Companies with robust sustainability practices that mitigate environmental risks and promote social responsibility are demonstrably more attractive to sustainability-focused investors. For more traditional investors motivated by financial performance, companies with good sustainability performance offer a better risk profile, which is also a reason to invest in them. This shift in investor behaviour creates a compelling incentive for companies to promote sustainable products and processes.

Consumers are leveraging their purchasing power more consciously than ever before. Sustainability transparency is no longer a nice-to-have; it is a critical factor influencing consumer choices. Consumers are drawn to brands that demonstrate a genuine commitment to ethical sourcing, environmental responsibility, and societal well-being. Companies that fail to prioritise these areas, or deceive through greenwashing tactics, risk losing market share to competitors who focus on sustainability, as well as damaging their reputation.

Employees, the core of all organisations, are increasingly seeking employers whose values align with their own. A strong sustainability ethic is a key differentiator in today's employment market. Companies that focus on sustainability are more likely to attract and retain top talent, fostering a more engaged and productive workforce.

Suppliers form the backbone of a company's sustainability journey. Partnering with suppliers who concentrate on responsible sourcing, energy-efficient production, and ethical labour practices is critical. Companies with unethical practices within their supply chain can severely damage their reputation, as consumers increasingly hold businesses accountable for their entire supply chain. Transparency and collaboration with suppliers are therefore essential to mitigating these risks.

Communities are also not simply bystanders in a company’s business and are often directly impacted by a company's operations. Companies that prioritise responsible operations, such as reducing pollution or supporting local communities through employment, to name a few, can build trust with local stakeholders, fostering a more positive and sustainable operating environment.

The examples listed above are non-exhaustive, and companies should consider their entire range of stakeholders when looking at their sustainability journey. There is, however, a type of stakeholder that is often overlooked: the silent ones. These include nature and civil society. While they cannot directly voice their concerns, considering their positioning on sustainability matters will enhance a company’s impact greatly.

By engaging effectively with stakeholders across the spectrum – investors, customers, employees, communities, and others – companies can ensure their sustainability measures are comprehensive, address a wider range of concerns, and ultimately contribute to a more sustainable future.