In (Kumar et al,2016) macromarketing journal, Freeman’s (1984) definition of stakeholder is any group or individual who can affect or is affected by the achievement of a corporation’s purpose. The same journal also states that stakeholders are key influencers of company strategy (Frooman, 1999) and encourage companies to include sustainability in their marketing agenda (Belz & Schmidt-Riediger, 2010). In order to gain stakeholder participation, it’s important to recognise who likely stakeholders are, and the nature of their interest in the engagement.
By recognising this, the company will be able to invite the stakeholders for involvement, address their concerns, and demonstrate how the effort can benefit/profit them in the (Kumar et al,2016) macromarketing journal Clarkson (1995) classified stakeholders as “primary” and “secondary” stakeholders. Primary stakeholders include customers, employees, stockholders, creditors, suppliers, or anyone with a functional/financial interest in the product or situation. Secondary stakeholders include the Government, non-government organisations(NGO’s) or people in society and the environment.
The diagram below highlights the stakeholders related to the organisational firm. (Francisco Szekely and Zahir Dossa, unknown year)
The process of engagement consists of exchanging information, listening to and learning from other stakeholders. BSR published a five-step guide to stakeholder engagement which consisted of the following steps (ALISON TAYLOR,2019) :
Feedback obtained through the stakeholder engagement process is also vital as it demonstrates to consumers that an organization is tuned into stakeholder concerns, or areas of opportunity, and is taking active measures to address their input.
According to journal of macromarketing (Kumar et al, 2016) stakeholder influence has a great impact on sustainable marketing strategies like Delmas and Toffel (2004) supported the view that stakeholders influenced companies to go beyond environmental compliance. Similar findings have been observed in (Domegan et al,2019) on green and social marketing literature, where Rivera-Camino (2007) examined association of stakeholders with green marketing strategies of Spanish companies and found that stakeholders did have an impact on green marketing strategies.
According to a journal by (Gilbert Silvius,2019) the International Institute for Sustainable Development expanded on the definition of sustainable development using a definition more focused on sustainability in organisations, they said “adopting business strategies and activities that meet the needs of the enterprise and its stakeholders today while protecting, sustaining and enhancing the human and natural resources that will be needed in the future” (Deloitte & Touche 1992). From reading this, it is obvious that there is a clear link between sustainable development and the stakeholder’s interests. Stakeholder engagement can also be executed in the project’s organisation or governance structures (Gilbert Silvius,2019) for example by inviting stakeholders to participate in the project team, project boards, steering committees, and advisory boards. Regular feedback with stakeholders is a pivotal part in marketing sustainability. Declaring a detailed time frame for communications and meetings will help meet stakeholder’s expectations and maximize engagement effectively.
The current thinking on this topic is that stakeholder engagement is now and will continue to be a core element of sustainability in marketing. It is a fundamental component of materiality assessments, which are then used to inform sustainability strategy, reporting, and disclosure (Five-Step Approach to Stakeholder Engagement,2019) and without input from key stakeholder groups, any approach to sustainability will be limited by an organization’s self-interest and inward focus. Current thinking also includes the fact that businesses should engage with stakeholders sooner, rather than later which will develop additional material and more effective strategies. Understanding the stakeholder perspectives and issues can help shape a better approach for the organization from the beginning of the process.
Sustainability has become important to companies of all sizes. Companies must continuously identify and prioritize key internal stakeholders. It’s important for businesses to engage with even the most vocal critics to try to find common ground. They impact consumer and media perceptions and ultimately sales; positively and negatively.
Current models of corporate action are finding it difficult to respond to the rapid and urgent change in the external environment. For universal issues such as climate change, corruption, inequality and discrimination, according to BSR, the purpose of stakeholder engagement must broaden from risk management and reputation-building to include partnership (Sara Enright and Alison Taylor,2016). Companies seeking to manage their most material sustainability risks often must do so in partnership with a range of groups that can add new capabilities to the effort, including governments, NGOs, local communities, international development organisations, suppliers, customers, and competitors. By doing this, businesses can evolve their stakeholder engagement approaches from defensive risk management to opportunity identification, becoming agiler and more responsive in the process. According to Mean Business, (Sara Enright and Alison Taylor,2016) a coalition of organizations working to create a low-carbon revolution, has secured commitments from more than 600 global companies and investors to take specific actions to combat climate change.
A final current though on this topic is that the use of new technologies for example mobile phone apps, online discussion boards, big data analysis, and crowdsourcing websites is proven to with advance and the engagement of stakeholders. These technologies are powerful and evolving rapidly, but they are still simply tools that make up a broader stakeholder engagement strategy. Used well, they can support more collaborative, inclusive, and strategic engagement methods (Sarah Enright and Alison Taylor,2019). Twitter is a current and useful tool for linking and promoting all communications, including press material, articles, videos, photos, corporate blog posts and executive podcasts. Technology can also improve performance by broadening the reach of stakeholder engagement, supporting better decisions informed due to the access of more information.
The topic of stakeholder engagement is important, firstly because it leads to more effective work and production of better results by decision-makers and according to the journal (W. Leal Filho and L. Brandli,2016) it can improve the likelihood of equity in decision-making and provide solutions for conflict situations it allows the ideas to be tried, tested and refined before adoption The main purpose of engagement is to gain a transparent decision making process with greater input and feedback from stakeholders and their active support of the decisions which are made” (Gilbert Silvius,2019). By engaging stakeholders on sustainability issues businesses have an opportunity to understand the market more, promote their partake in sustainable activity for good reputation and to build trust in long-term relationships, according to Sustainet stakeholder engagement in sustainable marketing is important as it helps with risk management: an active relationship with stakeholders that involves ongoing dialogue allows companies to anticipate any potential problems or issues. If an issue can be detected early, it can be mitigated perhaps before it even becomes a problem (Unknown, The Benefits of a Thorough Stakeholder Engagement Policy, 2017) In addition, stakeholder engagement can be looked upon as a social learning process, where different stakeholders learn about each other’s values/reflect on their own values and create a shared vision and objectives.
Engagement with stakeholders promotes innovation in sustainable businesses. Sustainable business practices are progressively in demand by consumers and being ahead of this trend and being relevant to the times is beneficial for public image which could potentially open new markets. Being ahead of the curve by implementing a solid stakeholder engagement policy, the company will obtain influence in the industry.
(Domegan et al,2019) contains an illustrative dynamic stakeholder framework based on Operation Transformation. To combat obesity in the Republic of Ireland, Operation Transformation (OT), which promotes healthy living in a reality television programme, is one of many obesity market offerings involving a wide range of stakeholders including those from the Department of Health civil servants and health professionals which consisted of GPs, surgeons, hospital administrators and media, one initiative to emerge in 2007 was an initial OT value-based exchange that occurred between RTE´, the Irish national broadcaster and VIP Productions to produce a healthy lifestyle (obesity) programme VIP and RTE´ then engaged in exchanges with 5 OT leaders and 3 experts as part of the programme format. (Christine Domegan et al, 2019).
Safefood then partnered with RTE´ and VIP to sponsor the show. Safefood is an all-island entity whose remit is to promote awareness and knowledge of food safety, food hygiene and nutrition issues on an all-island basis. The third and ongoing phase since 2013 is about OT linkages, connections and interactions with other obesity focused sub-systems in Ireland such as WHO Healthy City initiatives in Irish cities and counties. (Domegan et al,2019) Equally, the local environment the OT leader lives has parks, pitches, paths, and forests etc that they can use for walking/running exercises and physical activity. OT has expanded its network by partnering with stakeholders such as workplaces, schools, pharmacies, supermarkets, hospitals, NGOs and government departments to promote a healthy lifestyle. All national supermarket chains feature OT aisles, including OT recipes and the required food items for reasonable prices. In Healthy Cities, a number of structures have been created to ensure that all sectors of society are able to participate in health and well-being initiatives of OT, for example a cross-sectoral group (Domegan et al,2019)
The conclusion of this illustration is that due to stakeholder layering and embeddedness, OT and its stakeholders will not, by itself resolve the obesity problem in Ireland. This will come from “the self-organised alignment of, and interaction between, stakeholder frames across complementary and adjacent provisioning systems, some stakeholders will operate in commercial food/activity systems while other sets of stakeholders will constitute markets served by public and NGO provisioning systems for those who cannot access commercial markets. (Domegan et al, 2019)
Shifting from traditional forms of stakeholder management to proactive forms of stakeholder engagement requires a new capacity of resources (Rhodes et al. 2014) Stakeholder engagement requires additional skills within companies to engage successfully. Companies tend to lack strategy and find it difficult to Understand the perspective of external stakeholders do not consider stakeholder engagement as part of day to day operations in their core business. They subsequently delegate it to the CSR or communications department, and most underutilise it, when they could be using for its tremendous potential. Another limitation is that in today’s world, many issues exist in relation to sustainable development in marketing, some are considered to be sensitive and most are highly politicized or under public disclosure, and every move of government exposed to intense scrutiny from stakeholders on all sides. Therefore, with the initiation of engagement there is a risk that stakeholders are not willing to take on responsibility of this (National Round Table on the Environment and the Economy & Public Policy Forum 2010).
Another limitation may be the challenge of having a numerous number of stakeholders. It can be difficult to identify and rank all possible stakeholders more specifically from most important to least important. Most companies can suffer from a lack of focus when engaging stakeholders, failing to define their goals, reasons and purposes (Kuenkel 2013).
This paper aimed to contribute to the understanding and importance of the role of stakeholder engagement in sustainable marketing. Outlined above is the concept of stakeholder engagement and a discussion on classifying stakeholders. The paper also tackled the stakeholder engagement process, while discussing the role of engaging stakeholders in sustainable marketing together with it the importance of this topic and an illustration demonstrating stakeholder engagement in sustainable marketing. Limitations were also highlighted. Stakeholders can and should be engaged in many different ways, which if done successfully will have many advantages as mentioned in the importance of this title above.