What Does It Really Mean to Call ‘Society’ Your Stakeholder?

The idea of stakeholder
capitalism
— the concept firms must be centered on assembly the wants of all its
stakeholders, not simply shareholders — is getting loads of consideration recently. When
in 2019, the Enterprise Roundtable — endorsed by virtually 200 CEOs of the
largest firms — redefined the purpose of a
corporation
to profit all stakeholders, it signaled a sea change even amongst those that had
lengthy adhered to the concept maximizing shareholder worth was an organization’s
major responsibility.

However what does it actually imply to talk broadly about completely different components of society
as being key stakeholders on your firm? The thought of society as a major
stakeholder is rooted in centuries-old custom in Sweden. That the
shareholder-centric view was solely not too long ago knocked off its pedestal comes as a
shock to lots of the nation’s company leaders. Their method to placing
society on the middle is one facet of Sweden’s “secret sauce” that we discover
in our new book,
Sustainability Management: A Swedish Strategy to Remodeling Your Firm,
Your Business and the World (Palgrave Macmillan, 2020). For Sweden and its
enterprise leaders, an inclusive society and financial system is each a matter of precept
and a supply of resiliency and success over the long run.

For our e book, we interviewed greater than a dozen of Sweden’s prime CEOs and enterprise
leaders to know their particular person sustainability management journeys —
together with Jacob Wallenberg, chair of Investor AB, Sweden’s largest
funding firm and the fifth technology of Sweden’s main enterprise household.
As he advised us, a primary precept has pushed Investor’s funding philosophy,
going again 160 years:

“We’re long-term, engaged house owners; and which means we develop firms with a
concentrate on long-term competitiveness and their relationship with society at giant.
That features after all workers, shareholders, and prospects. The higher you
take care of all of the completely different stakeholders, the higher an organization will carry out.”

A management mannequin that places society on the middle

However at this time, acknowledging society isn’t sufficient. The view that we put ahead in
the e book is that sustainability management is now not about how society
perceives your model. Moderately, it’s about understanding your organization’s impacts
on society — and actively searching for to mitigate the unfavourable impacts whereas
enhancing the constructive ones. It is a core factor of our three-step
Sustainability Management Mannequin — which captures what we predict must be
on the core of any enterprise chief’s quest to maneuver the needle on their
sustainability ambitions. It consists of the next parts:

• The Basis: That is about realizing your footprint and constructing belief
  by way of accountable enterprise practices. It is usually about discovering your
  firm’s function and tying that to tradition and values.

• The Core: Embed sustainability in your core enterprise. This consists of
  product and portfolio integration, but in addition entails broader
  cross-functional
  integration.
  The way in which to make it actual is by linking sustainability to buyer worth
  creation, which is in the end mirrored in your gross sales figures.

• The Leap: After getting your home so as, and have fulfilled steps
  one and two; now you’re prepared to remodel and be a part of altering the
  world. Your individual management and influencing platform are key, however so too is
  the thought of society as a stakeholder — which emerges if you undertake a
  societal and planetary lens, and search unconventional partnerships.

There are completely different ways in which firms can embrace society as a stakeholder —
the principle factor is to higher perceive the impacts of enterprise actions on
folks and the planet. The UN Sustainable Growth Objectives
(SDGs) are a guiding
framework for understanding impacts and the science behind these impacts. This
is the very core of getting society as your stakeholder, the place the purpose is to
maximize constructive impacts and decrease unfavourable ones — and ideally, to take action at
scale.

Enterprise as a part of the societal ecosystem

Crucial to creating the leap is knowing that enterprise is a part of a societal
ecosystem. We outline this as a enterprise ecosystem that applies a planetary lens
and a societal lens, to know the science and impacts of enterprise
actions on folks and the planet, whereas participating with different actors within the
system and discovering new worth chains and options.

The societal lens goes past conventional stakeholder engagement and is a approach to
view and perceive an organization’s influence on folks, communities and society. It’s
rooted within the concept of respecting human
rights
that comes from the UN Guiding Rules for Enterprise and Human Rights,
which signifies that firms have an obligation to respect the rights of
people.

The planetary lens, alternatively, is a approach to view and perceive a
firm’s influence on the surroundings and the planet. It’s about understanding
the impacts brought on by enterprise on pure sources with out which the world,
together with enterprise, couldn’t survive. These sources embody ample water,
power and land; mineral and different sources, clear air and oceans, a secure
local weather and a commitment to
biodiversity.

Firms don’t exist in a vacuum. In our view, enterprise leaders will
more and more have to view their function — certainly, their future survival — by way of
these planetary and societal lenses. This has turn out to be apparent after almost six
a long time of company growth, predicated largely on pure useful resource
exploitation — the place, as the planetary
boundaries
train us, we’re nearing many tipping factors. These are 9 international planetary
boundaries, past which we face catastrophic threshold results within the
surroundings and local weather — together with local weather change, ocean acidification,
land-system change and different boundaries that have an effect on a secure and resilient Earth
system.

In different phrases, in case you dare to declare society as a stakeholder; it is advisable to put
that dedication into motion, be ready to seek out new companions, options and
ecosystems in an effort to do issues in another way.

Society as a stakeholder at Scania

As a part of the dedication to drive the shift towards sustainable transport at
Swedish industrial automobile big Scania, a broader
perspective was taken on the world of mobility, and utilized each planetary and
societal lenses. That meant pondering past Scania’s personal business vertical and
to acknowledge the corporate’s function as a lot broader — a part of an ecosystem of
mobility, relatively than a automobile producer.

That pondering impacted how Scania considered its stakeholders; and to look past
conventional rivals, suppliers and prospects to incorporate prospects’
prospects, policymakers and academia. To satisfy the company purpose — “To Drive
the Shift” in sustainable transport — Scania needed to work along with different
actors that play a key function in mobility: from renewable gas manufacturing to
electrical automobile charging to electrification infrastructure. It additionally meant
getting deep into the science, to know societal and planetary impacts of
completely different pathways.

Taking that societal perspective led to 2 essential issues:

• The Pathways
  Study,
  which confirmed that attaining fossil-free industrial transport by 2050 isn’t
  solely attainable throughout the timeframe of the Paris Settlement however financially
  engaging from a societal perspective.

• The Pathways
  Coalition — a
  partnership aimed toward working in the direction of that transition to a fossil-free
  transport system. Along with Scania, it consists of the world’s
  second-largest retailer, H&M Group; electrical energy producer E.ON Nordic
  and electrification techniques supplier Siemens; and ICT chief
  Ericsson.

For Scania, the societal ecosystem method offered a brand new method of seeing the
world — and particularly, for contextualizing its impacts on society and the
planet.

Bringing society into focus requires greater than lip service

For causes deeply rooted of their tradition and values, Swedish firms appear
notably accustomed to pondering when it comes to their influence on society. Of
course, we’re not all Swedish — so how can others undertake the identical mindset?

We expect the reply is to regulate your lens to convey society and planet into
focus. With that new perspective, you’ll be able to problem what you are promoting mannequin,
rethink your worth proposition, and marshal the required companions to comprehend
your imaginative and prescient and construct belief along with your stakeholders alongside the way in which.

As a result of it’s so deeply rooted, this method goes past model constructing and
stakeholders’ model perceptions. The societal and planetary lenses illuminate a
broader worldview, and the power to work together with society in new methods. That
perspective is simply attainable when firms pay greater than lip service to the
concept that society is their stakeholder.

Thus far, the Enterprise Roundtable shift that garnered a lot consideration stays an aspirational assertion, relatively than a plan of motion. With a view to create precise system change, sustainability management have to be as a lot about creating societal worth as it’s enterprise worth. Reaching each goals, ultimately, is the one worth creation that counts if each enterprise and society are to stay resilient.

Revealed Jan 6, 2021 7am EST / 4am PST / 12pm GMT / 1pm CET

Elaine Weidman-Grunewald

Elaine Weidman Grunewald is a world sustainability government. She spent 20 years at Ericsson, the place she was Chief Sustainability Officer; and is a co-founder of the AI Sustainability Middle — a world-leading middle centered on the moral and societal implications of AI and data-driven applied sciences. (Learn extra …)

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Henrik Henriksson

CEO

Scania CV AB

Henrik Henriksson is CEO of worldwide sustainable transport firm Scania; and co-author of the brand new e book, Sustainability Management: A Swedish Strategy to Remodeling Your Firm, Your Business and the World (Palgrave Macmillan, September 2020).