Power and Purpose: Harnessing Stakeholder Partnerships for the Great Transformation
| Author | Arved Lüth |
| Published date | 01 November 2015 |
| Date | 01 November 2015 |
| DOI | http://doi.org/10.1111/1758-5899.12214 |
Power and Purpose: Harnessing Stakeholder
Partnerships for the Great Transformation
Arved L€
uth
:response, Founder and CEO
Frankfurt
It is hard to imagine that it was only in the year 2000
that NGO representatives were invited to Davos for the
first time. This was the time when Naomi Klein had just
written ‘No Logo’and the G8 summit in Genova (2001)
saw violent protests. Maximizing shareholder value was
not considered as ‘the dumbest idea in the world’(Jack
Welch) by many CEOs then. Quite the opposite was the
case: maximizing shareholder value was the standard
approach in business schools as well as in board rooms.
Sixteen years before Edward Freeman had already pre-
sented another concept putting stakeholders at the cen-
ter of the top management’s attention. He famously
defined stakeholders as ‘any group or individual who can
affect or is affected by the achievement of the organiza-
tion’s objectives’.
Today, enlightened shareholders want to know how
their investment handles its stakeholder relations,
because they know: in a very fuzzy, multipolar way,
stakeholders have a major influence on the company’s
performance by choosing their buying preferences, by
blogging or clicking on some campaign website, or even
just by having ‘expectations’and thus holding a ‘stake’in
the company. The times when business was able to
ignore most of their stakeholders’expectations are long
gone. While the organization is navigating into the
future, stakeholders are the only people who will give
feedback if the organization is able to listen. Stakehold-
ers are the only voice to tell a company if its behavior is
acceptable and thus legitimate. In other words: stake-
holders are the raters of legitimacy for any business.
However, for practitioners the situation may be utterly
confusing. In a social media world many new stakehold-
ers pop up every minute and you would better take their
expectations seriously if you do not want your business
to risk its license to operate. We are, of course, only
partly talking about real people. Some stakeholders are
more virtual than real –a blog, Generation Y, the creative
class, future generations or simply market segments or
labels coined by marketing professionals such as Life-
styles of Health and Sustainability (LOHAS). There are no
natural predators for stakeholders.
But how do organizations, large corporations or public
sector administration, deal with this? Whereas the power
of stakeholders has increased dramatically in the last
decade, the stakeholder management structures of cor-
porations have not kept pace with this development.
Thus, organizations in the 21st century have to find
strategies to build effective relationships with their
stakeholders and thereby to contribute to sustainable
development. Not doing so runs the risk of losing their
societal legitimacy, their ‘license to operate’.
At the :response and Global Policy conference entitled
‘If Stakeholders Ruled the World –Stakeholder Relations
in the 21st Century’held at the London School of Eco-
nomics and Political Science (LSE) in 2014, representa-
tives from corporate business, politics, academia and civil
society discussed the latest developments in stakeholder
relations practice. This special section aims at taking this
discussion further. The articles in the special section
cover a range of issues and developments in stakeholder
relations practice.
The first three contributions demonstrate the need
and ongoing efforts for integrated thinking and sustain-
ability reporting: Mervyn King, Chairman of the Interna-
tional Integrated Reporting Council (IIRC) and former
Judge of the Supreme Court of South Africa, sets the
stage for the special section by highlighting the impor-
tance of ‘integrated thinking’in changing corporate
behavior. He argues that a company’s value creation can
only be sustained if the sustainability issues are embed-
ded in the organization’s long-term strategy. In this vein,
reporting in such a manner, so-called ‘integrated report-
ing’, does influence corporate behavior.
For Nelmara Arbex, Chief Advisor on Innovation in
Reporting of the Global Reporting Initiative (GRI), trans-
parency is the driving force to transform business. In the
new business context, stakeholder engagement is crucial.
According to Arbex, the most successful companies have
executives who understand the links between ethics, sus-
tainability-related issues and business strategy and who
are ready to communicate and act coherently in open
dialogue with different stakeholders.
©2015 University of Durham and John Wiley & Sons, Ltd. Global Policy (2015) 6:4 doi: 10.1111/1758-5899.12214
Global Policy Volume 6 . Issue 4 . November 2015
474
Introduction to Special Section
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