Companies not doing enough to engage their stakeholders: Study
By SUE-ANN TAN
The Straits Times, 27 June 2024
SINGAPORE – Companies need to ramp up their efforts to better engage stakeholders such as investors, customers, staff and the wider community, noted a study on June 27.
The study looked at 80 companies, ranging from firms with a market capitalisation below $300 million to those worth over $1 billion, and found that firms generally did not disclose how their board and executive leadership handle stakeholder engagement plans and decisions.
While the companies put content about corporate governance on their websites, they did not outline how their boards manage relationships with stakeholders.
Only 10 per cent of companies gave case studies or examples to show how their boards considered major stakeholder decisions throughout the year, noted communications agency Black Sun Global and the Singapore Institute of Directors (SID), which carried out the study.
They also conducted an online survey in May on stakeholder engagement, gathering around 200 responses from aspiring and current board members and investors.
“Effective stakeholder engagement is now more crucial than ever. Customers, suppliers, employees, investors, communities and regulators demand greater transparency, accountability and ethical conduct from companies,” said SID chief executive Terence Quek.
“Boards must be plugged into the changing expectations of stakeholders and engage them in the corporate journey.
“This research highlights the growing need for organisations to genuinely consider stakeholder interests in their decision-making processes.
“By doing so, businesses can build stronger, more resilient relationships and drive sustainable success.”
Societal expectations and values are evolving, with a growing emphasis on environmental, social and governance factors, Black Sun and SID noted.
“Stakeholders are increasingly expecting organisations to demonstrate a commitment to sustainability reporting, social responsibility and ethical practices. This has led to a greater focus on stakeholder engagement to understand and address these expectations,” they added.
These evolving expectations mean that companies must look at stakeholder engagement as a strategic imperative and not just as a compliance exercise, they said.
“Trust and support from key stakeholders are essential for navigating the complexities of today’s business environment. Without authentic and effective communications, companies risk becoming isolated from those whose support is vital to their success.”
The research also found that companies did not implement comprehensive communication practices to foster such trust. More than 90 per cent of survey respondents indicated that companies should allocate additional resources towards engaging stakeholders.
Large-cap companies performed better in investor engagement than smaller firms, the study revealed. “Smaller companies should focus on developing tailored engagement strategies to build trust and support with investors, while not neglecting other stakeholder groups,” Black Sun and SID said.
Mr Uantchern Loh, Black Sun’s chief executive for the Asia-Pacific region, noted that stakeholder engagement is about building and nurturing two-way relationships, and communications covers all forms of messaging, both internal and external. Meanwhile, public relations is about the organisation’s external image.
“When these three elements work together seamlessly, the result is a consistent, positive reputation that attracts customers, bolsters employee morale and builds lasting relationships with key stakeholders,” he said.
VIEW REPORT