Identify the key stakeholders that will influence and are influenced by your business model and strategy. Many organizations already undertake materiality assessments or stakeholder mapping exercises where groups of stakeholders are considered to understand the interest and impact that they may have on the business. Those that have a high influence and high interest should be considered material. The business should also consider the stakeholders that it directly impacts by conducting its operations, for example local communities or the environment.

Identifying your key stakeholders is only the first step. The organization must then consider what expectations those stakeholders have of the organization and how they are impacted by decisions taken by the management on the organization. Once the key stakeholders are known, discussions can take place on how best to engage with those groups as well as identifying potential risks and opportunities for the organization.

Oftentimes boardroom discussions fail to take into account key stakeholder groups when making strategic decisions. Necessary stakeholders should be consulted through the appropriate mechanisms, for example focus groups, AGMs, advisory panels, dialogues or site visits, on decisions that are likely to impact them.

The board should work with management and the appropriate functions to understand the formal operational relationships that management and functional departments within the organization have and ensure the board has appropriate governance over the mechanisms that formalize this process. The board needs unfiltered views and opinions from key stakeholders when those views may impact or inform the decision-making process. Continuous dialogue and exchange may be conducted by management.

The role of the board versus the role of management when it comes to stakeholders, depends on the importance of that stakeholder to the business model. This distinction is something for an individual organization to consider.

Board directors often refer to having insufficient time during meetings to dedicate discussion time to ESG or sustainability topics. But board meetings are scheduled months in advance, it is important that time is taken to consider material sustainability topics alongside other key agenda items. The agenda and time of the board is managed by the CEO, therefore management should ensure it is utilizing director time in the most effective way. The agenda is set in advance and as a group the board should be focused on the long-term. Sustainability should not be considered or discussed outside of existing business strategy and risk management.

Integrate ESG considerations into the existing boardroom discussions and decision- making.

Trust presents a challenge. The board and management want to trust the views and opinions of stakeholders, but often the view of the representative may not be reflective of the collective view of the stakeholder. Consider how more effective engagement and more robust relationships can support the trust and confidence that the board has in the views of the key stakeholder groups.

Fiduciary duties dictate that directors should act in the longterm interest of the company. When arbitrating stakeholder tensions and managing dilemmas, the board should consider the interest of the company as a whole, rather than the interest of the individual stakeholder group.

Activities and exercises such as the materiality assessment, risk management, data collection and reporting can be used to further support the board in understanding stakeholder views. The board may also consider the role that external consultants, advisors and experts can play in improving education and knowledge of material sustainability topics and the impact of business activities on key stakeholder groups.