Who are our stakeholders? CSR is all about stakeholders.

Dr. Sarika Kulkarni Head Center for Social Change Don Bosco Center for Learning Mumbai Stakeholders are all the people who are not only directly but also indirectly associated with our business. These are the people (groups) who get affected (positively or negatively through our business decisions). Responsible Businesses have stared to spend time in identifying all these stakeholders and analyze their business decisions from this perspective and evaluate whether their decisions are affecting the stakeholders negatively in any way. Whether Stakeholders are gaining is not so important, they should not =stand to loose anything is the new business mantra is what is being heard in the corporate corridors. Corporate Social Responsibility is all about stakeholder engagement, involvement and delight. CSR then becomes a tool, a philosophy that businesses use to achieve stakeholder delight.

Shareholder Delight

Stakeholder Delight

Fig1: Responsible Businesses are moving from existing merely to provide shareholders a return on their money to achieving stakeholder delight. Needless to say, stakeholders have become an extremely important component and all GOOD CSR programs start with identifying stakeholders. Any business big or small would have the following stakeholder categories: Financial Stakeholders Environmental Stakeholders Social Stakeholders

Fig 2: Stakeholder categories.

Each of this categories gets impacts even by any micro decision we take, some positively while some negatively. CSR is all about enabling businesses to take a balanced view of this impact. For example, Just in Time was hot and happening and became a rage with companies worldwide. The financial implications were ofcourse was an apt and comfortable balance between decreased inventory costs versus increased logistics and transportation costs and often the number of trips to be made was a function of savings achieved. Needless to say, nobody had the stakeholder view when focusing on financial savings being achieved through JIT. If organizations knew how the social and environmental stakeholders are miserably impacted, they would have never JITed. It is a well know fact that JIT caused huge traffic snarls everywhere and was bad for that community, the excessive usage of fuels (due to increased transportation frequency) and the massive carbon imprints and increased pollution actually damaged the environmental stakeholders. JIT was hence bad and a very selfish decision that businesses took but then nobody took a stakeholder view.

Financial Stakeholders: These are all the people who stand to gain monetarily from our business decisions. Shareholders Creditors Partners Employees Customers Suppliers

Financial Stakeholders

They are also known as Direct Stakeholders. Social Stakeholders Local Community Families of direct stakeholders. Nation/ Country/ World

Social Stakeholders

They are also the Indirect stakeholders as they do not have financial involvement but get affected by the business decisions. For example, when Tatas were setting up factory at Singur there was a lot of opposition to this from the local

community as they thought the land was fertile and good for agriculture and giving it away would impact their income for generations. Ofcourse political angle is not being discussed here at all. However when they decided to move the factory to Gujarat, local community supported the decision as they thought they would stand to gain long term from this. Hence local community and their future, whether you deal with them financially or not, is important element and needs to be taken care of. Local community in Gujarat took a view that factory would mean development and increased commerce and whether they get an employment and direct benefit they would definitely stand to gain enormously indirectly. And true, some youths set up restaurants, while some others some other businesses to cater to the increased movement or people and goods in the area. Social stakeholder view is hence an extremely vital element and should be an intrinsic part of any decision making exercise. Environment Stakeholders Natural Environment Non Human Species.

Environmental Stakeholders

Once again they are indirect stakeholders but mostly stand to loose from the decisions of business unless the business takes decisions such as using renewable sources of energy, recycling, reducing, re using and stuff like that. JIT example and how it damaged the environment royally had already been discussed earlier. There is this famous case of a large Noodle company in China that set up a factory and the pollution emanating from it killed all the species around the factory, the water in nearby lakes turned black, the aquatic world obliterated and the damage was intense and irreversible. However there are a lot of positive instances as well. Lot of companies worldwide are using solar or wind power thus putting less pressure on environment, adopting nearby natural habitats, planting more trees and creating a sustainable environment that not only helps the nation but also brings in social and environmental stakeholder delight. Nation Building should be an important agenda and stakeholder delight method helps businesses to contribute positively and efficiently to this. Our country has different targets to achieve and unless businesses chip in with a stakeholder view, it would be tough. The next article would look at the agenda for the nation, the different Millennium Development Goals and how CSR activities can contribute effectively and proactively to Nation Building.

Dr. Sarika Kulkarni Heads the Center for Social Change at Don Bosco Center for Learning and is a CSR consultant to several companies. She is also a Asian Institute of Technology Fellow on CSR and Sustainable Development.