Engaging stakeholders is a strategic matter

IN PRINCIPLE 13 of the Singapore Code of Corporate Governance - Engagement with Stakeholders, the Board is encouraged to adopt an inclusive approach by considering and balancing the needs of material stakeholders, as part of its overall responsibility to ensure that the best interests of the company are served. Specifically, listed companies are to disclose in their annual reports how they are managing stakeholder relationships.

The 2019 Black Sun Group's research on STI30 companies indicated that almost three quarters have shown their commitment and discussed their stakeholder engagement plans and processes. However, less than 40 per cent indicated clearly in their annual reports how the expectations of stakeholders have been taken into account in establishing the company's strategy. And less than one-third go on to deliberate how they plan to respond to the feedback gathered from their engagement activities.

The research appears to indicate that stakeholder engagement is seen as a means to an end - the endpoint being that of accountability and reporting. Armed with a "tick-the-box" mindset, stakeholder engagement is typically not viewed as a strategic exercise or one which directly impacts a company's profitability and ability to generate sustainable value.