To govern effectively, boards must understand the environment in which their organisation operates, including the interests and concerns of their stakeholders – whether they be employees, customers, suppliers or the broader community. The AICD has developed a new guide 'Elevating stakeholder voices to the board: A guide to effective governance' to help directors identify and elevate key stakeholder voices to the board..
“It is important that boards manage stakeholder engagement to be confident the board is hearing ‘representative’ feedback; not anecdotal or feedback limited to the ‘loudest voice’.” Dr Katrena Stephenson GAICD, Director, Environment, Development and Community at Kingborough Council
Every director has a responsibility to assess the organisation’s relationship with its key stakeholders and ensure stakeholder engagement is effective.
Stakeholder governance involves identifying, engaging with and understanding stakeholder perspectives on key issues, and reflecting on how these perspectives should be addressed in decision-making.
If done well, stakeholder governance strengthens an organisation and will promote its long-term success, to the benefit of shareholders and stakeholders alike.
Poor stakeholder governance, by contrast, will typically increase an organisation’s financial and non-financial risk profile and may precipitate major reputational damage.
Elevating stakeholder voices to the board: A guide to effective governance
The AICD has developed a new guide to help directors identify and elevate key stakeholder voices to the board.
The guide explores:
- The board’s role in stakeholder governance
- Directors’ legal duties in relation to stakeholders
- Principles boards should apply to ensure effective stakeholder governance
- How boards can balance the interests of stakeholders when making decisions
- The hallmarks of good stakeholder governance
The guide incorporates advice from Australian stakeholder groups representing customers, employees, suppliers, Aboriginal and Torres Strait Islander peoples, as well as activists and community groups on matters such as climate change, human rights and environmental issues. The focus is on non-shareholder stakeholders.
The guide also offers:
- Insights from prominent directors, stakeholder groups, subject matter experts and board advisers
- Key questions the board should be asking
- Case studies demonstrating effective stakeholder governance
- Links to practical tools and other relevant resources
“Boards need to ask themselves: how can they make stakeholder engagement a priority? How can they make it meaningful? Do they want to do it better?” Melinda Cilento, Co-Chair Reconciliation Australia, CEO CEDA
How boards should use this guide
This guide will lead boards through the process of identifying and proactively engaging with key stakeholders and determining how best to balance the interests of stakeholders in decision making.
It can be used by directors of all organisations. Even the smallest organisation will have important stakeholder relationships and can benefit from applying the principles outlined in the guide.
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