Corporate Environmental Policy-Making: Stakeholder Consultation.

Teaching and Learning Resource ( TLR)

1. Title

Corporate Environmental Policy-Making: Stakeholder Consultation.

2. Keywords

Corporate environmental policy; Decision-making; Environmental management systems; simulation; stakeholder consultation.

3. Introduction

Stakeholders: Edward Freeman has defined stakeholder as "any group or individual who can affect, or is affected by, the achievement of a corporation's purpose", including "employees, customers, suppliers, stockholders, banks, environmentalists [and] government". According to Beckenstein et al some would extend the concept of stakeholder to include "plants and animals that rely on ecosystem services, as well as future generations".
Sources: Freeman, RE (1984) Strategic Management. A Stakeholder Approach. Pitman, London (pvi); Beckenstein et al, (eds) (1996) Stakeholder Negotiations. Exercises in Sustainable Development. Irwin, London (p2).

Businesses have developed a range of management practices in response to the various environmental issues that confront them. In many cases, this involves implementing an environmental management system, at the heart of which lies some kind of corporate environmental policy statement. These policy statements usually include a general commitment to improving environmental performance, and a set of aims or goals that indicate the areas in which the company seeks to improve its performance.

Companies can and do adopt different approaches to the development of their policy statements. Some produce them internally, with little or no reference to external organisations. Others commission specialist consultants to assist them. Others still consult with a range of internal and/or external stakeholders such as animal welfare groups, business organisations, community groups, conservation groups, consumer groups, employees, environmental groups, human rights organisations, local government, regulatory authorities, residents' associations, shareholders, trade associations and trade unions. The last of these approaches, stakeholder consultation, is a fairly recent innovation which, it is claimed:

allows interested parties to contribute to the policy-making process;
increases the public accountability of companies;
induces companies to adopt more socially and environmentally responsible practices.

Critics, on the other hand, argue that stakeholder consultation is little more than an exercise in public relations, whereby companies seek to legitimate practices that are fundamentally damaging both to society and the environment.

4. Aim

The aims of this TLR is to provide students with an opportunity to learn about the emerging practice of stakeholder consultation, and to explore some of the arguments for and against it as a decision-making process. It seeks to do this primarily by means of a simulation, focusing on the topic of corporate environmental policy-making.

5. Learning outcomes

After using this TLR, students should:

be familiar with the concepts of stakeholder and stakeholder consultation, and appreciate that stakeholder consultation can take place in a range of different decision-making contexts;
be able to identify key stakeholders in any given decision-making context, and be sensitive to the different - and potentially competing - interests and values of those stakeholders;
appreciate the process by which stakeholder consultation can inform the development of corporate environmental policy, and be sensitive to the ways in which stakeholders might seek to use this process in order to achieve goals that reflect their interests and values;
be able to think critically about the wider social implications of stakeholder consultation (for example, in relation to concepts such as accountability, legitimation, power and responsibility), and also about its environmental implications.

6. Pre-requisites

There are no formal pre-requisites for this TLR, but the learning outcomes are more likely to be achieved if students have some prior knowledge of key issues in environmental ethics / values, as well as some familiarity with the various ways in which businesses are responding to environmental pressures. (See Links with other TLRs below.)

7. How to use TLR

The TLR has been designed to be used broadly as follows:

Introduce the TLR, reviewing the nature of the content, the learning outcomes, and the way in which the TLR will be used. (10 mins)
Compile a single list of key stakeholders from the lists prepared by the students (see Preparation below), and negotiate with the students the most appropriate stakeholders (at least four and probably not more than eight) for use in this activity. (This TLR generally works best if there are least two environmental organisations: one which is relatively moderate in its philosophy / politics and another, rather more radical one.) (10 mins)
Divide the class into a number of groups equal to the number of stakeholders plus one, and allocate a different stakeholder to each group. Allocate the company itself to the 'extra' group. (5 mins)
Instruct each 'stakeholder group' and the 'company group' to make notes on (a) the general interests and values of their group, (b) the strengths and weaknesses of the company's existing environmental policy statement - from the point of view of their group, (c) the changes their group would like to see made to the policy and (d) the negotiating strategy that their group might adopt in the consultation process in order to achieve those changes. Groups should bear in mind the likely strategies of all other groups, and should consider whether it would be advantageous to seek alliances with one or more of the other groups. (30 mins)
Simulation: Invite the groups (the 'company group' first, and then each of the 'stakeholder groups') to make a short presentation (about 2 mins) in which they (a) outline what they see as the strengths and weaknesses of the existing policy statement and (b) identify the changes that they would like to see made. (These presentations could, but need not, involve the use of overhead transparencies and/or flipcharts.) This should be followed by an open discussion during which groups try to achieve their respective goals, until - time permitting - the 'company group' decides that the consultation process has achieved as much as it could reasonably achieve. It is essential that all participants stay 'in role' during the presentations and subsequent discussion. (30 mins)
Follow-up discussion: Invite the students (no longer 'in role') to reflect on the simulation exercise. Amongst other things, they might wish to consider the following questions. (30 mins)

To what extent is stakeholder consultation likely to allow interested parties to make a meaningful contribution to corporate environmental policy-making?
Are some interested parties more likely to be effective than others?
Could / should anything be done to make it a more meaningful exercise for a wider range of interested parties?

As described above, the TLR can be used with a class of 10-20 students, and the whole exercise completed in about two hours (excluding the pre-activity preparation time). Smaller and larger class sizes could be accommodated by varying the number and size of groups, but it should be noted that as the total class size increases, the opportunity for individual students to make an active contribution is diminished. The time required for completion of the exercise could be reduced by simply reducing the time available for each part of the exercise. Alternatively, the activity could be divided into two, hour- hour sessions.

8. Instructions to students

See attached Instructions sheet.

9. Stimulus Material

Case study material to be provided by the tutor. (See Preparation below.)

10. Degree stage

The TLR has been developed primarily for use at level three. It could be used at an earlier stage, but students at level 2 and (especially) level 1 are likely to find it more difficult to identify the general interests and values of different stakeholders, and formulate consultation strategies appropriate to those stakeholders. In addition, they are less likely to appreciate the wider social and environmental implications of stakeholder consultation.

11. Resource requirements

This TLR can take place in any ordinary teaching room. An overhead projector (with transparencies and marker pens) and/or flipcharts (with marker pens) may be needed. (See How to use TLR above.)

12. Preparation

There are a number of things which need to be done prior to using this TLR:

Choose a case study company. This could be a fictitious one. However, the exercise might gain greater authenticity by choosing a real company, and made more meaningful by choosing one that was in some way relevant to the students' interests. This could be a local company, a company whose activities are topical at the time of using the TLR, or a company whose activities are closely related to the themes of the course (eg one which operates in less developed countries; one associated with marine or atmospheric pollution, or contaminated land; one whose activities involve the 'development' of rural or wild/semi-wild environments). Where a real company is chosen, care should be taken to ensure that it is one which already has some kind of corporate environmental policy and, ideally, one which has produced some kind of environmental performance report. (Most well-known UK larger companies now produce such reports. They can usually be obtained from the company's public relations department, and are sometimes also available on the Internet - see Recommended Reading for details of how to access on-line environmental performance reports.)
Collect the following information about the case study company: details of the nature and scope of its operations; details of its environmental performance; a copy of its existing environmental policy. In the case of a fictitious company, this has to be produced by the tutor. For real companies, it may be worth obtaining a copy of the company's annual report as well as any environmental literature that it might have produced.
Introduce the students to the TLR: explain the nature of the content, the learning outcomes, and the way in which the TLR will be used; introduce the case study company and provide the students with access to the case study material; give each student a copy of the Instructions sheet (see above); and ask all students to ensure that they have carried out the instructions on this sheet prior to the session in which the TLR will be used.

13. Links with other TLRs

The aims and/or learning outcomes of this TLR are related to those of other TLRs listed in the following 'thematic cluster':

Environmental economics, law and decision making

14. Follow-up activities

Similar TLRs could be devised in which the process of stakeholder consultation is applied to other arenas of environmental decision making (eg the development of local / national government policies and strategies). In a slightly modified form, the TLR could be adapted to simulate a public planning inquiry.

15. Recommended reading

Books
Most textbooks on strategic business management contain some reference to stakeholder theory and/or stakeholder analysis. For one of the seminal works in this field, see:
Freeman, R Edward (1984) Strategic Management. A Stakeholder Approach. Pitman, London.
For more recent works in this area, see:
Kelly, Gavin et al (eds) (1997) Stakeholder Capitalism. Macmillan, Basingstoke.
Wheeler, David and Maria Sillanpää (1997) The Stakeholder Corporation. A Blueprint for Maximising Stakeholder Value. Pitman, London.
For a discussion of stakeholding in the context of corporate environmental management, see:
Beckenstein et al (eds) (1996) Stakeholder Negotiations. Exercises in Sustainable Development. Irwin, London.
Eden, Sally (1996) Environmental Issues and Business. Implications of a Changing Agenda. Wiley, Chichester.
Gray, Rob (1993) Accounting for the Environment. Paul Chapman Publishing, London.
Welford, Richard (1995) Environmental Strategy and Sustainable Development. The Corporate Challenge for the 21st Century. Routledge, London.

Journals
For articles on all aspects of corporate environmental management, see:
Business Strategy and the Environment. Published by Wiley, Chichester.
Eco-Management and Auditing. Published by Wiley, Chichester.
Greener Management International. Published by Greenleaf, Sheffield.

Internet
For information on issues relating to accountability in business, and Internet addresses for a sample of corporate environmental performance reports, contact:
Centre for Social and Environmental Accounting Research, University of Dundee (http://www.dundee.ac.uk/accountancy/csear/)
Institute of Social and Ethical AccountAbility (http://www.AccountAbility.org.uk)
For listings of on-line corporate environmental performance reports, contact:
The International Corporate Environmental Reporting Site (http://home.wxs.nl/~folmolen/mjv_main.htm)
Hitoshi Suzuki's website (http://www2.gol.com/users/hsuzuki/report.html)
Company websites can also be located by performing Internet searches.

16. Users' comments

“Good way of getting students to think about other social groups from a critical perspective.”

“Use it in conjunction with real world materials obtained from a company that claims to be environmentally aware – students can then see how far companies really are consulting stakeholders.”

“Consider linking this to real-life stakeholder consultation exercise.”

“Don’t push the role play too much if the class isn’t in the mood for it.”

Instructions Sheet

Corporate Environmental Policy-Making: Stakeholder Consultation

Introduction
Businesses have developed a range of management practices in response to the various environmental issues that confront them. In many cases, this involves implementing an environmental management system, at the heart of which lies some kind of corporate environmental policy statement. These policy statements usually include a general commitment to improving environmental performance, and a set of aims or goals that indicate the areas in which the company seeks to improve its performance.
Companies can and do adopt different approaches to the development of their policy statements. Some produce them internally, with little or no reference to external organisations. Others commission specialist consultants to assist them. Others still consult with a range of internal and/or external stakeholders such as animal welfare groups, business organisations, community groups, conservation groups, consumer groups, employees, environmental groups, human rights organisations, local government, regulatory authorities, residents' associations, shareholders, trade associations and trade unions. The last of these approaches, stakeholder consultation, is a fairly recent innovation which, it is claimed:
allows interested parties to contribute to the policy-making process;
increases the public accountability of companies;
induces companies to adopt more socially and environmentally responsible practices.
Critics, on the other hand, argue that stakeholder consultation is little more than an exercise in public relations, whereby companies seek to legitimate practices that are fundamentally damaging both to society and the environment.
The aim of this TLR is to explore the emerging practice of stakeholder consultation as a decision-making process. It seeks to do this primarily by means of a simulation, focusing on the topic of corporate environmental policy-making. In this, you will be asked to take the part of various stakeholders who have been invited by some company to assist in the revision of an existing environmental policy statement.

Instructions

(To be completed before the session in which this activity will take place.)
1.Read the case study material.
2.Identify key stakeholders (internal and external) who have a legitimate interest in the company's environmental policy statement. (You should think of at least four and probably not more than eight, including one or more from the public, private and voluntary sectors.)
3.Make a note of the general interests and values of each of these stakeholders, and the goals that each might seek to achieve when invited to participate in the company's stakeholder consultation process.

Further Reading

(http://www2.gol.com/users/hsuzuki/report.html)
Company websites can also be located by performing Internet searches.