In uncertain times, good stakeholder relationships are more critical than ever.
Decisions made by governments can have a critical impact on businesses’ performance and strategic direction, and organisations will continue to be heavily scrutinised by the wider stakeholder community. The pandemic intensified this trend, pushing government and stakeholder relations further into the boardroom and to the heart of businesses.
The pandemic has significantly altered the public-private sector dynamic. According to G20 companies, governments are the stakeholder group with the most impact on their business performance and strategic. 78% of businesses also highlighted how regulators have a ‘strong’ or ‘very strong’ impact on their strategic direction.
of business leaders surveyed were not involved in the legal processes at their organisation (compared to just 28% for operations and 29% for strategy)
companies have experienced a leak of internal sensitive communications in the last 12 months
G20 companies are under extreme pressure to strengthen stakeholder relationships over the next 12 months
Improving stakeholder relations will be a key priority for companies in the coming year. 35.2% of respondents said their organisation is under ‘extreme’ pressure to strengthen external stakeholder relationships over the next 12 months.
Companies that approach external engagement in a disciplined way are able to position themselves well to secure a beneficial regulatory and policy environment, and are able to effectively respond to legislative threats or reputational challenges.
With COVID-19 bringing about public policy and mass behaviour changes, three-quarters of surveyed G20 business leaders believe consumer behaviour will be permanently changed by COVID-19. It is evident that unprecedented levels of intervention in national economies will be more enduring than previously anticipated.
In general, participants were confident in the quality of their stakeholder communications, with 81% rating it as either ‘excellent’ or ‘good’; 79% of companies pointed to ‘extreme’ or ‘significant’ pressure to strengthen stakeholder relationships over the next 12 months. There will be growing pressure on all companies regarding sustainability and socio-political positioning in particular, with the renewable resources sector of increasingly intense public interest.
The COVID-19 outbreak and mass movements such as Black Lives Matter have put companies under pressure to focus on the social and governance elements of ESG. Indeed, 4 out of 5 global businesses agree that since the COVID-19 outbreak, they have been focusing more on the ‘social’ pillar of environmental, social and governance (ESG). Many companies are implementing more human rights and diversity efforts, and this trend looks set to continue.
The pandemic has subjected companies to greater scrutiny from all stakeholders, with government support becoming conditional and high expectations regarding societal contributions. This trend is likely to accelerate.
85% of large companies globally see COVID-19 as a catalyst to accelerate or materially enhance their approach to ESG and sustainability issues. Across all sectors, respondents demonstrated a keen awareness of the need to build trust and credibility across stakeholder groups. Business leaders across all industries emphasised the need for transparent leadership communication.
Reflecting awareness of shifting political and societal values, 82% of business leaders agreed that companies should be run in the interest of all stakeholders, not just shareholders. Indeed, 83% of corporate leaders deemed themselves to have responsibility to communicate their opinions on social and political topics. An awareness of the need for authentic dialogue with external stakeholders demonstrates the understanding across our global executives that a resilient business must engage proactively and consistently.