What is the Stakeholder Issue in Sustainable Development?

• Third largest PGM producer• 30 000 employees• Operations in located in RSA

Barnard MokwenaVice President: External AffairsLonmin Platinum

What is the Stakeholder Issue with the Mining Brand in South Africa?

Is this ISSUE an Opportunity

to do things differently?

Or is it a THREAT to the sustainability of operations

Why?

Social license to operate increasingly important

Introduction

Stakeholders. The most quoted definition is that given by Freeman (1984):

The challenge of the Industry Brand in South Africa

• Associated with a legacy of more than 100 years

• Epitomises exclusion, repression and exploitation

• Almost a replica and a symbol of the previous regime

“any group or individual who is affected by or can affect the achievement of an organisation’s objectives”

Creating Sustainable Value and Wealth

The Broad Post-1994Stakeholder Issue is characterised by Quest for socio-economic liberation,

And is driven by human rights culture, and memories of land ownership

Distinctive OrganisationalCompetencies

Eroding

Dynamic and Complex

Value?

CSR - Poverty

Social Justice and Equity

What strategic stakeholder management can achieve …

Robust relationships with stakeholders

High reserves of reputational capital

Contribution to sustainable business growth and sustainable development

Post-apartheid Robust Relationships

Characteristics of “healthy” relationships:

Control MutualityThe degree to which stakeholders and the company are satisfied with the level of control or

influence they have over the relationship.

The most stable, positive relationships exist when stakeholders experience that they have some degree of influence over the relationship.

Trust

The confidence that the company and its stakeholders have in each other and the willingness to open themselves to the other party.

Integrity - as the extent to which any party’s behaviour is perceived as fair, just, and honest.

Competence, which is the belief that an organisation has the ability to do what it says it will do.

Satisfaction

Why stakeholder relationships matter?

Stakeholder relations

Stakeholder engagement

Reputational CapitalSocial Reporting and Compliance

Corporate Governance

Organisational Performance

Information on the quality of stakeholder relations is part of measuring and reporting

social/ environmental impacts

Quality of relationships also informs risk management

and future regulatory requirements

Increasingly, corporate reputation is understood as

built through the organisation’s relationships

with all stakeholders

Relationships as a business asset and a management

competence. ’

The quality of relationships drives stakeholder engagement and

responsiveness, ensuring the needs and objectives of stakeholders are

taken into account

Reputational Capital

• What is reputational capital?

Market value

Book value

Intangible, separable

assets•Trademark•Patents•Know-how•Customer Relationships•Software•WIP•Order backlog

? Goodwill

• The market value of the company in excess of its book value and separable, intangible assets

• It constitutes the residual value of the company’s intangible assets over and above its stock of patents and know-how

• Much like knowledge capital, reputational capital is an aggregate intangible asset that must be evaluated using both internal and external information

Reputational capital

Reputational Capital

High reserves of reputational capital give an organisation distinct advantages:

GENERATE REPUTATIONAL GAINS– Their products/services and stock offerings entice more

customers and investors – and command higher prices– Their jobs lure more applicants – and generate more loyalty and

productivity from their employees– Their clout with suppliers is greater – and they pay lower prices

for purchases and have more stable revenues

MITIGATE THE RISK OF REPUTATIONAL LOSSES• Their risks of crisis are fewer – and when crisis do

occur, they survive with less financial loss

Step 4:

Stakeholder Engagement

Inclusive, integrated approach

Step 3:

Stakeholder Profiling

Emergent Strategy

Issues / Risk Management

Roadmap to Strategic Stakeholder Management

Step 2:

Stakeholder Listening

Environmental Scanning

Formal/informal listening

Stakeholder universe

“Main folders” for key strategic

stakeholders

Stakeholder insight

Know their stakes + issues

‘Names and faces’ orientation

“Sub folders” with detail information

Step 1:

Stakeholder Mapping

Deliberate Strategy as point of departure

Roadmap to Strategic Stakeholder Management – Step 1

• Identify stakeholders based on the organisation’s strategy

• Your stakeholders are those groups that can either hinder or facilitate the achievement of your strategic goals

• Prioritise stakeholders based on the organisation’s strategic intent (primary: secondary)

• Various techniques to map stakeholders

• The result will deviate from the generic stakeholder map

Stakeholder universe

“Main folders” for key strategic

stakeholders

Step 1:

Stakeholder Mapping

Deliberate Strategy as point of departure

Roadmap to Strategic Stakeholder Management – Step 2

• Why?• How? • What?• Lonmin example

Step 2:

Stakeholder Listening

Environmental Scanning

Formal/informal listening

Stakeholder insight

Know their stakes + issues

Stakeholder listening: How?

Two main categories of listening:• Environmental scanning (continuous)

– Mostly media & document analysis– Internal processes to deal with issues/risks should be formalised

• Formal measurement/research (pre-defined intervals)– Reliable & valid social research methods– Combine quantitative (describe with statistics) and qualitative

(understand the reasons why) methods– Adapt measurement instruments and tools to the needs of

specific stakeholder groups– Set targets & track progress – Two-way process: give feedback to stakeholders after

measurement

Stakeholder listening: What?

Focus of measurement depends on which stakeholder or stakeholder groups are being listened to

Generally, stakeholder listening can focus on:• Perceptions, needs, expectations, experiences• Relationship quality

– Broadly influenced by various indicators of communication and perceived behaviour or conduct towards stakeholders

• Reputation• Social impact or social performance (mostly communities)• Strategic alignment (mostly employees)• Identifying gaps• Describing specific aspects• Measuring or quantifying

Stakeholder listening: Example

• Community satisfaction survey– Quantifying perceptions in an index to plot performance– Focus group interviews– Personal interviews– Simultaneous translation where necessary– Compare ratings over time– Compare community ratings with staff/management

ratings on specific issues

Benchmark (example)

Communication

Behaviour

• Access• Issues addressed• Frequency

More…

• Health• HIV/Aids• Environment

More…

Benchmark (example)

Communication Indicators 1-7Access

Issues addressed

Frequency

Amount

Timeliness

Information flow / 2-way comm./ feedback

Style/symmetry/reciprocity

Complexity/clarity

Accuracy

Coordination/integration

Participatory approach

Credibility/Trustworthiness

Control mutuality

Mutual understanding

Benchmark (example)

Behavioural Indicators 1-7

Health

HIV/Aids

Environment

Housing

Involvement in the community

Commitment

Empowerment

Visible transformation

General visibility of management

Transparency

Coordination of projects

Control mutuality

Relationship behaviour

Corporate citizenship

Sustainable development

Total: Behaviour

Percentage (%)

Mean score

Company Performance (example)

Step 3:

Stakeholder Profiling

Emergent Strategy

Issues / Risk Management

Roadmap to Strategic Stakeholder Management – Step 3

‘Names and faces’ orientation

“Sub folders” with detail information

• Use the results of stakeholder listening to profile stakeholders

• Become specific• Use the issues detected in

stakeholder listening to inform emerging strategy

• Prioritise issues based on their potential impact on stakeholders

• The issue: stakeholder matrix

Step 4:

Stakeholder Engagement

Inclusive, integrated approach

Roadmap to Strategic Stakeholder Management – Step 4

• Develop a company-wide, coordinated approach towards stakeholder engagement

• Understand the company’s stakeholder interfaces and govern value-based interaction through clear stakeholder protocols– have measurable objectives per stakeholder interface– provide clarity on the roles and responsibilities of

different teams interacting with stakeholders • Develop a communication programme for each

stakeholder group: one size doesn’t fit all• Have a auditable system of stakeholder engagement (track

interaction, keep record of commitments made)• Identify, analyse, manage and track issues and the impact

of issues on stakeholder relationships• Engage stakeholders during crises

Inclusive, integrated approach to stakeholder engagement

Stakeholder engagement in the past

Current approach to stakeholder engagement

Project based Engagement basedMoney RelationshipsOne-way process Two-way processTeaching LearningWe vs. them Togetherness, trustActivism risk Risk managementPeripheral Core businessCompliance Competitiveness

2.1%

42.1%

1.0%

3.6%

6.4%

3.8%

4.9%

4.9%

7.5%

16.6%

7.0%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

Western Cape

Eastern Cape

Northern Cape

Free State

Limpopo

Mpumalanga

Gauteng

Kwazulu-Natal

North West

Lesotho

Mosambique

N = 470

Cosmopolitan Population