Sustainable stakeholder relationships
The ongoing global economic crisis has hit the size of mature markets hard.
But it has also raised questions over the role of companies in society and led to increasingly tough regulation as governments seek to avoid another crisis down the line.
Broader considerations than shareholder value are emerging. Our research highlights that companies are increasingly aware of issues such as the environment and corporate social responsibility (CSR), as well as of immediate problems such as tightening regulation. Post crisis, they will find themselves needing to listen and engage with a wider field of stakeholders than their shareholders alone.
The increasing role of government in business is now cited as the sixth-biggest risk, driven in part by tightening regulation. But it is also because governments, especially in rapid-growth markets, are taking an increasingly active role in a host of sectors.
Government policy, and maintaining good relations with government, is increasingly important for businesses.
Regulation and compliance is the seventh-biggest risk facing companies. Leveraging CSR and public confidence, a new entry to the list, is ranked eighth overall.
Companies also see excellence in investor relations as a top 10 opportunity, highlighting the importance of a broad funding base in today’s relatively tight-credit world. Certainly, institutional investors now demand greater transparency over areas such as environmental and social issues, which can impact a long-term investment’s viability.
What it all means for businesses
Government involvement in business, particularly with regard to regulation and compliance, is expanding. Organizations must be seen to comply with increasingly onerous regulation and take interest in social and environmental issues, not only to avoid penalties from regulators but to accrue crucial advantages in stakeholder and public perception.
To mitigate the risks and enable opportunities companies could: