Sustainability

“Meeting the needs of present without compromising

the ability of future generations to meet their own
needs.”

That requires a focus on “ People, Planet and Profit”

In short; It’s all about improving the quality of life for

every one now and also for generations to come.
Community, Business and Sustainability

“ In a free Enterprise, the community is not

just another stakeholder, but is, in fact, the
VERY PURPOSE of its existence.

J N Tata
Why Stakeholder Engagement?

 Business is accountable to its stakeholders.

 Relevance of accountability;

 Identification of threats (risks)and opportunities,

 Identification of options to reduce risks
 Building trust with stakeholders for mutual benefits.
Why Stakeholder Engagement?
 To understand the right balance that business needs to
maintain with its stakeholders to optimize its long
term performance (value creation).

 To understand and manage expectations and risks.

 To establish parameters for responsibility of

business.

 To accelerate innovations via collaborative efforts.

Why Stakeholder Engagement?

Stakeholder engagement, within a

sustainability management framework,
assists companies in managing this
complexity in ways that enhance accountability
to stakeholders and overall business
performance.
Why Stakeholder are Important?
 Customers – growing competitiveness of markets
and focus on products as services has led to
customer driven companies.
 Suppliers – Recognition that suppliers are
partners in solving issues of joint concern and
opportunity
 Government- Increasing complexity of issues,
globalization, and the need to consider not only
legislation but voluntary and collaborative
approaches.
Why Stakeholder are Important?
 Community:
For some companies and sectors, major events
such as the Bhopal disaster emphasized the needs
to work with communities (e.g. Responsible Care)

 Employees – Knowledge society heightens value

of employees, shift from products into services
heightens value of employees, and age of
prosperity for the middle classes around the world
heightens choices and opportunities for
employees.
Why Stakeholder are Important?
 NGOs and Society
• Vedanta’s experience with Orissa illustrated to
companies that there is no place to hide. One bad
operation will affect reputation and legal action.
• Coke and Pepsi experience illustrated that even if you
engage the most important stakeholders (scientists) if
you don’t engage other interested stakeholders they can
disrupt your business, even if you have made the right
decision.
Benefits of Stakeholder engagement

 Improved operational efficiency.

 Enhanced Brand Value and reputation.

 Customer attraction and retention.

 Enhanced human and intellectual property.

 Improved risk management

 Attracting and retaining talent.

Benefits of Stakeholder engagement

 Prolonged social license to operate

 Promoting and increasing the culture of
innovation and research.
 Better access to capital
 Creation of enhanced shareholder value
 Increased revenue earning
 Identification of new opportunities.
Principles of Engagement
 Materiality- Do stakeholders have required
information to be able to make informed judgments,
decisions and actions?
 Completeness- has the business identified and
clearly understood the stakeholder concerns though
engagement?
 Responsiveness- has the business responded to the
stakeholder concerns, taken action and communicated
back to Stakeholders the outcome of such actions?
Steps for Effective Engagement

 Management Commitment.
 Identification of Stake holders
 Set parameters for engagement and engage.
 Aggregate , Analyze the concerns and prioritize
risks and opportunities.
 Implement and Report Performance.
Management Commitment
Make a commitment to expand the overall
approach to decision-making, or specific decision-
making processes, by sharing information with
Stakeholders

Without appropriate engagement, even good

decisions – or decisions that tried to take into
account the diverging perspectives of multiple
stakeholders - may be poorly received, with
costly consequences.
SH Identification
 The objective is to identify stakeholders, determine
their level of relevance, identify potential means of
engagement, and consider potential risks of
engagement.
 Standard procedures for identifying stakeholders are
typically insufficient for identifying increasingly
influential yet traditionally indirect / lower priority
stakeholders.
 A thorough stakeholder mapping and assessment
helps reduce surprises, and identifies stakeholders
who can bring valuable information and innovation
to the dialogue.
 ..
All those who impact or are impacted by, company’s
management, operations, products, and services
STAKEHOLDER MAPPING

Future Environment Customers

Employees
Generations
Managers
Experts

Shareholders
Industry
Association Organization

Educational Suppliers
Institution
Financial
NGOs Local Institution
Media Government
Community

7
Approach to Stakeholder Consultation
Engage Identify Concerns/ Priorities
Stakeholders Issues Concerns/Issues

Address concerns Set Goals/Targets Review Performance &

in Strategy and Implement Take corrective actions

Incorporate Learning Report & Communicate

& Improve Performance (GRI)

Stakeholder Engagement Process

Process for Prioritizing SH Concerns

Targets & Initiatives

Risk & Opportunity
Stakeholder Engagement Stakeholder Concerns

Set Objectives,
Prioritization
Analysis &
Business Results

Products, Services LCA,

& Operations ISO-14001, ISO-9001,
OHSAS-18001

Review Performance Monitoring Implementation

2
Implement and Report Performance
Making decisions on how the identified priorities will be
implemented by defining strategies, setting targets that
will also serve as accountability mechanisms, and
securing resources from a range of stakeholders.
Implementation involves;
 Planning, allocation of resources and execution
 Monitoring effectiveness of such measures.
 Reporting Performance.

The indicators and targets developed should respond to

priorities, but should measure the value created for both
companies and stakeholders by effectively addressing
those priorities
Stake holder Engagement- A case Study
Stakeholder concerns and Sustainability Indicators
Stake- Concerns of the Strategic Indicators and
holder stakeholder Focus actions
Shareholder Stock Price EVA positive, EBIT, Weighted Average Cost of
Dividends, P/E ratio, Capital (WACC), Net
Market Share realization, Working
Capital Efficiency
Overall performance and Top line growth, Operating cost, Customer
its implication on market Reserves/Net Worth, Satisfaction Index,
capitalization & creation of Brand Value, Corporate Citizenship
sustained shareholder Customer Satisfaction, Index, Employee
wealth Employee Satisfaction Index,
Satisfaction, Patents and R&D
Intellectual Capital,
Social reputation, cost
leadership

Grievances Complaint/grievance Transfer of shares, non-

Information needs
management receipt of balance sheet
and non-receipt of
declared dividend
Timely availability of Quarterly/half
above information yearly/annual reports and
shareholder meets
Stake holder Engagement- A case Study
Stakeholder concerns and Sustainability Indicators
Stake- Concerns of the Strategic Indicators and
holder stakeholder Focus actions
Employees Professional growth, Enhance culture of Competency coverage
personal growth, excellence, ratio, training and
health, safety & knowledge based development,
environment, welfare and happy knowledge
measures, future organization, management index,
business plans development and involvement in Annual
retention of talent, Quality Improvement
employee Plans (AQUIP),
satisfaction number of accidents,
work area
environment quality

Quality of life, Quality of life in Corporate citizenship

disengagement and around the index, compliance with
enterprises environmental
standards, eco
restoration etc.,
employee satisfaction
index.
Stake holder Engagement- A case Study
Stakeholder concerns and Sustainability Indicators
Stake- Concerns of the Strategic Indicators and
holder stakeholder Focus actions
Suppliers Value creating Long-term Supplier satisfaction,
partnership and timely partnership cost of procurement
payment resolution of
conflicting goals,
supplier satisfaction
and material rejects

Customers Value creating Long-term Customer Satisfaction

partnership, sensitivity business Index, customer dis-
and responsiveness to relationship, cost satisfaction, complaint
user needs, quality of products, resolution, product
functionality and delivery, complaint development cycle
satisfaction resolution time, PQI, dispatch
compliance
Stake holder Engagement- A case Study
Stakeholder concerns and Sustainability Indicators
Stake- Concerns of the Strategic Indicators and
holder stakeholder Focus actions
Regulators Statutory compliance Compliance Percentage
management compliance and review
under ISO-14001,
quality systems and
OHSAS-18001

Community Quality of life, health, Corporate social Corporate citizenship

job opportunities, responsibility, index, spend on
education, quality of life of society, pollution
environment community control
Stakeholder wise issues and strategic objectives
Stakeholders Issues Strategic Objective

Shareholder  Corporate Governance  Upholding the spirit of Tatas

 Sweating of assets & listing agreements
 Economies of scale  EVA Positive Core Business
 Innovation as a substitute  Sustainable Growth
for investment  Revitalize core business for
 Forward & backward sustainable future
integration and  Continue to be the lowest
consolidation cost producer of steel.
 WTO impacts and exchange  Outsource strategically
rate impacts  Divest, merge, acquire
 Outsourcing  Venture into new business
Customers  Increasing service level  Value creating partnership
expectation of customers with customers
 Commodity nature of steel  Move from commodities to
 Ethical standards in brands
business  Uphold the spirit of Tatas
Stakeholder wise issues and strategic objectives
Stakeholders Issues Strategic Objective

Employees  Attracting and retaining  Enthused & happy

talent employees
 Employee satisfaction &  Continue to be the lowest
commitment cost producer of steel
 Right sizing and employee  Unleash peoples potential
cost and create leaders who will
 World class developing build the future
environment  Encourage innovation and
 Ethical standards in allow freedom to fail
business  Manage knowledge
 Uphold the spirit of Tatas
Supplier  Increasing service level  Value creating partnership
expectations of customer with suppliers
 Outsourcing  Strategic outsourcing
 Ethical standards  Uphold the spirit of Tatas
 WTO issues  Continue to be the lowest
cost producer of steel
Stakeholder wise issues and strategic objectives

Stakeholders Issues Strategic Objective

Community  Lack of understanding  Uphold the spirit and
of business & industry values of Tatas towards
 Law & Order situation Nation building
 Increasing expectation  Improve quality of life
 Environment of the community
 Ensure safety &
environmental
sustainability
 Sustainable growth

All  Balancing the needs of  EVA positive business

Stakeholders all stakeholders  Sustained growth
 HIV/AIDS Awareness  Value creating
partnership
 Improve quality of life
of employees &
communities we serve
 Excel at TBEM
Fora and formal two-way management
stakeholder communications
Stakeholder Forum for Assessing Frequency
Requirements, Communicating
Directions & Receiving Feedback
Shareholders Investors meet across the Annual/
& globe; Annual General Meetings; As per plan/
Financial Quarterly and half-yearly Annual
Community reports to Shareholders;
Updating major Shareholders
(LIC, UTI);
Shareholder Relations’ Meets;
Customer forum; MD’s
Conference with customer
groups.
Customer Worldwide; Visits to Customers As per plan
& CVM, RVMs; Learning from Quarterly
Field Failures Vendor Dialogues.
Fora and formal two-way management
stakeholder communications
Stakeholder Forum for Assessing Frequency
Requirements, Communicating
Directions & Receiving Feedback
Suppliers & Meetings with Key Suppliers; Twice / year,
Partners Vendor Meets & As per plan,
Recognition Once a year
External Public/ Meetings with Govt./Steel As per need
Govt. / Media Ministry/Trade Bodies, Industry
Associations; NGOs, Ministry for
Environment & Forests, Press
Briefings & Releases, etc.
Employee, Dialogues with the employees, Quarterly,
Community & JDCs, JWC, Apex Council, Senior Twice/year,
Society Citizens Forum; Spouses’ As per plan
Dialogue; Uday, Joint
Community meeting, Community
need analysis
Fora for two-way communications with
employees
Communication/ Freq. No./Yr Issues Discussed
Forum
MD Online 12 Customer, safety,
plant performance etc.
Senior, General & 4 to 6 Vision, values,
Ladies Dialogues, empowerment,
MCM, BE Councils innovation,
continuous
improvement,
performance.
Dialogue with Union 3,6,2 Performance
Committee Members expectations, values,
(JCCM, JWC, and JDC) ST/LT directions,
customer services,
market conditions,
production
Fora for two-way communications with
employees
Communication/ Freq. No./Yr Issues Discussed
Forum
Departmental 12 BE, improvement,
Communication learning, training,
Meeting customers’ needs
BE Facilitators meet 6 Developments in BE,
innovative ideas,
launch of new
initiatives
Joint Works Quality 6 5S & QC activities,
Committee safety, ergonomics,
health, EMS
Information Generated by Stakeholder
Consultations
Stakeholder Information Generated
Shareholders Overall performance and its implication on
market capitalization and creation of
shareholder value.
Customers User needs, customer satisfaction, product
quality and functionality.
Supplier Identification of areas with conflicting goals,
payment, material rejects and supplier
satisfaction.
Information Generated by Stakeholder
Consultations
Stakeholder Information Generated
Employees Employee Satisfaction, suggestions for
improvement in product quality, social
welfare and business excellence,
professional growth, health and safety and
quality of life.
Community The needs of community, women
empowerment, employment generation,
environment and quality of life.
External Public Requirement under statutes, compliance
& Government status, threats to business and license to
operate.
Integrating Stakeholder Information into
Strategic Planning
Stakeholder Use of Information

Shareholders & Financial Analysts Objective & Target settings (Balance

Score Card), investment decisions,
diversifications/ merger /acquisition,
company perception with analysis,
emerging strategic issue identification.
Customers Product improvement, product
development, customer retention,
market penetration, emerging demand
scenario and price sentiments,
development of short and long term
business plans, identification of
customer related issues.
Supplier Fine tuning of vendor rating and
vendor evaluation procedure, vendor
relationship management.
Employees Employee Satisfaction Index &
Corporate Citizenship Index,
identification of employee related
issues.
Integrating Stakeholder Information into
Strategic Planning
Stakeholder Use of Information
Community Plan for development of
community in the areas of
forestry, irrigation, women
empowerment, income
generation, health, hygiene,
etc. and identification of key
societal issues.
External Public & Government Management programs for
compliance and resource
conservation, management
programs for community
development.
Media & Other Perception of the company,
external environment &
business news issues
identified.
CONCLUSION
In order to achieve excellence in business
performance, Organizations need to adopt extensive
processes for identification of sustainability issues and
the stakeholders that are affected by their business
and/or can affect their business. Through an effective
engagement with the stakeholders they can prioritize
stakeholder concerns and integrate them in their
decision making processes.

This in the opinion of sustainability managers is the

surest way to success.
 What is Materiality?
 In financial terms, a concept is considered material to
the company if its omission or misstatement
influences the economic decision of users.
 Compared to financial statements, sustainability
considers a broader scope of action and covers a
multitude of issues- environmental, social, economic
and more.
 The Global Reporting Initiative (GRI) defines as
material those issues with “a direct or indirect impact
on an organization’s ability to create, preserve or erode
economic, environmental and social value for itself, its
stakeholders and society at large”.
What is Materiality?
In simple terms, materiality aims to identify:
“ the societal and environmental issues that present risks
or opportunities to a company while taking into
consideration the issue of most concern to external
stakeholders “

And Materiality is:

“The topics and indicators in the sustainability report

that reflect the organization’s significant economic,
environmental, and social impacts or that would
substantively influence the assessments and decisions of
stakeholders.
What is Materiality?
When to perform a materiality analysis?
 While foreseeing future risks and opportunities
around ESG issues. It helps in building a
sustainability strategy, preparing a sustainability
report or looking to explore new business
opportunities.
 Conducting stakeholder engagement
 Understanding of stakeholders and prioritising
their concerns.
How to determine materiality?
 Generally material varies considerably from company
to company ,and depend upon size, location, time of
establishment, level of stakeholder engagement,
financial ← Green policy tools as sustainability drivers:
challenges for corporations → performance, etc.
 As a result, the practical application of materiality is
constantly evolving.
 Recently, organizations like the Sustainability
Accounting Standards Board (SASB) and the GRI have
developed tools to consolidate the process of
identifying materiality.
How to determine materiality?
The materiality can be determined according to
issues under five categories:

 Environmental Capital,
 Social Capital,
 Human Capital,
 Business Model & Innovation,
 Product Stewardship and
 Leadership & Governance.

.
How to determine materiality?
Common elements in materiality analysis include:
1. Identification of a group of relevant economic,
social, environmental, and governance issues for
consideration;
2. Evaluation and ranking of the level of stakeholder
concern regarding each issue;
3. Evaluation and ranking of the potential impact on
the company of each issue;
4. Presentation of issues prioritization, typically in a
matrix format that is subsequently used to inform
strategy and reporting.
How to determine materiality?
 Additionally, surveys involving consumers and
sustainability experts, feedback from stakeholder
meetings, engagement events, media scans, internal
business impact surveys, corporate risk maps, also
assist in determining materiality.
Benefits..
 Materiality analysis is about setting priorities right. By
complementing financial and non-financial
performance,
 Materiality helps align a business strategy with a
company’s ESG risks and stakeholders’ interests while
achieving larger impacts in sustainability.

It is quickly becoming the dominant concept in

sustainability reporting and it is just a matter of time
before companies realize the potential and benefits of a
materiality analysis for their overall performance and
sustainability in particular.
Thanks