Governance: Stakeholder Theory

Stakeholder Theory emphasises the company's interactions with all stakeholders.

"Strategic Management: A Stakeholder Approach" by R. Edward Freeman popularised this
approach in 1984.Stakeholders are everyone who may affect or be affected by the
organization's goals. Shareholders, workers, consumers, suppliers, government, and the
community are examples.

Stakeholder Theory states that enterprises must service all stakeholders. Organisational
success should be judged by financial performance and stakeholder impact. This
contradicts the shareholder thesis that a corporation's fundamental obligation is to its
shareholders.

This idea helps leaders evaluate several views and create balanced, stakeholder-sensitive
choices. It emphasises corporate ethics and firm longevity.

As more companies embrace CSR and sustainability, the Stakeholder Theory has grown in
relevance. These changes reflect a wider understanding of a corporation's mission and
stakeholder dependency.

However, balancing the numerous and often competing interests of stakeholders is

difficult, and there's continuous discussion on how to prioritise stakeholders in decision-
making. Stakeholder Theory is still important for understanding and improving corporate
governance.
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Case Study:
Unilever's Sustainable
Living Plan
2029 - ALL RIGHTS
3

INITIATIVE
Unilever, a prominent multinational corporation, operates
within the consumer goods industry and offers an extensive
array of products across various sectors including foods,
beverages, cleaning agents, and personal care products.

In the year 2010, the renowned multinational corporation

Unilever initiated the implementation of a comprehensive and
strategic initiative known as the Unilever Sustainable Living
Plan (USLP). The primary objective of this plan was to
effectively disassociate the company's environmental footprint
from its overall growth trajectory, while simultaneously
enhancing its social impact.
 Analysis Through Stakeholder Theory

Unilever's implementation of the Unilever Sustainable Living Plan (USLP)

serves as a compelling illustration of the practical application of Stakeholder
Theory within the organisational context.
The company duly recognised its ethical obligation towards a diverse range of
stakeholders and actively endeavoured to generate substantial value for each of
them.
Unilever, as a corporation, has made a steadfast commitment to actively
assisting a population exceeding one billion individuals in their endeavours to
enhance their overall health and well-being.
The primary objective of the initiative was to offer a range of products that not
only satisfy consumers' palates but also provide them with optimal nutrition.
Additionally, it sought to furnish consumers with pertinent information that
empowers them to make informed decisions that are beneficial not only to their
personal well-being but also to the broader global community.
Unilever has made a commitment to improve the livelihoods of a substantial
number of individuals as it expands its operations. This includes the
establishment of additional avenues for female participation within its
workforce and supply chain.
 Analysis Through Stakeholder Theory

Unilever has made a steadfast commitment to reducing the environmental

impact associated with the production and utilisation of its products, with the
ultimate goal of achieving a 50% reduction in this footprint while concurrently
expanding its business operations.
The shareholders of Unilever have expressed that the company's USLP
(Sustainable Living Plan) serves as their overarching business model. Unilever
firmly believes in the notion that brands that possess a clear purpose have the
potential to experience growth, while companies that are driven by a strong
sense of purpose are more likely to endure in the long run.
Furthermore, Unilever recognises that individuals who are motivated by a sense
of purpose are more likely to flourish and succeed. This statement suggests that
Unilever perceives its sustainable growth strategy as a catalyst for generating
enduring value for its shareholders over an extended period of time.
The approach adopted by Unilever serves as a prime illustration of the
fundamental tenets of the Stakeholder Theory.
This theory posits that an organization's obligations extend beyond its
shareholders, encompassing various other entities or individuals who possess
the capacity to influence or be influenced by the organization's pursuit of its
goals.
Conclusion
The Sustainable Living Plan implemented by Unilever serves as a noteworthy illustration of how a
corporation can effectively generate value for all its stakeholders by strategically aligning its business
model with principles of social responsibility and environmental sustainability.

This not only confers advantages upon stakeholders but also serves to bolster the reputation and long-term
viability of Unilever, thereby illustrating the strategic advantage that can be derived from adopting a
stakeholder-centric approach within corporate operations.

Nevertheless, it is imperative to acknowledge that the aforementioned strategy necessitates the

organization's adeptness in effectively handling the multifarious and occasionally contradictory
requirements and anticipations of various stakeholder cohorts.
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