1. Developmentof an effective stakeholder boardA stakeholderboard is a useful instrument for any organization functioning in almost everysector of economy. Even the size of acompany does not play a big role, because every organization can adopt theconcept of panels to its needs and, for instance, not to invite therepresentatives of every stakeholder group or to give only highly specializedtasks that in total decrease the number of board members. In order to create aneffective stakeholder board in any case, corporations are highly recommended touse simple step-by-step guide for its development. Simple model includes fiveeasy steps such as to plan, to set the rules, to recruit members, to supportthe panel’s work and to measure success.
1 The aim of the first stepis to start the development of a members group that is suitable for determinedpurposes and which has a power to influence decisions at the required levelwithin the company. In order to deal with the first task the company issupposed to make decisions about clear motivation and focus of the panel, theability to attract potential board members, the level of panelists’ involvementin decision-making process as well as it is essential to find a high authoritysupport for a future stakeholder board. At the second stage a company has tocreate a comfortable environment for the panel which enables fair and effectivedecision-making process based on effective operation, decisions power and broadcommunication inside and outside of a firm.2 Thirdly, it is importantto recruit members into a board who can either represent main stakeholdergroups or at least reflect their interests and why are ready to createconstructive and useful inputs for a company. A useful strategic tool for thisstep would be such instrument as mapping there is possible to determine themain stakeholders, the context of their engagement and choose the criteria fora member choice. The main task in the fourth step is to provide the constant supportfor the stakeholder board activities or, in other words, to set out easycommunication process and access to necessary information, to enable closerelationships with the main participants and to create atmosphere of trust.
3 Lastly, a company should systematicallyreview the progress of the stakeholder board, make changes in its compositionand work and ensure that it contributes the inputs to the initial establishedgoal. Creation of regular reports should be an essential task of panelists asit helps to communicate with the company and other involved groups as well asto show the archived progress over the covered period of time.4 According to the KPMG Survey ofCorporate Responsibility Reporting, the role of stakeholder panels isincreasing nowadays due to their ability to enhance the credibility ofsustainability reports of the companies. In 2008 27 percent of 250 globalreports included commentary of different stakeholder boards.5 2. Casestudies2.1. NestléNestlépositions itself as a leader in the fields of nutrition, health and wellness.
The main statement of the Nestlé is to improve the life quality of people atevery stage of company’s production and functioning by creating of long-term valuefor shareholders and for society. In 2009 the company implemented the conceptof Creating Shared Value and developed a special governance body forcontrolling and evaluation of the progress.TheNestlé Creating Shared Value Council (CSV) consists of 13 external members whohas an experience in CSR, sustainability, strategy, nutrition, water resources,rural development and includes such famous names as Michael Porter, theHarvard academic, Robert E. Black, professor of international health at the Johns Hopkins University.6 Therefore, theCreating Shared Value advisory panel became a strategic tool for Nestlé to beinvolved into continuous dialogue with the leading experts in the key areas forthe company. The main task of Nestlé’s panel is to implement the concept”Creating Shared Value” and evaluate the company’s progress. Thepanelists take also participation in such important for the company annualevent as CSV Nestlé Global Forum and act as judges for choosing the winners inthe Nestlé Award in creating the total value.
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2.2. JPI-HDHLJPIHDH (“A Healthy Diet for a Healthy Life”) is an international joint programminginitiative of research-funding organizations, created to solve social problemsrelated to health and diet that Europe faces. Moreover, the main aim of theorganization is to make citizens be motivated for having a healthy life and toprovide opportunities for healthy diet, healthy levels of physical activity andto decrease the number of diet-related diseases till 2030. Forthe proper information exchange with other political bodies and stakeholders andfor consultation of JPI HDH functioning the Stakeholder Advisory Board (SHAB) wasestablished which is a “communication platform of all relevant stakeholders andthus facilitates a close network between all relevant actors in the field offood and health”.
7The board consists of representatives of relevant stakeholders or, to be moreprecisely, each member organization of the SHAB has two representatives in thepanel where one person is a primary contact and another one is an agenda memberwho replaces the primary contact when it is necessary. In total, there are 15representatives of such organizations as “European Science Advisory Network forHealth”, “The European Consumers Organization” etc. It is expected that SHAB members will activelyparticipate in at least 50 percent of the SHAB meetings otherwise theirmembership closes. Talkingabout main functions of Stakeholder Advisory Board (SHAB), should be noticedthat it gives only recommendations that are not obligatory and the panel takesno responsibility for final investment decisions of the whole organization. SHABprovides the comments and critic about drafts of all relevant documents of theJPI-HDHL (including the Strategic Research Agenda), tracks of the progress oforganization, gives recommending on the implementation of the SRA, participatesin an annual conference and workshops and communicates the most relevantinformation.
81.1. LafargeInour seminar paper we consider the company Lafarge till its mergerwith Holcim/Lafarge on July 14, 2015. Lafarge is a top-rankingcorporation in the cement, aggregates and concrete industries.
The innovativesolutions of the company make houses in the cities more compact, more durable,more beautiful and better connected. According to the Sustainability report, in2013 Lafarge was employing 64,000 people, operating in 62 countries with annualsales of €15.2 billion. 9Lafargehas created a stakeholder panel members of which since 2003 meet few times ayear to develop recommendations concerning: the management’s sustainabledevelopment approach, and the company’s environmental and social performance.
10 The selection of panelmembers is made by the evaluation of their high level of knowledge and skillsregarding sustainability as it affects Lafarge’s operating environment. Themembers are supposed to represent the Group’s main categories of stakeholders;as such, the group should be representative of both the domain of stakeholders(environment, communities, financial, building, trade unions, clients,governance issues, etc.) and geographical footprint of Lafarge.11 For instance, in 2014 thestakeholder panel was presented by Adrian Marinescu (European Works Council),Jean-Paul Jeanrenaud (WWF), Sheila Khama (African center for economictransformation), Philippe Lévêque (Care), Robert Wild (IUCN), Frank Rose(independent), Livia Tirone (architect).12 They twice a year withLafarge executives to discuss the Group’s sustainability strategic issues andreporting. If stakeholder representatives need broader inside information, thepanel may be invited to visit a Lafarge facility to better understand aparticular issue, view and/or advice on the implementation of initiatives, orto gain a better understanding of Lafarge.131.2.
CamelotCamelothas operated the UK National Lottery since it began in 1994. According to theCompany Annual Report, “Camelot is a socially responsible organization,maintaining high standards of corporate governance, as well as safeguarding itspositions as one of the most cost-efficient lottery operators in the world withthe strategy aims to achieve objectives beyond sales growth and maximizingreturns to society”. 14Inorder to maintain the transparency of reporting, Camelot introduces along-standing and embedded approach, which is critical to enable them and theirstakeholders to monitor the progress and identify further opportunities forimprovement and innovation. The company work with the stakeholders to identifythe actions they need to take to improve the CR performance. We see stakeholderengagement as a core pillar of our corporate responsibility work and one thatenables us to achieve this ongoing goal. The Advisory Panel on CorporateResponsibility (APCR) is made up of independent specialists with professionalexpertise in areas of stakeholder concern. At the beginning of its functioningthe panel included seven members, who were identified with regards to businessneeds and impacts on society.15 According to the CorporateResponsibility Report 2015-15, nowadays only four advisors were appointed tomake up a forum of independent experts who meet with Camelot’s leadership team,chaired by Camelot’s CEO, Andy Duncan, to discuss continuous improvement in thearea of CR.
163. ConclusionThisliterature review has shown, that the term of stakeholder board is a vast,complex and hard to grasp concept, that is constantly evolving. Communicationof the companies with their stakeholders started out as stakeholder engagement,being just a simple dialogue between the main players. Since then, theunderstanding of stakeholder involvement has transformed into a separateexternal governance body – stakeholder panel which is a new level of engagementestablished for the development of sustainable business strategies. As manifoldas forms and functions of stakeholder board within literature are, asacknowledged and clear is the importance of the concept. It is not justadditional governance body for better decision-making processes and achievingsuccess; it is a kind of sign of quality and ethical company for the consumers. Whentrying to find specific recommendation, rules and procedures of effectivestakeholder board definition, it is becoming obvious that current literaturedoes not provide ready-made clear concepts.
The same applies to the functionsor membership of stakeholder panels. Several classification of functions andgeneral recommendations have been mentioned in this seminar paper that could beused as a starting point and guidelines. However, as the case studies show, thesuccessful functioning of stakeholder panel is the concept which is constantlydeveloping and as a result should be customized and tailored to the certaintasks of every company and industry.Additionally,the reviewed examples of real stakeholder panels demonstrate the most successfulpractices from different sectors, emphasizing their importance in the frameworkof increasing social responsibility, but at the same time highlighting theproblem of ambiguity in assessing the actual effectiveness of the boards.
Takingeverything into account, stakeholder boards provide many potential advantagessuch as free lines of communication between main stakeholders and management ofthe company, increasing stakeholder loyalty, improved decision-making processesetc. Generally speaking, adopting and empowering stakeholder panels allows tocreate a completely new corporate governance scenario with better respond tothe goals of social requirements and of the rules of corporate socialresponsibility.
