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Affected stakeholders

What are affected stakeholders?

An affected stakeholder refers to individuals or groups who are impacted, either positively or negatively, by a company’s operations, activities, or business relationships.

This encompasses a wide range of entities, including employees, customers, local communities, and even the natural environment, which is considered a silent stakeholder due to its inability to voice concerns or interests in the same way humans can.

Affected stakeholders are integral to a company’s materiality analysis, as understanding and addressing their needs and impacts is crucial for sustainable and responsible business practices.

Affected stakeholders definition

Examples of affected stakeholders:

There are several stakeholders who can be affected by a company. In the list below, you can find different examples of entities that can be affected stakeholders. Note that those stakeholders can also be primary stakeholders.

  1. Employees: Directly affected by company policies, workplace conditions, and job security.
  2. Customers: Impacted by the quality, safety, and sustainability of products or services.
  3. Local Communities: Affected by a company’s operational impacts such as employment opportunities, environmental degradation, and community engagement efforts.
  4. Suppliers and Business Partners: Their business operations can be significantly influenced by a company’s sourcing practices and ethical standards.
  5. Investors and Shareholders: Interested in the financial performance as well as the environmental, social, and governance (ESG) aspects of their investments.
  6. Regulators and Governmental Bodies: Concerned with compliance to laws and regulations, including environmental laws, labor rights, and corporate governance.
  7. NGOs and Activist Groups: Often represent broader societal or environmental concerns related to a company’s operations.
  8. Indigenous Communities: May be uniquely affected by a company’s use of land and natural resources, particularly in terms of land rights and cultural impacts.
  9. Future Generations: While not direct stakeholders, their well-being and access to natural resources can be significantly impacted by current environmental practices.
  10. The Environment: As a silent stakeholder, it encompasses ecosystems, biodiversity, and natural resources affected by pollution, resource extraction, and other business activities.

Affected stakeholder in CSRD

The Corporate Sustainability Reporting Directive (CSRD) places a strong emphasis on the importance of affected stakeholders in corporate sustainability efforts, making their recognition and engagement not just a matter of compliance but a strategic imperative for companies.

At the heart of the CSRD is the drive towards greater transparency and accountability, pushing companies to fully disclose their impacts on society and the environment. By looking at their value chain for CSRD, companies can detect important links and include them in their reporting.

By bringing the concerns and needs of affected stakeholders to the forefront, businesses are compelled to adopt a more comprehensive view of their operations, one that encompasses the full spectrum of their impact, from the local community to the global ecosystem.

Affected stakeholders in double materiality

The introduction of double materiality by the CSRD further underscores the critical role of affected stakeholders. This concept demands that companies report on the dual aspects of how sustainability issues affect their financial performance and how their operations impact people and the planet. It’s a recognition that the fates of businesses and their broader communities of stakeholders, including the environment, are inextricably linked.

Through this lens, understanding and documenting the interaction between a company and its affected stakeholders becomes central to fulfilling the directive’s requirements.

Engaging with affected stakeholders

The guidelines emphasize the importance of actively engaging with affected stakeholders, including both direct stakeholders and the environment as a ‘silent stakeholder,’ as an integral part of the sustainability reporting process.

This engagement is crucial for identifying material topics, enhancing transparency, and ensuring that a company’s sustainability efforts are aligned with stakeholder concerns and the broader societal and environmental context. Through dialogue and feedback, companies can gain valuable insights, adapt their strategies, and report transparently on how stakeholder input influences their operations and sustainability practices.

The engagement with affected stakeholders is not a one-time activity but should be an ongoing process. It allows companies to stay informed about changing stakeholder concerns and expectations and to adapt their strategies and operations accordingly.

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