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Primary stakeholders

What are primary stakeholders?

Primary stakeholders are individuals or entities with a direct interest in a company’s activities and financial performance. This group includes: existing and potential investors, lenders, other creditors such as asset managers, credit institutions, and insurance companies

These stakeholders primarily focus on assessing how a company’s sustainability practices and performance impact its financial health and future prospects, aiding them in making informed investment, lending, and credit decisions.

Since those primary stakeholders often have invested in or are financially engaged with the company in another way, these parties are also very important to the company itself. Unlike affected stakeholders companies derive financial benefit from this group of stakeholders.

Definition primary stakeholders

Examples of primary stakeholders

Examples of primary stakeholders in the context of a company’s sustainability and financial performance are written down below.

  1. Existing Investors: Individuals or institutions that currently hold shares or stakes in the company.
  2. Potential Investors: Individuals or institutions considering investing in the company, interested in both financial returns and sustainability performance.
  3. Lenders: Banks or financial institutions that provide loans to the company and are interested in its ability to repay, influenced by its sustainability risks and opportunities.
  4. Creditors: This broader category can include bondholders or suppliers offering credit terms, who are interested in the company’s financial stability as influenced by its environmental, social, and governance (ESG) factors.
  5. Asset Managers: Investment professionals managing portfolios that may include the company’s securities, with an interest in the sustainability performance affecting long-term value.
  6. Credit Institutions: Banks and other financial institutions that may offer various forms of financial services to the company, considering ESG factors in risk assessments.
  7. Insurance Companies: Providers of business insurance to the company, interested in how sustainability risks might affect the company’s risk profile and insurance premiums.

Primary stakeholders in CSRD

Primary stakeholders are central to understanding a company’s broader impact and performance beyond just financial metrics in the context of the corporate sustainability reporting directive (CSRD).

The CSRD, an evolution of the Non-Financial Reporting Directive (NFRD), aims to improve transparency and foster sustainable growth by requiring companies to provide detailed sustainability information.

This directive significantly expands the scope of sustainability reporting, making it relevant for a wider array of companies within the EU.

Input for materiality assessment

Primary stakeholders are essential in conducting a materiality assessment as part of sustainability reporting, particularly under frameworks such as the Corporate Sustainability Reporting Directive (CSRD).

Their involvement ensures that the sustainability issues identified and prioritized are those that truly matter, both to the company’s operations and to its broader ecosystem of interested parties.

This process is not just about compliance or fulfilling reporting requirements; it’s a strategic exercise that aligns the company’s sustainability efforts with the expectations and needs of those most impacted by its business activities.

The engagement of primary stakeholders in the materiality assessment brings a wealth of benefits. It opens up channels for informed decision-making, where the insights and concerns of a diverse group of individuals and entities inform the company’s focus areas in sustainability.

This diversity is crucial, as it brings to light a wide range of social, environmental, and economic impacts that the company needs to manage. Stakeholders, by sharing their unique perspectives, can highlight risks and opportunities that might not be immediately evident from an internal viewpoint.

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