What are silent stakeholders?
A silent stakeholder refers to entities or elements that do not have a direct voice or active role in business operations but are significantly affected by and potentially affecting those decisions. In the context of CSRD this term often specifically refers to nature and ecosystems.
Unlike other affected stakeholders such as employees, customers or primary stakeholder such as investors, these silent stakeholders cannot communicate their interests, concerns, or the impacts they endure as a result of corporate activities.
Examples of silent stakeholders:
Silent stakeholders encompass a broad array of entities and elements that, while not able to articulate their interests or concerns, are significantly impacted by corporate and human activities. Here are some examples of silent stakeholders, particularly within the context of environmental sustainability and corporate operations:
- Wildlife: Animals and other non-human living organisms are directly affected by habitat destruction, pollution, and climate change resulting from corporate activities, yet they cannot voice their needs or concerns.
- Forests: Trees and forest ecosystems, which are crucial for carbon sequestration, biodiversity, and soil stabilization, often suffer from deforestation and degradation due to agricultural expansion, logging, and mining.
- Water bodies: Rivers, lakes, oceans, and groundwater resources face pollution, overexploitation, and ecosystem disruption, impacting countless species and the overall health of aquatic ecosystems.
- Biodiversity: The variety of life in all its forms, including genetic, species, and ecosystem diversity, is threatened by human activities, leading to habitat loss, invasive species, and climate change impacts.
- Future generations: People not yet born, who have no voice or agency today, will inherit the consequences of current environmental degradation and resource depletion.
- Indigenous lands and communities: While not voiceless, Indigenous communities often have limited power in decision-making processes affecting their lands, which are critical for their cultural heritage, livelihoods, and sustainability practices.
- Cultural heritage sites: Historical and archaeological sites, as well as landscapes of cultural significance, can be silently impacted by development, tourism, and climate change.
- Microorganisms: The myriad of microscopic life forms that play essential roles in nutrient cycling, decomposition, and supporting larger life forms are affected by pollution and environmental changes.
Incorporating silent stakeholders in CSRD
Incorporating silent stakeholders, particularly the environment and ecosystems, into a company’s double materiality assessments, aligns closely with the expectations set forth in the sustainability reporting guidelines of CSRD.
To effectively include these silent stakeholders, companies need to undertake a comprehensive evaluation of how their operations impact the environment. This includes assessing the effects on biodiversity, ecosystems, water resources, and air quality, thereby recognizing nature’s stake in the company’s activities.
Additionally, understanding the company’s dependency on the environment is crucial. This involves analyzing how changes in natural systems, such as resource depletion or climate shifts, could affect the company’s operational sustainability and competitiveness.
Given that these stakeholders cannot voice their concerns, companies should proactively seek insights from environmental experts and conservation organizations. These interactions help bridge the gap, bringing scientific research and expert knowledge into the materiality analysis process.
Silent stakeholders in NFRD and ESRS
The concept of including nature as a silent stakeholder is increasingly recognized in legal frameworks and guidelines related to sustainability reporting and environmental governance.
For example, the European Union’s Non-Financial Reporting Directive (NFRD) and its subsequent updates, along with the European Sustainability Reporting Standards (ESRS), emphasize the importance of considering the broader environmental and social impacts of corporate actions.
These regulations and standards aim to ensure that companies assess and disclose their effects not just on human stakeholders but also on the natural environment, thereby acknowledging it as a silent stakeholder.