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3.4 Stakeholders

For nearly two decades, the management literature has discussed the stakeholder concept to help managers think about how to manage relationships with those groups or individuals which can effect or be effected by the achievement of an organization's objectives. Organizations must strategically communicate with their stakeholders if they are to establish social legitimacy, as well as operate effectively. Since the 1990s, stakeholder theory has been applied to sustainability-related studies investigating CSR, natural resource management, public health, and sustainable development. It has been applied in traditional business settings, policy making, NGOs, and community-based or activist organizations (Dempsey 2009).

Most research discussing stakeholders refers to R. Edward Freeman's (1984)

book Strategic Management: A Stakeholder Approach. Freeman, a professor of business administration, proposed a model of stakeholder management that focused on identifying and responding to multiple stakeholders. Subsequent researchers identified key stakeholder groups including, but not limited to, stockholders, employees, government officials, supply chain members, investors, and communities. Other important stakeholders when communicating about the environment may include citizens and community groups, environmental groups, scientists, corporations and lobbyists, anti-environmental and climate change critics, news media and environmental journalists, and public officials (Cox 2013).

Climate disruptions are expected to force organizations to expand their definitions of stakeholders to include emission trading groups and scientific expert groups, among others (Brown and Flynn 2006). Two significant environmental meta-trends (i.e., decreased freshwater access and global climate change) are threatening to disrupt organizational operations due to reduced resource supply (e.g., less clean water to manufacture Coke, inadequate water for citizens living in Denver, CO) and the potential for a displaced workforce (e.g., migration due to rising waters along the coasts). Climate change is expected to result in increased healthcare costs, increased insurance costs (both business and property), disrupted access to and higher costs for supply chain materials, and changed tax structures as the public sector strives to manage intensified weather and climate conditions while providing infrastructure and social-service support.

Is the natural environmental a stakeholder? In order for an entity to be a

stakeholder, the following attributes must be present: power to influence the organization, a relationship perceived to be legitimate, and/or the urgency of the claim. “The salience of a particular stakeholder to the firm's management is low if only one of these attributes is present, moderate if two attributes are present, and high if all three attributes are present” (Driscoll and Starik 2004, p. 879). Definitive stakeholders possess all three which makes them a management priority. Driskoll and Starik make a compelling argument that we need to give stakeholder status to the natural environment since it is the source of resources. Manufacturing organizations exchange more with the natural environment than with any other stakeholder group. However, traditionally, the environment is not included in theoretical discussions as stakeholders because we tend to privilege the concept of human agency. Although the natural environment's claims are often seen as legitimate and urgent, the natural environment is dependent upon the actions of other stakeholders for protection. Many people only act to protect the environment after dominant stakeholders support it or if managerial values are pro-environmental.

Friedman and Miles' (2002) stakeholder analysis framework offers us another

way to classify power and dependence within stakeholder relationships. They propose four types: opportunistic, unacknowledged, mutually beneficial, or concessionary. No clear contractual obligation exists between parties in an implicit relationship (i.e., it is opportunistic and unacknowledged). Most organizations exist in an opportunistic or unacknowledged relationship with their natural environment. Mutually beneficial relationships can exist when both parties share compatible objectives and parties call on and work in terms of each other. In such relationships, each party has something to lose if the relationship deteriorates although some have more to lose than others. This is closer to the mindset of the green organizations identified by Biloslavo and Trnavcevic (2009) or as promoted by the radical and imaginative Discourses identified by Dryzek (2005). Like mutually beneficial relationships, concessionary relationships are considered necessary by both parties. However, the goals among parties are incompatible; these relations “occur when material interests... are necessarily related to each other, but their operations will lead to the relationship itself being threatened” (Friedman and Miles 2002, p. 6). Compromise is a key component of concessionary relationships. In terms of the Discourse of practicality, compromise rarely benefits the natural environment (see Sect. 2.3.4.3)—often occurring between human stakeholders seeking to protect their own interests. In terms of our understanding of the natural environment— stakeholder power relationship, managers might consider pervasiveness (the degree the stakeholder impact is spread over distance and time) and dependence (Driscoll and Starik 2004). Viewed with those lenses, nature holds the balance of power. In terms of urgency, management needs to consider consequential, if not catastrophic, ecological problems and the likelihood of issues occurring like shortages of fuel, fish, and forest stocks. “Cognizant organizations will already factor likelyoccurring environmental phenomena into their respective plans before such shortages occur” (p. 63). Both Coca-Cola and Tyson Foods are aware of their need to protect water purity and plan for water scarcity. Driscoll and Starik suggest including an additional criteria for stakeholder status into the equation: proximity. Action Plan: Work with your executive team to identify key stakeholders, including the natural environment, important to your organization's operations in light of the environmental challenges most likely to impact your institutional field and geographic location.

 
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