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Stakes and stakeholders: getting the perspective right

April 27, 2021

One of the recurrent – if infrequent – themes on this blog is the importance of language. In earlier posts, I have explored the way different tropes and metaphors can influence the way people approach building peace. Getting the language right is also true in the business world, and in this post I explore the way companies talk about ‘their stakeholders’ and what this suggests about their view of the world and their place in it.

Stakes and stakeholders

The origins of the words ‘stake’ and ‘stakeholder’ as used in reference to interests and interested parties aren’t entirely clear, at least based on a rapid internet search through various online dictionaries. But their modern day meaning is clear enough: the word stake stands for ‘interest’, while a stakeholder is a person, group or entity with an interest in a particular asset, project or enterprise. Thus a stakeholder is an interested party.

Usage maps show the word was little used until the final third of the twentieth century, and it’s fair to say that references by businesses to ‘our stakeholders’ has come in for a fair amount of criticism since then. Common criticisms are that companies are simply adopting fashionable language without necessarily changing their perceptions or treatment of others, nor their self-interested approach to political lobbying, and that this reflects an inherent cynicism.

Nevertheless, it’s clear that many businesses do take more trouble to identify and consider the needs of ‘their stakeholders’ than they once did. For example, mining companies pay far more attention to local communities, food conglomerates pay more attention to the farms and communities where their commodities are sourced, and many corporations in all sectors are conscious of the need to engage with and respond to the suggestions and demands of civil society on environmental, human rights and other social issues. Good signs of progress.

But the way we deploy words often says as much about us, as about the things we are describing or discussing. When companies talk about ‘their stakeholders’, it’s clear what they mean. They are saying that the people, groups or entities to which they refer are relevant to their projects, their enterprise, their profit and loss accounts. This may well be true: for example communities living in an area designated for mining are clearly going to have a stake in how the mining is done, because it will have an impact on their environment, their economy, their livelihoods and their health.

But referring to others simply in respect of their potential interest in the company’s project is narrow and short sighted. It risks creating an idea in the company’s mind that communities or other interested parties merely need to be brought onside, so that they support – or at least don’t undermine – the company’s project. In the mining sector this is sometimes called seeking a ‘social licence to operate’.

Clearly businesses do need to have others’ support. But focusing exclusively on this can lead them to look at different people, groups and entities habitually in a rather two-dimensional way. When a company sees others merely in terms of their relationship to its business project, this denies their whole identity and their broad spectrum of interests. And it is likely to foster a transactional approach to dealing with them: something they will all too readily pick up on, and therefore respond in kind.

A stake in what?

Far better, surely, for companies to take a step back, and consider the company itself, alongside others, as stakeholders in something wider – rather than seeing people just in terms of their stake in the company. This would mean, if we stick with the mining company example, considering the company, along with local communities, the local and provincial government, other land users, and so on, all as common stakeholders in a sustainable and prosperous future. Miners use a lot of water, so in practical terms this would mean the mining company would consider the various water needs in the landscape, including its own, when developing a water strategy – rather than simply considering how other users might be affected by its water needs. The latter approach may be progressive, but the former is far more enlightened. Similarly, a global IT company would consider itself as one stakeholder among many, and thus take account of how all stakeholders’ needs can be met, and all stakeholders’ interests considered – including its own. If that had been the approach of some of the Silicon Valley giants, it seems reasonable to suggest that they wouldn’t be in the trouble they find themselves in today, over online harms, privacy, electoral manipulation, fraud, and so on. Because ultimately, seeing oneself as part of the wider community – a corporate citizen, if you will – rather than merely at its service or seeking its approval for a specific project, is likely to engender a more ethical and sustainable way of doing business.

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