Stakeholder Relations 2.0


Here’s something very interesting I came across on the iMiners blog that in turn pointed to a post on the IR Web report. Here’s what they write:

BROADRIDGE Financial Solutions Inc. (NYSE: BR), the giant investor communications and brokerage outsourcing firm, plans to connect every US company and every shareholder in a massive social network that could rival Facebook in terms of members. […]

The move by Broadridge comes after the SEC adopted changes to its rules in February designed to encourage the use of electronic shareholder forums by public companies and their shareholders. The SEC sees online forums as a way to improve communication between shareholders and companies and cut the number of shareholder proposals submitted for inclusion in annual meeting proxy statements.

iMiners conclude the following from that:

The SEC’s encouragement of companies using new technologies to facilitate communications is finally starting to take off, and we think that in the not too distant future shareholder forums will become standard on many company IR websites (at least for those companies not afraid to embrace new technologies, and not afraid to have a dialogue with shareholders).

UPDATE 23/09: ..As I continued browsing to look for more information on investor relations 2.0 I found another great post that puts all this nicely into a broader context.

This illustrates a number of issues we’ve discussed upon developing the workshop programme and sparks a few further thoughts (and I would expect us to debate those fervently).

Web 2.0 (or any other applicable term to replace this one), has ceased to be the new thing – it’s becoming an important part of social, cultural and commercial life, certainly in societies where internet penetration is high. Simply put, it’s about enabling and engaging in true two-way communication on the internet. Web 2.0 turns turn mono-directional information broadcasts into conversations about information provided by both (or more) sides.

In a very immediate way, organisations that communicate with their stakeholders in this fashion become more accountable. However, well-established organisations, whether public sector, corporate or non-profit can be very reluctant to engage in this type of interaction with their stakeholders as they perceive a decrease in the amount of control they are able to exert on the course of the conversation.

This reluctance is unlikely to halt the development towards true two-way online communication. This is because stakeholders, maybe most immediately those of private sector organisations, will increasingly push for this type of accountability and regulators could bolster their demands.

It is likely that soon even more will be asked for, namely that these conversations take place in the open, to increase transparency. This has the potential to ensure greater accountability not only towards the immediate group of stakeholders – the company’s shareholders – but also towards a broader audience of employees, customers, activists, affected communities and others.

Exciting possibilities exist to demonstrate leadership with regard to the broader societal responsibility of business, for example by moving towards continuous or even real time reporting. However, it is likely that transparency will increase not only with regard to performance against economic, social or environmental targets, but also regarding the motivations of different stakeholders engaged in conversation with a given institution.

An interesting question in this respect is whether this increased transparency will reveal fault lines between investors’ and other stakeholders’ interests, for example when CSR strategy or philanthropic engagement are increasingly scrutinised by the owners of a public company. Such scrutiny may help or hinder activist agendas.

Also, any demands for this type of increased accountability will only be credible if made by those who demonstrate the same openness to engage. It seems far from clear whether the larger part of activist groups or regulatory agencies (governments) would presently pass that test.

Even so, greater accountability and transparency will only result from bold leadership, the willingness to engage meaningfully with stakeholders and probably, considerable commercial and political pressure to create incentives for both.

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One Response to “Stakeholder Relations 2.0”

  1. Engaging the corporate sector against corruption through social media advocacy? « ACCOUNTABILITY 2.0 Says:

    […] is considered part of corporate responsibility. Also, as I’ve tried to illustrate in an earlier post, a number of companies are moving towards increased online engagement of their stakeholders as well […]

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