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Quick expert Q&A on engaging difficult stakeholders in emerging markets

As regular readers (all three of you) will know, I am focusing writing and interviews at the moment around the area of stakeholder engagement.

That’s alongside business and human rights and deforestation.

Of course it’s no co-incidence that I also have products to sell in these areas too, but a chap has to eat, and these are absorbing areas, politically, management-wise and intellectually.

So here’s a brief, and I hope useful Q&A with a good friend of mine, who also knows his stuff on the first two of these areas.

He’s the only person I have met who has a Phd in the role of business in post conflict reconstruction, yes really. Here’s the details on his book, well worth a read.

Cracking twist at the end too

A brief intro:

Dr Peter Davis is a specialist advisor on politics, ethics, conflict and, in his own words, “other issues that don’t fit into spreadsheets”. He does a lot of work with both governments and business on governance in emerging markets, and always has fascinating insights as a result

TW: Give us a bit of background on you, your experience, business and
otherwise, related to stakeholder engagement
I work
with international institutions such as IFC on the interface between
donors and companies. I’ve also worked with companies – Anglo, Grumman,
Rexam, Diageo – to help them better understand their stakeholders.

TW: What’s your view on how big business approaches to vulnerable
stakeholders are maturing, or otherwise?
PD: Pretty varied, but on the whole
considerably improved. I think also that the scare stories one hears
that implies that companies are indifferent to stakeholders are not
right. Companies may not listen correctly, might mis-hear or
mis-understand what they are told, but generally at least know they need
to listen. The companies really good at it remain fairly few, but the
general standard is improving.

TW:  Clearly, ‘high impact’ sectors such as oil, gas and mining tend to
lead in this space, as they have fixed and valuable assets at risk. 
Which other sectors would you say companies can learn from when it comes
to engaging difficult stakeholders?
PD: Yes
I think generally that is the case, I think also some of the FMCG
companies have been pretty good too – Unilever, Heineken and P&G for
example. What is interesting now is that more companies are inclined,
not just to ape what the extractive have done, but to work out from
first principles what they need to be doing.

TW: There are lots of process tools out there, guidelines too. Would you
advocate using them all to the hilt, or  good engagement is it more of a
mix of art and science?

PD: Generic
guidelines are often not that helpful as they tend to ‘bounce off’
established international systems. Even if managers may be broadly
sympathetic with the intent of a set of guidelines it’s often a struggle
to make them fit with existing systems. I think therefore that
companies which take the ‘essence’ of external standards and apply them
to internal systems and practice work best. Definitely more of an art
than a science – really the key thing is hiring people sympathetic to
these sorts of issues.

TW: Governance of emerging market nations and their institutions is
clearly key in keeping communities, workers and key stakeholders happy.
What can MNCs do help support good governance and institutions?

PD: Be very careful! It’s not for companies
to interfere in the domestic governance of the countries where they work.
If they have concerns or think they can help, the best bet companies
have is to work with their home government’s development agency, or with
institutions wuch as IFC or World Bank. These ‘development partners’
are still not always great at working with companies, but are getting
much better.

TW: Recently, you’ve worked in places such as Nigeria, Bangladesh
and Vietnam. Are these countries, and others, becoming more
aggressive with MNCs, thereby making the case for successful ongoing
stakeholder engagement more compelling?
PD: ‘Aggressive’
is not the right word – probably ‘robust’ is better. There’s a greater
awareness of what MNCs can do – for good and ill – and a greater desire
to harness that for wider development benefit. For example, you’re
seeing a considerable increase in requirements for ‘local content’ in
sourcing. This is a good thing if it fosters wider development. The
challenge however is to make sure that such arrangements do not lead
either to protectionism, or to contracts going to ‘favoured’ firms!

Peter will be joining us to teach on our “How to effectively engage stakeholders in frontier markets” two-day executive training workshop, certified by the CSR Training Institute, on 30-31 October, 2014, in London. There are currently less than ten places left on this limited numbers course. Attendees are mostly senior executives from mining, oil &gas and FMCG companies, Contact if you are interested in taking part.