Stakeholder consultation is a fundamental aspect of effective engagement strategies. It holds particular importance for both businesses and government entities, where seeking input from those impacted by or interested in projects has become crucial.
In the context of large-scale commercial projects with potential environmental, social, or indigenous rights implications, consultation exercises are not just recommended but are mandated by specific administrative bodies. These consultations seamlessly integrate into the project approval process, demonstrating a commitment to responsible and inclusive decision-making.
Public administrations, recognized as key stakeholders in private projects, have played a vital role in shaping the concept of consultation. Through the establishment and evolution of public consultations, they have effectively brought the voices of citizens into governance and decision-making processes.
After a providing a definition and brief history of Consultations, this guide focuses on the importance of conducting stakeholder consultations and suggests steps and elements to consider doing so effectively. It then provides a list of useful tools and channels for these exercises and identifies five challenges facing those responsible for consultations and best practices for dealing with them. Finally, it offers concrete examples of successful consultations carried out with the help of Borealis stakeholder relationship management software.
What is stakeholder consultation? Definition, origin, and evolution
Stakeholder consultation is a pivotal aspect of contemporary decision-making processes, serving as a cornerstone for inclusive governance. In both public and private sectors, engaging with stakeholders has evolved into a crucial practice, ensuring that a diverse array of perspectives is considered. This paper explores the definition, origin, and evolution of stakeholder consultation, shedding light on its significance in shaping responsible and informed decision-making.
Before delving into the intricacies of stakeholder consultation, it’s essential to clarify the term “stakeholder.” Stakeholders are individuals or groups who have a vested interest in the outcomes of a decision, policy, or project. Their engagement is vital as it brings a multifaceted understanding of various concerns and priorities.
Public consultation
Public consultation is a mechanism employed by public administrations and organizations to solicit opinions and comments on issues or projects with potential societal impact. This inclusive approach transcends the boundaries of government decisions, encompassing the broader citizenry, businesses, non-governmental organizations (NGOs), community groups, and experts. Methods of public consultation vary but may include town hall meetings, online surveys, public hearings, and other forums that encourage active participation.
The roots of public consultation lie deep in the historical development of participatory democracy, aiming to foster more direct and extensive public involvement in state governance. While practices may differ across regions, the overarching objective remains consistent: to ensure that decisions reflect a comprehensive understanding of diverse interests and needs.
Stakeholder consultation by companies
The incorporation of stakeholder consultation by private companies is intricately tied to the concept of stakeholder mobilization, which gained prominence in response to environmental concerns during the 70s and 80s. This era marked the initiation of dialogues between companies and community groups, including environmental activists.
The 90s witnessed the emergence of corporate social responsibility (CSR), emphasizing the need for companies to integrate social and environmental considerations into their operational frameworks.
CSR, as a guiding principle for responsible business conduct, has spurred companies to move beyond profit-centric approaches. By recognizing and addressing social and environmental issues, companies can build sustainable, ethical practices. Real-world examples abound, where companies, through effective stakeholder consultation, have crafted CSR initiatives that not only align with regulatory expectations but also contribute positively to communities and the environment.
International standards and regulations
The practice of consultation stands as a central theme in various international frameworks and principles that guide responsible business conduct. These frameworks collectively shape the ethical landscape of global business and underscore the importance of engaging stakeholders in decision-making processes.
The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct act as a compass for companies navigating the complexities of global business. Emphasizing stakeholder engagement, these guidelines encourage active involvement in decision-making processes. Reinforcing these principles, numerous international and national regulations highlight the obligation for companies to conduct stakeholder consultations, ensuring that their practices align with responsible and accountable standards on a global scale.
In tandem with responsible business conduct, environmental assessments have become a standard for major development projects worldwide. Originating from legislation such as the U.S. National Environmental Policy Act (NEPA) of 1969, these assessments aim to proactively identify and mitigate potential environmental impacts. A crucial element in this process involves consulting with affected communities, recognizing their local knowledge and concerns as integral to effective decision-making. This inclusive approach ensures that projects are not only environmentally sustainable but also consider the perspectives of those directly affected.
The significance of consultation extends to indigenous rights, as demonstrated by the Indigenous and Tribal Peoples Convention – Convention 169 adopted by the International Labour Organization (ILO) in 1989. This landmark document mandates governments to engage indigenous communities in evaluating the impact of projects. The results of these consultations serve as a fundamental criterion for project implementation, emphasizing the importance of respecting the rights and perspectives of indigenous peoples globally.
Furthermore, the principle of “free, prior, and informed consent” (FPIC), originating from the advocacy of indigenous communities, was codified in ILO Convention 169 and further endorsed in the United Nations Declaration on the Rights of Indigenous Peoples (2007). Governments and private entities are now compelled to establish robust consultation processes with indigenous communities, ensuring a more equitable and respectful approach to development initiatives.
Within the realm of financial institutions, the International Finance Corporation (IFC), a branch of the World Bank, plays a key role in promoting environmentally friendly and socially responsible projects. The IFC’s Performance Standards for Environmental and Social Sustainability, comprising eight standards, emphasize the importance of consultation in identifying and managing risks associated with financed projects. This commitment to consultation is further emphasized in the IFC’s operational guide, “Doing Better Business Through Effective Public Consultation and Disclosure” highlighting the central role of consultation in achieving successful and sustainable project outcomes.
The importance of stakeholder consultation
Stakeholder consultation serves as a fundamental mechanism for collecting information, perspectives, and feedback from individuals involved in a project. This exercise is crucial in ensuring the alignment of an engagement plan with the needs, expectations, and concerns of all relevant stakeholders.
These are some important reasons why a consultation process should be an integral component of any major project:
- Alignment with stakeholder needs
- The process allows for a comprehensive understanding of the needs and expectations of individuals and groups affected by the project.
- This understanding enables the harmonization of project objectives with stakeholder expectations, thereby contributing to social acceptability.
- Risk mitigation
- By incorporating stakeholder perspectives, potential risks associated with resistance to change, conflicts of interest, or misunderstandings can be proactively addressed and mitigated.
- Enhanced decision-making and legitimacy
- Stakeholder consultation contributes to improved decision-making processes and enhances the legitimacy of decisions, fostering a sense of inclusivity.
- Trust building
- Actively engaging stakeholders creates and reinforces bonds of trust, laying the foundation for enduring relationships.
- Quality improvement
- The incorporation of information, feedback, and ideas from diverse perspectives through consultation positively impacts project quality.
- Innovation and growth opportunities
- Stakeholder interventions during consultation may unveil new opportunities for innovation or growth, enriching the project’s potential.
- Reputation enhancement
- Effective stakeholder consultation contributes to an enhanced reputation, strengthens the brand, and garners increased public support.
How to set up a successful stakeholder consultation process?
1. Stakeholder identity
Identify all relevant stakeholders, including administrative bodies, local communities, NGOs, and environmental groups. Ensuring a diverse representation guarantees a variety of perspectives.
2. Stakeholder needs and expectations
Prior to the consultation process, gather information about stakeholders’ concerns. This proactive approach allows for effective preparation and the structuring of sessions to address their specific needs.
3. Consultation objectives
4. Choosing stakeholder consultation methods
Tailor the consultation methods to each stakeholder and their specific objectives. Options such as public meetings, surveys, interviews, among others, should be chosen based on the desired outcomes.
Once these elements are determined, it is advisable to formulate a comprehensive consultation plan. This plan should encompass a timetable, required resources, and delineation of responsibilities at each stage of the process.
Throughout the various phases of consultations — preparation, execution, and results — it is important to:
- Show respect for all stakeholders, regardless of their representing entity.
- Communicate transparently about the process, objectives, and how stakeholder input will be utilized.
- Implement accessibility measures, considering aspects such as consultation methods, location, and language, to encourage and facilitate stakeholder participation.
- Maintain accurate records of the process and its outcomes, including the information obtained and decisions influenced by it.
After the conclusion of the consultation process consider:
- Analyzing collected data to derive lessons and conclusions shaping the project’s course.
- Integrating consultation results into strategic planning and decision-making processes.
- Communicating results to stakeholders, illustrating how their input has influenced decisions, fostering respect and future engagement.
- Evaluating the effectiveness of the consultation process and identifying areas for improvement in subsequent exercises.
Stakeholder consultation tools
Digital tools
Embracing technology can significantly enhance the organization and execution of consultations. Digital tools include:
- Survey platforms
- Social media
- Email and SMS
- Online forums and discussion platforms
- Videoconferencing tools
- Online voting systems
- Data analysis tools
- Meeting planning tools
- Online collaboration platforms
- Project, customer relationship, content, and stakeholder management tools
The use of digital tools brings several advantages:
- Facilitates reaching a diverse range of stakeholders, promoting inclusivity without geographical constraints.
- Offers participants flexibility in terms of time, contributing to increased inclusiveness.
- Facilitates direct and ongoing interaction, likely improving communication.
- Saves time and money by reducing travel and logistical expenses associated with traditional methods.
- Enables rapid reactions and exchanges, particularly valuable in addressing raised concerns.
- Facilitates quick and efficient data collection and analysis.
- Assists in data retention for future reference.
Despite their practicality, these tools come with potential pitfalls that organizations should be aware of:
- The ease of participant intervention can lead to an overwhelming number of comments, some of which may be irrelevant, consuming valuable resources.
- Face-to-face exchanges are often deemed more enriching, fostering greater commitment through the nuances of voice, gaze, and close-up body language.
Hence, it remains crucial to match the appropriate consultation mode with each stakeholder, recognizing that more traditional methods also play a vital role, including:
- Public meetings and forums
- Focus groups.
- Public hearings
- Workshops
- Advisory committees and groups
- Informal consultations
This nuanced approach ensures a comprehensive and effective engagement strategy that combines the advantages of digital tools with the strengths of traditional methods.
The main challenges of stakeholder consultation and best practices to overcome them.
Challenge 1 - Identifying and analyzing relevant stakeholders
In the context of large-scale projects, the process of stakeholder identification and analysis can prove time-consuming and challenging due to the sheer number and diversity of individuals and groups affected.
Best practice
Early and methodical involvement serves as a key strategy to address this challenge effectively. Initiating the engagement process at an early stage increases the likelihood of capturing all pertinent stakeholders and ensures the execution of sufficiently rigorous analyses. This proactive approach not only prevents the oversight of critical stakeholders but also lays the groundwork for comprehensive assessments, fostering a more inclusive and informed consultation process
How Borealis software can help?
Providing a comprehensive database
Borealis provides a centralized and comprehensive database that allows organizations to systematically capture and organize information about all relevant stakeholders. This includes their roles, interests, concerns, and any historical interactions.
Facilitating early engagement tracking
By using Borealis from the early stages of a project, organizations can track and document stakeholder involvement. This ensures that stakeholders are identified and included in the process right from the beginning, reducing the likelihood of overlooking anyone.
Allowing stakeholder categorization and analysis
Borealis allows for categorization and segmentation of stakeholders based on criteria such as influence, interest, or impact. This categorization facilitates a more nuanced analysis, helping prioritize stakeholders for more targeted engagement strategies.
Challenge 2 - Choosing the right consultation method and conditions
Best practice
A critical best practice is to deeply understand your stakeholders. Knowing their geographical locations, languages, and communication preferences is essential. This knowledge forms the bedrock for making informed decisions when selecting consultation methods and conditions. By comprehensively understanding the characteristics and preferences of stakeholders, organizations can tailor their approaches, ensuring that the chosen methods align seamlessly with the diverse needs and circumstances of the stakeholders involved. This practice not only enhances the effectiveness of the consultation process but also fosters a sense of inclusivity and engagement among stakeholders with varying backgrounds and requirements.
How Borealis software can help?
Creating a stakeholder profile
Borealis helps organizations maintain detailed profiles of stakeholders, including their geographical locations, preferred languages, and communication preferences. This information serves as a foundational resource for tailoring consultation methods.
Segmentation and targeting
Borealis allows organizations to categorize stakeholders based on various criteria, including location, communication preferences, and whether communication should be through traditional means, online platforms, or other specific channels. This segmentation facilitates targeted engagement strategies aligned with the unique needs of each group, enabling organizations to choose methods that are accessible to a broader audience.
Geographical mapping
Borealis integrated geographical mapping feature provides a visual representation of stakeholders’ locations. This aids in planning consultations that consider the geographical dispersion of stakeholders.
Challenge 3 - Managing expectations and conflicts
Navigating the complexities of stakeholder expectations and the potential conflicts that may occur poses a significant challenge, and there is no one-size-fits-all solution to this issue. However, adopting an “authoritative” stance or allowing confusion to persist is never the right approach; it risks fostering tensions, discontent, and skepticism.
Best practice
A critical best practice is to communicate clearly, concisely, and transparently with stakeholders, placing particular emphasis on active listening. It is crucial to recognize that consultation is not a one-way street; it should encourage and embrace dialogue. Rather than being an exclusive process, consultation should be a catalyst for fruitful exchanges. By fostering open communication channels and actively engaging in dialogue, organizations can proactively manage expectations, address concerns, and navigate conflicts. This approach not only builds trust but also creates an environment conducive to collaborative problem-solving, ultimately working towards a mutually beneficial outcome.
How Borealis software can help?
Allowing proactive Issues, and expectations management
By systematically tracking stakeholder interactions, Borealis can help identify potential issues and stakeholder’s expectations before they escalate. It also enables organizations to capture and manage all relevant commitments made as part of the consultation process. Proactive identification and management these elements allows organizations to take preventive measures and address concerns and expectations promptly and proactively.
Reporting and Analytics
The reporting and analytics features in Borealis provide insights into trends, sentiments, and areas of concern. This data-driven approach assists in identifying potential conflicts early on and tailoring communication strategies accordingly.
Challenge 4 - Don't let anything slip through the cracks
In the exercise of stakeholder consultation processes, the risk of omissions and oversights creates a considerable threat to the success of a project. Even an unintentionally overlooked complaint can snowball, leading to adverse consequences.
Best practice
To mitigate this challenge, maintaining vigilant oversight of stakeholder feedback is crucial. Swift action is imperative when even a minor issue arises. Implementing a robust grievances and issues management mechanism is an indispensable best practice. This mechanism standardizes the handling of grievances, preventing the deterioration of relations and ensuring that no concern, regardless of its scale, is left unaddressed. This proactive approach not only safeguards the project from potential pitfalls but also reinforces a commitment to responsiveness and stakeholder satisfaction.
How Borealis software can help?
Enhancing active listening and feedback
The Borealis Online Grievance and Feedback Portal empower organizations to actively address stakeholders’ concerns and expectations, fostering efficient two-way communication that builds trust, prevents confusion, and facilitates ongoing dialogue. This transforms consultations into a continuous, collaborative process rather than a one-time event. It also incorporates alerts and notifications for the prompt handling of new grievances or feedback, and ensures that the team is swiftly informed about any concerns, enabling a consistent and efficient approach to issue resolution.
Challenge 5 - Coordinate consultation activities and collect and analyze data
Conducting multiple consultation activities simultaneously represents a considerable challenge, as does the effective management of the data collected throughout the process — from recording to analysis. Without the right tools, these tasks can become overwhelming.
Best practice
To navigate this challenge seamlessly, it is imperative to equip oneself with a high-performance data management system specifically designed to support stakeholder engagement. This strategic approach ensures efficient coordination of consultation activities and streamlines the collection, recording, and analysis of data, mitigating potential challenges and enhancing the overall effectiveness of stakeholder engagement efforts.
How Borealis software can help?
Borealis can play a crucial role in overcoming the challenge of coordinating consultation activities and managing data effectively. Here’s how:
Centralized platform
Borealis provides a centralized platform for planning and organizing multiple consultation activities. This eliminates the need to manage disparate tools or systems for each activity, streamlining coordination efforts.
Activity scheduling
Borealis includes features for scheduling and organizing consultation activities. This ensures that different activities do not overlap and allows for efficient planning.
Task assignments and delegation
Borealis offers a structured workflow designed for the assignment, tracking, and completion of tasks associated with stakeholder consultations. This ensures that the appropriate individuals or teams are actively engaged in addressing specific issues, which not only promotes accountability within the team, but also significantly reduces the likelihood of overlooking critical actions.
Real-time updates
With real-time updates and notifications, Borealis keeps all team members informed about the progress of various consultation activities. This transparency facilitates better coordination and allows for timely adjustments if needed.
Data analytics
Borealis Analytics Tool provides the necessary tools for analyzing the data and the generation of comprehensive reports on consultation activities. This enables organizations to derive meaningful insights, identify patterns, and make informed decisions, and share this information with team members, managers or even relevant external stakeholders and contribute to a transparent communication process.
A robust stakeholder engagement software like Borealis, plays a pivotal role in addressing the multifaceted challenges associated with consultation processes. From ensuring comprehensive oversight and effective task management to promoting transparent communication and data analysis, Borealis streamlines operations. It not only fosters trust and ongoing dialogue but also facilitates efficient coordination of diverse consultation activities. By providing a centralized platform equipped with features tailored to stakeholder engagement, Borealis emerges as a crucial tool for organizations seeking to navigate and overcome the complexities inherent in engaging stakeholders successfully.
Real-life examples of stakeholder consultation
These are two examples of how consultation was carried out in the right way and led to positive results.
Yamana
Yamana Gold is a Canadian precious metals producer with mining operations in Canada, Brazil, Chile and Argentina. One of its mining projects is located in Abitibi, Quebec.
In accordance with Quebec environmental regulations, the company was obliged to consult the local populations affected by its project.
In order to be proactive, Yamana set up a working group of community stakeholder representatives and Yamana team members early on in the project and before the public hearings.
These people were able to discuss the community’s concerns and the impacts and benefits of the project in advance. They have already been able to draw up recommendations and find solutions.
In addition, in order to
- properly record and monitor community feedback
- guarantee data quality
- increase data analysis capacity
- and facilitate reporting
Yamana acquired Borealis software, a stakeholder management system that enabled it to carry out these tasks in a fluid and organized manner.
A concrete spin-off from Yamana’s mobilization efforts
During the community consultation process, the Borealis feedback monitoring team became aware of a recurring concern about the level of a local lake.
Yamana decided to review existing data on the subject and conduct a sampling campaign to ensure it was acting responsibly.
The result? Stakeholders were satisfied that their concerns had been heard and addressed.
Hydro One
Hydro One, the largest provider of electricity transmission and distribution services in Ontario, Canada, needed to undergo three major environmental assessments.
In addition, because its projects involve First Nations lands, the company has an obligation, at all times, to consult the Indigenous communities affected by its activities.
In anticipation of these exercises, the company set itself the task of reviewing the entire mechanics of its data management and sought a solution that could support all its mobilization efforts.
Borealis software enabled us to
- centralize its data in a single location
- record all interactions with stakeholders and access them easily at a later date
- easily generate reports
- monitor compliance with commitments
- work faster and more efficiently
Indigenous relations
For the Indigenous Relations team in particular, the software has helped them prepare consultation files designed to prove that “rights holders have been properly informed about a project, that their concerns have been heard, and that all parties have reached a satisfactory agreement.”
While the Indigenous consultation report is one of the key elements required as part of the environmental assessment procedure, Hydro One used Borealis to demonstrate its transparency towards these communities and its commitment to taking their concerns into account.
The use of Borealis also provided the company with another advantage. By rigorously recording the details of its consultations, it also demonstrated its respect for Indigenous communities, and thereby strengthened its ties of trust with them.
Efficiency for sustainability
Stakeholder consultation by private companies has developed particularly rapidly over the last twenty years, as the notion of corporate social responsibility has gained ground.
Given the urgent need to protect the environment and human beings, and to implement sustainable business practices, this type of consultation has become a regulatory obligation in many countries.
But the need to consult stakeholders is not limited to possible legal repercussions. The benefits of such consultation go far beyond that. By demonstrating openness and attentiveness, showing respect and valuing dialogue and the search for joint solutions, project promoters demonstrate their willingness to establish lasting relationships with their stakeholders. Ultimately, the aim is for everyone to benefit from the positive spin-offs of projects.
Companies therefore have every interest in adopting the best possible consultation practices. Coupled with best practices in stakeholder relationship management, they enable project managers to increase their chances of success.
With stakeholder consultation now inevitable, it’s best to take the exercise seriously and invest in solutions that guarantee the effectiveness of the process.
