Stakeholder Engagement in Sustainability

This assignment delves into the concept of stakeholder engagement within the context of sustainability reporting. It examines various theoretical perspectives on stakeholder engagement, including normative stakeholder theory and its implications for ethical decision-making. The assignment also discusses practical challenges associated with engaging stakeholders effectively, emphasizing the importance of transparency, communication, and collaboration in fostering sustainable practices.

ACCOUNTING THEORY
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Contents
Introduction................................................................................................................................3
Requirement 1............................................................................................................................4
Discussion of terms................................................................................................................4
Requirement 2............................................................................................................................5
Concept of Stakeholder Engagement.....................................................................................5
Stakeholders of the firm.........................................................................................................5
Requirement 3............................................................................................................................7
Accounting theories................................................................................................................7
Requirement 4............................................................................................................................9
Adequacy of Data...................................................................................................................9
Requirement 5..........................................................................................................................10
Research Proposal................................................................................................................10
Conclusion................................................................................................................................14
References................................................................................................................................15
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Introduction
This report embarks on the stakeholder’s engagement. As the stakeholders are related to the
business and organization. There are five important parts of the report. The first requirement
of the report includes the description of some important terms used in the report. The second
requirement of the project describes the concept of the stakeholder’s management and the
different stakeholders of the firm. The third requirement of the report includes the different
accounting theories in perspective to the stakeholder’s engagement. The requirement
critically reflects the adequacy of different data i.e. primary and secondary to support the
study. In the fifth requirement of the report is related to the research. A proposal for the
research is being made which includes the research question, objective, importance, literature
review, methodology and the steps for ethical approval to undertake the research project.
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Requirement 1
Discussion of terms
Some of the important terms are discussed below:
Stakeholder- The term stakeholder means a person or group of person or any organization
has an interest in investing in an organization or have a stake in the company for earning a
profit or we can say a person or an organization having an interest in a start-up of a new
project in the organization (Manetti, 2013).
Internal stakeholder- Internal stakeholder is the owner's managers and employees of the
organization these are responsible for the organization growth, owners, managers, and
employees perform the operation by helping them in making the strategy and plans and also
make the decision for the success of the organization (Lorne & Dilling, 2012).
External stakeholder- External stakeholders are those such as customers, suppliers and
creditors these are the outside persons who take the interest in company for investment
(Lorne & Dilling, 2012). Customers are those which purchase the products of the company
and the suppliers are those which purchase the product form the company for the society and
the creditors are those such as banks, government from which company takes the money for
the business these all are the external stakeholders.
Stakeholder Engagement- Stakeholder engagement is the process in which people are
involved from the outside in the organization in the decision-making process, as the
stakeholder's activities can affect the decision of the organization or the decision taken by the
organization can affect the stakeholder's interests. Stakeholders are the most important part of
the company which helps in the organization to find out the social and environmental issue of
the company which is going on outside (Kaur, 2014). The responsibility of stakeholder
engagement is to find out the solution for these issues and help the company for improving
their performance and help in achieving the objectives of the company.
Accounting theory- Accounting theory can be described as a process, which examines the
methodologies of the accounting, it is a set of accounting rules and the principle of the
financial accounting. Accounting theory is set of principle by which company accounts can
be properly managed by the company.
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Sustainability reporting- The term sustainability reporting can be defined as a report that is
used to be published by an organization or a company about social, environmental and
economic impacts caused by their activities (Bal & Bryde, 2013).
Integrated reporting- A report created by an organization in order to communicate its
prospects, performance, governance, and strategies that will result in creating value over the
short, medium and long-term (Zakhem, 2017).
Corporate social reporting- It is a concept of corporate social responsibilities that consist of
a process of communicating the environmental and social possessions of organizations
profitable engagements to specific interest groups within the society (Belal, 2016).
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Requirement 2
Concept of Stakeholder Engagement
Stakeholder Engagement plays an important role in an organization by the help of
engagement of stakeholders in several business aspects, an organization can make provisions
for its activities and it can also evade the social reaction (Kaur, 2014). In an organization, the
involvement of the stakeholders enables the organization to ascertain and address the
apprehensions, that decrease the threats and deadlocks which are used to arise from confusion
or misunderstandings (Lemke, 2015). As through the involvement of stakeholders, potential
problems could be identified and plan can be developed to mitigate those problems before
they arise; it helps the organization to function in a more constant socio-political
environment.
Stakeholder engagement can be elucidated as the initiation of collaborative activities
instigated by the business with its stakeholders. There are lots of opportunities to embark on
the engagement of stakeholders and a number of way for instigating a dialogue. An
organization has to pay the attention while building the relationships and also make
consideration in recognizing the stakeholder that can be affected by the different projects
(Glover, 2015). In addition to this engagement of stakeholders helps in solving the issue not
only related to the organization but also related to the stakeholders In both of the aspects,
stakeholder engagement involves two essential points:- Identification of the Stakeholder and
Dialogue with the stakeholders.
Stakeholders of the firm
The term stakeholder can be defined as a group or individual which may be affected through
or may affect the achievement of the organization`s goals. In this these traditionally has been
such as:
 Internal stakeholder- The internal stakeholders of the firm are employees and
shareholder
 Coordinate authorities- The external shareholders of the firm are- customers and
suppliers
 External stakeholder- Some other stakeholders of the firm are professional
associations and government.
It is crucial for the organization to ascertain all the important stakeholders including those
who have been forgotten frequently, but then again they could make a major impression on
reputation and activities or functions of the organization, such as aboriginal communities or
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activities group (Bal, et al., 2013). In addition to this, the responsible organization has to
identify and work together with the stakeholders who are going to be influenced by its
activities; on the whole, if the influence is expected to be negative. One of the other measures
for recognizing and listing stakeholders consist of the attributes of urgency, legitimacy,
power as well as the ability of the stakeholders that may affect or could be affected by the
actions perceived by the organization (Manetti, 2013).
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Requirement 3
Accounting theories
In this case study, the organization needs the support from stakeholders to find out issues
related to environmental and social aspects professed by the stakeholders. Corporate social
reporting is useful for the organizations in order to represent itself as socially responsible. In
this by the help of accounting and integrated reporting, stakeholders relation can be
maintained and move towards the operations (Manetti, 2013). Sustainability reporting and
accounting can build a base for dealing with complex stakeholder’s relationships and moving
towards other viable processes. According to the accountability theory, the success of the
engagement is based on the understanding the following aspects-
 Who are the stakeholders that could be engaged,
 Why these stakeholders shall be engaged (purpose of stakeholder engagement)
 What is the scope of stakeholder engagement
 How the engagement of stakeholders could be done (technique for stakeholder
engagement)
This accounting theory determines that the involvement of stakeholders supports
organizations to develop and improve strategy as well as to identify and address operational
issues.
Normative stakeholder theory lays emphasis on the activities of the organization that what
the organizations shall do in context to the stakeholders. This theory is based upon treatments
of some aspects such as- corporate legitimacy principle, fiduciary principle, and corporate
social responsibility (Kaur, 2014). These two aspects are different from each other, as the
first aspects embark on the stakeholders that can retain the ability to influence the
organization is legitimate; on the other hand, the second aspects state that such legitimacy is
consequential from ethical responsibility outstanding to other stakeholders.
Instrumental theory, in contrast to this, the instrumental theory lays emphasis on the
concept that whether the activities carried out by the organization is beneficial for the
business or not, however, the interest of the stakeholders should be considered. This theory is
regarded as a part of instrumental version and depicts shareholders as crucial factors which
support the organization to accomplish its goals and objectives as well as empowers the
leaders to come across their fiduciary responsibilities to the shareholders (Doherty, et al.,
2009). As per this theory, organizations deal with its stakeholders on the basis of
collaboration; in addition to this, the mutual trust facilitates competitive advantage to the
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organization (as in case the competitors are not considering the stakeholder`s engagement).
The instrumental stakeholder’s theory is based upon the underlying principle that
stakeholders can be grouped as shareholders, customers, and labors. These groups operate as
structural units in which common ideas could be shared by the members.
Sustainability theory specifies the identification of the stakeholder states that, the important
stakeholders for the business shall be identified. After identifying the stakeholders of the
organization. They shall be engaged in various processes of the organization.
Descriptive stakeholder’s theory, general outline and elucidate the organization`s specific
behaviors and characteristics, for instance, nature of the organization. This theory embraces
that the firm is at the center of competition and cooperation, both of their inherent value. In
addition to this, the descriptive theory in relation to stakeholder`s aspects describe such
factors- organization`s nature, managers way of thinking in context to the management
aspects, how the management of corporations can be done in reality, thinking of board
members in regards to corporate constituencies` interests and identification of stakeholders
(Bal, et al., 2013).
The accounting theories which also support the aspects of engagement of stakeholders is one
of the essential parts of sustainability accounting process; for instance, it can provide various
benefits to the organization such as-
1. To ascertain stakeholder concerns concerning to its activities and economic, social as
well as environmental performance (Ali & Abdelfettah, 2016).
2. To define the scope of the present process in context to the stakeholders, accounting
framework, operating issues and units and geographical locations as well as centered
on engagement consequences.
3. To recognize social, economic and environmental indicators over and done with
stakeholder engagement (Glover, 2015). To gather information in context to the
performance of the organization in perspective to the recognized indicators.
Moral accounting theory outlines the responsibility of the managers for internal
stakeholders such as employees. Managers are responsible to take account of employee`s
legitimate rights (Glover, 2015).
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Requirement 4
Adequacy of Data
According to Professor Shallow, the secondary data is adequate in context to the study
purpose. As the secondary data is used to be gathered in an easy manner in comparison to the
primary data. Both of the data sources i.e. primary data and secondary data sources have their
own adequacies in relation to the study.
Primary data and its sources- Primary data are the first-hand data which is gathered by the
researcher for the first time when he or she has pursued the research (C & C, 2012). There are
a number of techniques through which the primary or first-hand data could be gathered. Some
of the primary data sources are- surveys, interviews, observation technique etc.
Secondary Data and its sources- It is also known as second-hand data, as the data is
gathered through some other researcher or individual for his or her own purpose (Olsen,
2011). This data can be easily used as the secondary data can be gathered from a number of
resources such as- internet, official reports, business reports and magazines, books, journals,
newspapers and many other sources.
Both of the sources to gather data for the research study are important in their own way. As
the primary data source could be approached by the researcher when more valid data is
required for the research as sometimes the secondary data could be less valid in comparison
to the primary data (C & C, 2012). In contrast to this, the secondary data could be approached
by the researcher for his or her study, when there is less time to complete the study, as to
collect the primary data it consumes more time. Whereas secondary data could be gathered in
less time as it is already available and could be approached through various sources and do
not consume more cost (Olsen, 2011). Hence, the data for the study could be approached by
considering following aspects- convenience, relevance, suitability, and requirement of the
study.
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Requirement 5
Research Proposal
Title of Research Project- A study on importance of stakeholder’s engagement
Importance of Research
This research is important to be pursued, as through the study it could be concluded that what
is the importance of the stakeholder’s engagement for an organization. As the stakeholders
are considered as the integral and essential part of the organizations (Bates, 2014). Each and
every organization have stakeholders and some of the important stakeholders of the
organization are- management, owner, employee, shareholders and investors, government,
customers etc. Through the research, the importance of the stakeholders and their engagement
will be ascertained and this will facilitate in the accomplishment of the objectives in a better
manner. Another importance of the research is that the importance of stakeholder’s
engagement in developing the guidelines and policies of the organization will also be
determined. As it is important to ascertain the importance of engaging with the stakeholders
in order to run the business successful (Denscombe, 2012). Besides this, the techniques which
could be used by the organization for motivating the stakeholder's engagement could also be
ascertained and such techniques may be used further.
The Research Question
The major question of the research is to ascertain- “What is the importance of
stakeholder’s engagement for an organization?”
In addition to this, there are some other important questions are also there which will be
answered through the research, some of the secondary questions that will support in ascertain
the answer for the major research questions are-
 How can the stakeholders be engaged without affecting the organization`s business
aspects?
 What are the techniques that could be practiced for stakeholder’s engagement?
 What are the areas which require stakeholder’s engagement?
Literature Review
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Engagement of stakeholders cannot be done in deprived of any difficulties that may consist
of- conflict with those outside the process, huge extent of staff time and extraordinary cost
(Belal, 2016). Irrespective of such encounters, it proves that stakeholder’s engagement is
beneficial in turning out useful and supported plans of the management and it also helps in
building long-stand and solid relationships.
Normative stakeholder theory lays consideration on the doings or undertakings of the
organization that what actions shall be undertaken by the organizations in regards to the
stakeholders (Kaur, 2014). This theory determines the aspects related to the treatment of a
number of aspects for instance- corporate legitimacy principle, corporate social responsibility
and fiduciary principle (Oruc, 2011).
On the other hand, the instrumental theory lays concentration on the perception that,
whether the actions were undertaken by the firm is constructive for the business or not;
though the stakeholder’s interest should be considered. So that interest of the stakeholders
shall not be influenced in a negative manner (Bal, et al., 2013). The instrumental
stakeholder’s theory is grounded upon the fundamental principle that stakeholders can come
together as labors, shareholders, and consumers. These groups work as essential units in
which common ideas, suggestions, and feedbacks could be shared by any of the members
(Manetti, 2013).
The descriptive theory, in context to stakeholder`s aspects, elucidate the factors related to
the stakeholders and the organizations. How the manager thinks about the engagement of
employees in the decision-making process, the way by which organization`s management can
be done, deliberation of top management about stakeholder`s identification and other aspects.
Moral accounting theory, states that managers shall take account of legitimate rights of the
employees (Williams & Adams, 2014). Moral stakeholder perspective shall be considered in
context to disclosure of employees issues in order to expand accountability and transparency
to society and employees.
Vilma Luoma-who in the year 2015, stated in his article that there are three different type of
stakeholder relationships. The first one has certainly engaged faith holders, the destructively
engaged holders and the last one is fake holders (Luoma-aho, 2015). For an effective public
relations; it is important to support the faith holders, engage the hate holders and reveal the
fake holders.
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Menoka Bal and David Bryde in the year 2013, published their article in context to the
engagement of the stakeholders for achieving sustainability in the construction business. This
sustainability theory states that the important stakeholders for the business shall be identified.
The engagement of stakeholder can be done through a process which includes six different
steps i.e. identification of the stakeholders; relating stakeholders to different targets related to
sustainability; prioritization; managing; evaluating performance; carrying out targets into
action (Bal & Bryde, 2013).
Methodology
Type of research- It is a descriptive research, therefore qualitative research methodology will
be followed for the study.
Sample technique- Convenient sample technique is going to be approached for the research
as through such technique, the sampling of the respondent could be done as per the
researcher’s convenience (Becker, & Denicolo, 2012).
A number of the sample- The number of sample for the study will be four different managers
if different organization.
Data collection- Primary data will be approached for the study, as the research requires fresh
data to be studied to reach a conclusion ( Leavy, 2017). Data will be collected through a
survey. As this technique will be suitable for the research.
Survey Questions
The questions which will be asked to the respondent samples are given below:
Questio
n No.
Questions
1 Do you consider stakeholders as an important part of your organization?
A). Yes, B). No C). Sometimes
2 Do you think stakeholder’s engagement is an important perspective for the
business and stakeholders benefits?
A). Yes, B). No C). Maybe
3 Do you let your stakeholders participate in the decision-making process?
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A). Yes, B). No C). Sometimes
4 How do you involve stakeholders in the decision-making process?
A) Survey B). Advice of employees
C). Customer`s suggestions D). Feedbacks
5 When it comes to your accounting practices, do you consider stakeholder`s
engagement?
A). Yes, B). No
6 Which of the area requires stakeholder’s engagement?
A). CSR B). Sustainability accounting
C). Financial decision aspects D). New project development
E).
7 How can the engagement of stakeholders be done without influencing the
organization`s business aspects?
A). Involving stakeholders in decision-making process irrespective of areas
related to financial aspects
B). Only taking suggestions of stakeholders
C). Taking feedback from stakeholders and ignoring the feedback, in case, if it
affects the business.
8 Do you think the stakeholders of your organization are affected by the decision
taken by the firm?
A). Yes, B). No C). Maybe D). Can`t say
9 Overall, how satisfied or dissatisfied you are with the stakeholder's engaged in
the organization
A). Very satisfied B). Somewhat satisfied
C). Very dissatisfied D). Somewhat dissatisfied
E). Neither dissatisfied nor satisfied
10 Rate stakeholders engagement in the organization-
A) Extremely engaging B). Very Engaging
C). Slightly engaging D). Moderately engaging
E). not at all engaging
( Engel, et al., 2014)
Ethics Approval
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The steps which are required to be taken in order to gain ethical approval to undertake this
project are given below:
 Step 1. The very first step will be to assemble all the application documents such as-
supporting documents and application forms (survey instrument).
 Step 2. The application package will be signed off by the Head of School, afterward,
the signed application will be sent to the Human Ethics office (Hammond, 2016).
 Step 3. The office if Human Ethics will evaluate the application`s level of risk and
this application will be assigned to the potential review pathways.
 Step 4. The ethics application will be reviewed ( Frankena, 2015) by the RERC or
HREC. In case any changes are there then it will be requested by the review body.
After making the requested changes application will be accepted by the body.
 Step 5. Notification of the ethics approval for the project will be granted by the
Human Ethics office, after then the research project could begin.
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Conclusion
This could be concluded from the report that there are different thoughts about stakeholder’s
engagement. As the stakeholders are the inseparable part of the organization, therefore it is
must for the firm to consider about the stakeholders while initiating a plan, or change in the
process. As the organization`s activities may influence the interests of the stakeholders in the
positive or negative way. Beside this, it is also not wrong to say, that the activities of the
stakeholders as well can influence the business of the firm. Therefore it is concluded from the
study that stakeholders shall be considered in context to the sustainability reporting and
accounting.
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