Assessment Statement
“The business unit’s Governance practices are formally designed to engage key stakeholders appropriately.”
Interpretation
This item assesses how well the business unit’s governance practices are intentionally structured to engage key stakeholders — such as investors, customers, employees, community members, and regulators — in a transparent, inclusive, and strategic way. Governance is not just about control, it is about building legitimacy, trust, and alignment through engagement.
This includes:
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Stakeholder Identification: Who are the key stakeholders and why?
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Formal Mechanisms: Are there structures and processes to engage them?
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Strategic Engagement: Are stakeholders involved in meaningful decisions?
Example: Unilever’s Sustainability Advisory Council, Score: 5 – Strongly Agree
Unilever features a formal Sustainability Advisory Council, comprising external experts in social and environmental sustainability, that regularly engages with its board and senior management.
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Stakeholder Identification: The council includes NGOs and academic specialists who provide independent advice.
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Formal Mechanisms: Meetings occur periodically, with feedback directly informing corporate sustainability policies.
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Strategic Engagement: Insights from the council influence decisions around sourcing strategies, environmental targets, and corporate governance practices.
Reference: Unilever. (n.d.). Sustainability governance. Retrieved from https://www.unilever.com/sustainability/responsible-business/our-sustainability-governance/
Polman, Paul, and Andrew Winston. Net Positive: How Courageous Companies Thrive by Giving More Than They Take. Boston: Harvard Business Review Press, October 5, 2021.