Creating Sustainable Value Through Stakeholder Engagement

We are living in an era that has seen the key factors for corporate success change markedly in the span of just a few years. The boundary between business and society is fading, and the consequences are penetrating into the very core of corporate decision-making. A shift in attitude can already be observed in the higher echelons of many companies. Instead of placing their primary focus on shareholders, companies increasingly understand the importance of addressing the needs and expectations of a broader stakeholder base. The shift away from the classic shareholder value paradigm has made way for a new and more sustainable approach: stakeholder value.

For most companies today, proactive communication with their customers, employees, suppliers, social partners, and NGOs is a matter of course. Stakeholder engagement is also increasingly being recognized as a way not only to preserve a company’s reputation and license to operate, but even to enhance its competitiveness over the long term. Frequently, however, companies still do not have a formal, structured system in place for engaging with their stakeholders. Rather, the approach is often left to the intuition of the person in charge of spearheading the dialogue.

What is more, the integration of stakeholder interests into a company’s business and sustainability activities also tends to be piecemeal and ad hoc. The systematic, planned, and holistic management of stakeholder relationships is still virgin territory for many companies, including large international corporations.

The importance of dialogue

To gain a deeper, more scientific understanding of the importance of stakeholder engagement, Deutsche Post DHL Group initiated a comprehensive study as part of its Delivering Tomorrow series on economic and social trends. Titled Exchange, Engage, Excel: Creating Value Through Stakeholder Engagement, and published in September 2014, the study sheds light on the importance of closer stakeholder relationships and how a more profound dialogue can benefit everyone involved over the long term. Contributing authors include, among others, Professor R. Edward Freeman (University of Virginia), considered one of the founders of the stakeholder approach; Professor Peter Ulrich, founder and longtime head of the Institute for Business Ethics of the University of St. Gallen – the first of its kind in the Germanspeaking realm; and Mark Kramer, who, together with the economist Michael Porter, developed the much-discussed “shared value” approach.

An international survey of opinion leaders in six countries was also conducted as part of the study. In addition, the study features examples of stakeholder activities carried out by Deutsche Post DHL Group, which, being one of the largest logistics companies in the world, engages with a wide and diverse stakeholder base.

Informed opinion

The survey of international opinion leaders supports the finding that success in business hinges on strategies that are in sync with the interests and expectations of a company’s stakeholder groups. At 87 percent, an overwhelming majority of those surveyed believe that, rather than focusing solely on shareholder interests alone, companies should widen their perspective and take the varying interests of all of their stakeholders into consideration.

Companies that engage in dialogue with their stakeholder groups are clearly favored by 71 percent of those surveyed. Also, three out of four respondents said they would prefer to work for companies that are open with their interest groups and face up to criticism. Yet, in their view, reality falls short of the ideal: Only 44 percent of those surveyed see companies looking beyond capital interests and sufficiently considering the concerns of customers, employees, and other stakeholders as well.

Despite this, nearly 80 percent say they have observed positive changes in recent years. The majority of responses also confirmed a mounting optimism about the actual benefits of stakeholder management. Survey respondents singled out increasing pressure from external stakeholder groups and a growing recognition within companies as the reasons for the change in corporate behavior toward interest groups.
As for the benefits of stakeholder management, the majority of survey respondents think that companies focused on many different interest groups gain a competitive edge. Two-thirds are sure that stakeholder-centric companies have higher customer satisfaction rates. Likewise, a stakeholder-oriented management approach has a positive effect on employee motivation. And at least 51 percent of respondents are of the opinion that such companies are more innovative than those committed only to the interests of their shareholders.

Integrated engagement

One of the ways in which our stakeholders shape our actions is through our network for Responsible Business Practice (RBP). This internal, cross-divisional network gathers insights gained from our dialogue with stakeholders, various studies, and customer surveys; collects the results of our materiality analysis; identifies what actions are needed; and ensures that we maintain ethical standards and meet the demands of society. The network thereby helps Deutsche Post DHL Group better identify business opportunities and risks and respond more quickly with appropriate measures.

We have also established a committee of international advisors in order to maintain an ongoing external review of our entire sustainability agenda. The Sustainability Advisory Council (SAC) is made up of independent experts and opinion leaders from a number of disciplines (science, business, environment, logistics, politics, media, and ethics). The SAC is intended to help us ensure that our sustainability activities are always in line with social requirements and developments.

These activities are aimed at improving our performance with respect to society, the environment, and the economy. We also organize two fields of activity pertaining to shared value and corporate citizenship that have a stronger external focus. As corporate citizens, we apply our strengths and core competencies to address social needs. Shared value means we want to create value for the company and its customers that benefits society and the environment as well.

Corporate citizenship

At the heart of our corporate citizenship activities are our Group programs, GoHelp and GoTeach, which we run together with experienced partners. GoHelp involves supporting disaster management at airports in cooperation with the United Nations. This includes our Get Airports Ready for Disaster (GARD) program, which we use to help prepare airports in areas at risk of natural catastrophes. In addition, our Disaster Response Teams provide onsite support at affected airports in the wake of a natural disaster.

GoTeach is a program we employ to improve the educational and career opportunities of young people. After all, the ability to remain innovative and fit for the future in our society depends on a good education and specific vocational preparation. Here, too, we are engaged around the world with experienced partners – for example, the Teach for All initiative and SOS Children’s Villages – in order to support and foster children, especially those from disadvantaged socio-economic backgrounds.

Beyond our GoHelp and GoTeach programs, we encourage volunteerism among our staff. Furthermore, we launched the Living Responsibility Fund to support local environmental protection and aid projects in which our employees are involved. And, our internal “We Help Each Other” financial assistance fund leverages donations from employees to provide emergency financial assistance to colleagues affected by disasters.

Shared value

Our environmental protection activities are based on the shared value approach, the heart of which is creating a reasonable and credible link between our sustainability efforts and our business. This means that we also want to increase our business success through the contribution we make to society and the environment.

Our GoGreen program is the primary platform we use to pursue this aim. As part of this program, we have committed to improving our carbon efficiency (including transportation subcontractors) by 30 percent by the year 2020 compared to the base year of 2007. This includes not only reducing the impact that our business activities have on the environment, but also lowering our dependence on fossil fuels and reducing costs. We have made good progress toward this target as a result of much action taken over the past few years. In 2014, we had already improved our carbon efficiency by 23 percent – meaning we are more than halfway to our goal.

As part of our GoGreen program, we are also developing new environmentallyfriendly products and services that benefit our customers. These include carbon-neutral shipping solutions, which are so popular that we ship more than 2 billion items carbon-neutrally for our customers every year.

We are continuing to develop our portfolio of sustainable services and are offering our customers more and more customized green solutions, leveraging our experience to help them achieve their own carbon and efficiency targets. With our expertise, we optimize their supply chains, minimize emissions, and help make sure climate goals are reached.

Dialogue is key

We are convinced that the only path to responsible corporate leadership is through dialogue. The more open a company is to its stakeholders and their diverse points of view, the more heightened its awareness of its surroundings and the more insight it will gain about how its positions, services, and values are perceived. Those who choose dialogue increase their credibility as good corporate citizens in the public eye and build trust. At the same time, companies with a lot of experience in this regard develop a good sense for how to shape their own added value so that economic success and social responsibility go hand in hand.

Our goal is to continuously expand our knowledge and experience by systematically maintaining a comprehensive dialogue with our stakeholders. While we may not be able to resolve all differences or address all interests at once, dialogue goes a long way toward helping build mutual trust and understanding. We are extremely pleased with the results of our stakeholder engagement so far. Our success is based on a true willingness to listen to our stakeholders, even if it means tackling thorny issues, and the ability to draw the right conclusions for the way forward.

With this as our basis, I am confident that Deutsche Post DHL Group will be in a much better position in the future to further strengthen the economic and social capabilities of the company and create sustainable, shared value through engagement with our stakeholders.