The Importance of Stakeholder Engagement for Board Directors and Stakeholder Engagement

Directors are accountable for overseeing the management of a company and are held to a fiduciary duty to act in the shareholders’ best interests. Boards must also take into account the needs and concerns of all stakeholders, including employees customers, suppliers, and employees, as also communities, investors and others. This approach is referred to as stakeholder management and is one of the many fundamental principles that support the ESG (environmental social and governance) movement that is changing the way businesses are run across the globe.

A board of directors could assume a variety of roles in the organization but at its core it’s a team working in concert to achieve its goals. Be it setting goals, providing direction and support to management, or ensuring that the business is in line with its vision and mission, a well-functioning board is essential to the success of a company.

A well-run board will seek out diverse perspectives to better understand the specific problems that the business faces. In addition, it should be able provide clear channels for communication between the board members and stakeholders. This is not just an important aspect of corporate governance but is also critical for building trust between the board and the stakeholders. Stakeholders are more likely to cooperate with companies that are transparent and honest about their reporting, because it shows that the board is committed to its responsibilities. It also helps build an image of trust for the business, and increase its long-term value.

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