SD2 Partners - Step 1. Analysis: Generating Knowledge



Home Introduction Our Work Step 1 Step 2 Step 3 Step 4 Who We Are Glossary Links Contact Us	In order to provide our clients (and other partners involved) with a comprehensive overview of the status quo and potential developments, we will gather and analyse information in four areas: relevant issues, stakeholders and stakeholder dynamics, countries and regions (specific situation and priorities), risks and opportunities (to sector and client). It is essential to understand the critical success factors: what are the potential project killers, no-goes and fundamental preconditions to success, or high risk factors for the potential failure of a stakeholder engagement project? Revisiting the critical success factors at every stage of the project is an important way of ensuring success. Stakeholder engagement is not only a factbased affair but also a psychologically demanding venture within an organisation reflecting personal preferences, experiences and likes or dislikes. Relevant Issues We identify issues that the sector or the individual company faces, or might face in the foreseeable future, structuring environmental and social aspects of the company's activities, based upon: internal awareness and the perception of risk, sector benchmarks, existing industry, political and/or civil society initiatives, maturity of issues, regional priorities, mapping client's business activities. Stakeholders and Stakeholder Dynamics We identify those stakeholders with potentially the greatest impact. Principally, we look at the following factors: direct effect on the value chain and its financial consequences (cost increase, sales loss/earnings drop, hindering growth and market access, reputation risk and brand value decrease), why and how they may want to engage with the company, outreach to other stakeholders (ripple effects), identifying potentially contradictory and re-enforcing players and their future development and magnitude. We also identify power lines and power relationships between stakeholders, and thus describe the landscape of stakeholder dynamics in which the company operates: measuring the gap between stakeholders' expectations, the company's standards and the real position, early win positions for gap-closing, mid and long term consequences of aiming to reconcile with stakeholder expectations and requirements. We will create a matrix mapping stakeholders and issues so that clusters of societal groups and their interests and expectations can easily be identified.	Example: Stakeholder Engagement in the Finance Sector Financial stakeholders like banks, investors in stocks or private equity and insurance companies have at least three good reasons for being interested in the stakeholder dynamics exposure of their clients: Their own stakeholder dynamics have pushed them to develop best practice initiatives like the Wolfsberg-Principles for Private Banking against money laundering, or the Equator Principles for environmentally and socially responsible Project Financing in developing countries Unidentified risk exposure of their clients increases the risks to profitability of their own businesses (which is of greater interest also in the context of Basel II). Image and reputation can strengthen or weaken their market position also in non-related business areas like retail for banks and life insurance for risk insurers. To be involved in a controversial stakeholder debate as a finance provider of an attacked corporation is likely to tarnish the finance provider's reputation. Examples: Three-Gorges-Dam financing, Pipeline in CIS/Russia, Aluminium Project in Iceland.
	Countries and Regions We identify countries and/or regions with relevant stakeholder dynamics. This includes structuring the identified issues according to their importance and urgency, so that the potential magnitude of a conflict of interest can be assessed. The analysis could comprise, for example: how important individual countries and regions are for the company's value chain, how many regionally relevant stakeholders are involved and what their potential outreach could be, what potential influence these stakeholders have on costs, earnings, market-access, and brand value and reputation along the whole value chain. Risks and Opportunities We generate a comprehensive assessment of risk in the context of stakeholder dynamics, corporate environmental and social responsibility and corporate governance in order to rapidly address identified "hot spots". Potential risks include, but are not limited to, reputation risks, increased costs, decreased earning, staff loyalty and recruitment. We quantify such risks where possible, and take the following steps: create clusters of risks and opportunities in the given situation, conduct a SWOT analysis of these clusters, cost these clusters according to information needs.	Example: Civil Society Development in Eastern Europe European Union governments, as well as the European Commission, have been supporting democratization and the strengthening of civil society over the past decades, with increased efforts being made in the recent new member and future accession countries. Often, nongovernment organisations operating in EU countries are being funded to help build the capacity of groups in new member states and accession countries. This is the case with regard to human rights groups, women's organisations, environment activists and others. The goal is to help develop functioning democracies with effective representation of the social, economic and environmental interests of all societal groups. Through this process, effective coalitions are being built across Europe. These might prove to be powerful watchdogs and campaigners with regard to the foreign direct investment of companies from within and outside Europe.
	OUTPUTS OF STEP 1: Knowledge Matrix mapping stakeholders and issues Overview of stakeholder dynamics and their regional/country focus Clusters of risks and opportunities with SWOT analysis and costing