Whether they financially support a company as large investors or devote skills and hours as company employees, stakeholders serve as the backbone of any organisation. Only by reciprocating efforts and investing time and effort in building a constructive relationship with its stakeholders can a company address potential issues and maximise investment.

In an effort to rebuild trust in UK business and strengthen company and stakeholder relations, the government has published a new UK draft legislation that requires companies to report on how their directors take stakeholders into consideration when making important decisions. The new draft legislation, published on 11 June as part of a larger social reform project, looks to empower voices ‘outside of the boardroom’ and generate trust and transparency.

Yet according to stakeholder communications consultancy Black Sun, government reform such as the new draft legislation has the power to fundamentally influence the reporting debate. This year only 19% of FTSE 100 companies explained how they have taken stakeholders into consideration when constructing strategy.

While any company can produce an annual report that meets the highest standards, findings show that few can communicate authenticity and transparency. In its analysis of FTSE 100 corporate reporting trends, Black Sun calls for “less perfection and more authenticity.”

When comparing how companies report on corporate values and strategy, Black Sun found that while 95% of companies discuss engagement with stakeholders and 52% outline expectations for some of their key stakeholders, there is a significant disconnect between conversations with stakeholders and applying findings to strategy.

As the future of corporate success moves towards intangible qualities such as brand and customer experience, it’s never been more critical for companies to build strong relationships with their stakeholders. A company’s ability to fulfil its potential and establish long-term success is dependent on whether it listens to its stakeholders and takes what they have to say into consideration when constructing corporate strategy.

With companies having to navigate a fast-paced and tech-driven landscape characterised by fake news, automation and artificial intelligence, corporate trust is at “an all-time low,” says the report. Without trust, companies lose investors, employees and consumers. In order to once again establish trust as the basis for company and stakeholder relations, businesses must enact a more honest line of communication and use reports to tell an authentic and credible narrative specific to company purpose, ethics and strategy.

With the world facing global issues such as climate change, poverty and food insecurity, investors and stakeholders are looking to businesses for solutions. A company narrative that goes beyond profit and conveys a societal purpose is better fit to generate trust and inspire stakeholders to invest or work in a certain company. Although reporting purpose is not currently a requirement, Black Sun’s research shows that 66% of companies are now instituting a purpose, while only 20% of chief executives' leadership statements discuss purpose.

In order to be ‘part of the solution rather than the problem’, companies must also incorporate diversity. By attracting investors and hiring employees of different genders, ethnicities, ages, experiences, skills, education levels and professional backgrounds, businesses benefit from diversity of opinion and better decision-making. A diverse board and workforce that represents a variety of stakeholder views will make a company more informed and ultimately more trusted.

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