Using Stakeholder
Processes in
Environmental Decisionmaking
An Evaluation of Lessons Learned, Key Issues, and Future
Challenges
VI. Comparison of Public and Private Sector Experiences
With Environmental Stakeholder Processes
Government agencies and private companies have very different motivations and needs for
utilizing stakeholder processes. These reflect differences in both their histories and
cultures as well as their institutional missions. Agencies seek stakeholder input chiefly
as a means of obtaining information and, ultimately, legitimizing and obtaining public
acquiescence or support for their decisions. Businesses utilize stakeholder processes to
support facility operations, protect their societal license to operate and to grow, and
enhance their reputation. Historically, these distinctive motivations have led both
institutions to choose differing techniques for obtaining stakeholder input. Agencies have
traditionally utilized formal hearings, meetings, and workshops as major elements of their
public participation programs. In contrast, private industry has tended to utilize
processes such as site tours or community advisory panels that focus on specific issues or
locales. However, both government and industry are presently engaged in much
experimentation to develop stakeholder processes best suited to achieving their respective
goals.
The specific pathways through which government and industry adopted stakeholder
processes also differ. Government agency practices were directly shaped by our political
culture, which has emphasized greater citizen access and participation, sunshine
provisions to increase decisionmaking transparency, and the influence of interest groups
seeking to achieve their agendas. In contrast, the private sector experience during the
past generation has been dominated by the influence of shareholders, who remain the most
influential stakeholder group. The relative impact upon corporate governance of
shareholders compared with other stakeholders (e.g., customers, employees, communities) is
currently the subject of an intensive debate.57
Both government agencies and corporations have undergone significant organizational
changes during the past decade, although the industry experience is the more significant
and tumultuous. Corporations have substantially restructured and downsized, eliminated
layers of managers and other employees, and increasingly focused on core businesses where
they can achieve higher rates of return on invested capital. One indicator of these vast
changes is that one-third of the Fortune 500 companies listed in 1970 had—through
acquisitions, mergers, or bankruptcy—disappeared by 1983. The average life expectancy
of a contemporary multinational company is only forty to fifty years. One by-product of
these developments is that corporations are managed in a more short-term, ad hoc, and
flexible manner than previously.58
There are a growing number of private sector stakeholder experiences to evaluate.
Appendix 5 presents two case studies—BASF and BP America—that assess the use of
stakeholder processes for achieving important business goals at the local and corporate
levels, respectively.
One of the most noted examples of a company stakeholder initiative involves the Dow
Chemical Company. In 1991, Dow established the Corporate Environmental Advisory Council
consisting of highly influential and visible environmental leaders in the United States
and abroad. An unpublished 1994 evaluation of the Council—based upon interviews with
Dow officials, Council members and public information sources—yields some insight on
how this company designed a stakeholder process to inform both its environmental and
business decisionmaking. The Council’s role at that time included the following
tasks:
- Providing an opportunity for senior management to interact with credible, intelligent,
well-positioned environmental opinion leaders on issues of increasing importance—such
as the endocrine disruption debate—to Dow’s business interests.
- Enabling senior Dow executives to obtain a heads-up on emerging health, safety and
environmental issues from individuals who were likely to play an important role in shaping
the public debate on such issues.
- Obtaining an independent view to examine specific business planning assumptions relating
to product development and use.
- Providing an additional tool for Dow’s corporate environmental staff to persuade
increasingly decentralized business units to take environmental issues seriously and
integrate them within their business plans.
- Creating a voice for longer-term business planning.
- Utilizing stakeholder input as a potential source of competitive advantage as
environmental issues increasingly influence business costs and marketing opportunities.
- Supplementing other methods that Dow uses—such as community advisory panels—to
obtain stakeholder input.
- Achieving a public relations success story for the company and enhancing its corporate
environmental reputation.
No other major American company has followed Dow in establishing such a formal and
extensive stakeholder process at the corporate level. There have been major changes in
Dow’s senior management in recent years; according to Dow officials, however, the
Council remains an active and important source of input to senior Dow executives on
environmental and business issues.59
A growing number of private companies and governmental agencies are systematizing their
stakeholder processes through adoption of formal policies and guidelines. In October 1997,
for example, Vulcan Chemicals adopted a statement on "How To Know When To Start A
Community Involvement Group" to guide company stakeholder planning activities. This
is presented in Figure 5.60 In May
1995, the DOE published an Environmental Management Public Participation Policy that
defined specific goals, plans, and implementation guidance for engaging stakeholders. In
subsequent years, it has followed through with more specific analytical studies and
evaluations, including scorecards that compare DOE’s performance with that of other
governmental and industrial sectors, in their management of stakeholder processes.61
Figure 5: Vulcan Chemicals Community Involvement Group: How To
Know When To
Start A Community Involvement Group
- There must be sufficient time to address the issues of concern. It takes time for issues
to evolve and even more time to resolve issues by consensus.
- The subject of the dialogue must be issues of an appropriate scale -- issues about which
it is possible to do something. It is hard to get involvement on issues that people do not
see as urgently impacting their lives. Some emotional involvement is needed from one side
or the other, or both. On the other hand, the issue cannot be so acute that people cannot
talk about it civilly. Nor can it be so large that it is impossible to address with this
kind of process, e.g., Bosnia.
- The process must be structured to make an impact, not just to educate. Thus consensus,
not voting, should be the decisionmaking process. An outside facilitator should be used,
someone "above the froth and the flame."
- The right mix of people must be involved and empowered to have influence. Participants'
power derives from having the ability to make things move ahead or stop them from doing
so. Decisionmakers must be a part of the process or willing to be influenced by the
group's recommendations so the recommendations are not wasted.
- The group needs those with institutional memory about the issues as well as those new to
them. The initial makeup of the group is critical because it impacts future membership.
- The group should be small enough to allow everyone to engage in dialogue, approximately
8-12 people if decisions are to be made.
- The group must meet often enough to build relationships and let issues evolve,
approximately 6-12 times a year.
October, 1997 |
Stakeholder activities are also increasingly collaborative. Following the Exxon Valdez
oil spill in 1989, citizen advisory councils were established in Alaska, California, and
Maine to provide stakeholder input on environmental issues related to the marine oil
trade. These included review and evaluation of oil tanker navigation and escort
procedures, deployment of new tug escort vessels, use of weather reporting equipment, and
establishment of a training symposium. Such councils have typically involved industry,
government officials, and citizens who engage in joint fact finding and collaborative
analysis and use dispute resolution techniques when council recommendations conflict with
the views of important stakeholder groups.62
"Industry and governmental organizations increasingly
possess a growing number of common interests in managing
stakeholder processes." |
Industry and governmental organizations increasingly possess a growing number of common
interests in managing stakeholder processes. Each seeks to improve its credibility with
the public on environmental issues, and engaging stakeholders is a leading method to
achieve this objective. In addition, there is an increased willingness among various
institutions to learn from each other. Federal regulatory agencies, whose primary
stakeholder experience has involved formal rulemaking activities, policy dialogues, and
voluntary programs at the national level, benefit from learning more about private
industry’s management of stakeholder processes at the local level. Similarly,
companies face the challenge of adopting more strategic, corporate level mechanisms to
engage stakeholders, and a better understanding of lessons learned by national and state
environmental agencies can provide valuable information for corporate planning. Finally,
government and industry have separately expanded their participation with environmental
groups and other non-governmental organizations on a variety of issues. These developments
create opportunities for pursuing more collaborative fact finding, common problem solving,
and more streamlined and cost-effective management of stakeholder processes.
57
Tony Jackson, "Trying to Serve
Two Masters," Financial Times, December 22, 1997, p.8.
58
Arie de Geus, The Living Company (Boston:
Harvard Business School Press, 1997), p. 1; Robert H. Waterman, Jr., Adhocracy (New
York: W.W. Norton & Company, 1990).
59
Terry F. Yosie, Assessment of Dow’s Corporate
Environmental Advisory Council (unpublished manuscript, 1994); interview with Dennis
Heydenak, Dow Chemical Company, December 15, 1997.
60
See also Nevin Cohen, Caron Chess, Frances Lynn, and
George Busenberg, Fostering Environmental Progress: A Case Study of Vulcan
Chemical’s Community Involvement Group (Center for Environmental Communication,
Rutgers University, August 1995)
61
U.S. Department of Energy, Memorandum from
Leo P. Duffy, Assistant Secretary for Environmental Restoration and Waste Management,
"Public Participation Policy for Environmental Restoration and Waste
Management," March 1993; Ibid., Office of Environmental Restoration, Customer Focus
Analytical Team, p. 16.
62
George Busenberg, Citizen Advisory
Councils and Environmental Management in the Marine Oil Trade, Technical Report Based
on Doctoral Dissertation, Department of Environmental Sciences and Engineering, University
of North Carolina at Chapel Hill, 1997.