What is a stakeholder?

In a business context, stakeholders can include shareholders, employees, customers, suppliers, and the community in which the business operates.

Stakeholders’ interests and concerns can be financial, social, or environmental and vary depending on the context.

A stakeholder is a person or group interested in or affected by something, such as a business or an organisation.

They can be an owner, employee, customer, or someone impacted by the organisation’s actions.

For example, shareholders, employees, customers and suppliers are all stakeholders in a company.

In a community, residents, businesses, and government officials are all stakeholders in the community’s well-being.

A stakeholder in a company is an individual or group with an interest or concern in the company’s operations, performance, or success. Some examples of stakeholders in a company include:

• Shareholders who own the company and have a financial interest in its performance.
• Employees who work for the company are interested in job security, compensation, and benefits.
• Customers who purchase the company’s products or services are interested in the quality and value of those offerings.
• Suppliers who provide materials or services to the company and are interested in its ability to pay its bills and maintain a long-term relationship.
• Communities in which the company operates and are interested in the company’s impact on the local environment and economy.
• Government, which regulates the company and has an interest in its compliance with laws and regulations.

These are the familiar stakeholders, but they can vary depending on the company and its operations.

An example of a stakeholder could be a shareholder of a publicly traded company. Shareholders have a financial interest in the company’s performance, as the value of their shares is tied directly to the company’s financial performance.

They may be interested in the company’s revenue, profits, and dividends, as well as its management and strategic direction. Shareholders also have the right to vote on issues related to the company, such as the election of board members and significant business decisions.

ESG stands for Environmental, Social, and Governance. Investors and companies consider these three key areas when evaluating a company’s overall performance and potential risks.

ESG factors are closely related to stakeholders because they can impact the interests and concerns of the various groups that have a stake in the company. For example: 

• Environmental factors such as carbon emissions or water usage can impact the local community and the planet. 
• Social factors such as labour practices or human rights can affect employees and suppliers. 
• Governance factors such as executive compensation or board composition can impact shareholders and the overall accountability and transparency of the company.

Therefore, companies that take ESG factors into account when making decisions and managing their operations are more likely to be responsive to the concerns and interests of their stakeholders, which can lead to long-term sustainable growth and a positive impact on society and the environment.

To learn more about the world’s first University accredited Diploma in ESG, download the brochure here and below.