Stakeholder Engagement

Stakeholder engagement is a core element of sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS). It describes the structured process by which a company identifies its affected interest groups, enters into dialogue with them and ascertains their expectations, concerns and views. Stakeholders include both affected interest holders (such as employees, workers in the value chain, affected communities and consumers) and users of the sustainability statement, such as investors, lenders and business partners.

The pivotal aspect is the role stakeholder engagement plays in the materiality process. Under ESRS 1, a company must take the views of affected interest groups into account when determining its material impacts, risks and opportunities (IRO) within the framework of double materiality. Engagement provides the information base for realistically assessing the severity and likelihood of actual and potential impacts on people and the environment. Without the perspective of those directly affected, the impact materiality remains incomplete, because the company would judge the external effects of its activities only from its own internal point of view.

The ESRS require the company to disclose how engagement is organised: which stakeholder groups are involved, in what form and at what frequency the dialogue takes place, at which level of the organisation the results are considered, and how they feed into strategy and the business model. The disclosure requirement ESRS 2 SBM-2 (interests and views of stakeholders) makes the process transparent and auditable. Stakeholder engagement is therefore not a one-off exercise but an ongoing component of corporate due diligence and governance, closely interlinked with human rights and environmental due diligence obligations.