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Stakeholder Engagement

Download – Annex 4.9
TNFD v0.4 Annex 4.9


The Taskforce on Nature-Related Financial Disclosures (TNFD) recognises that to deliver on its mission, the TNFD risk management and disclosure framework must necessarily consider the societal dimensions of nature-related dependencies, impacts, risks and opportunities. Building on the discussion paper published by the TNFD in November 2022 on this subject, the Taskforce has taken further steps to consider societal dimensions of nature-related risk management and disclosure in the TNFD beta framework by preparing draft guidance on stakeholder engagement.

The TNFD is focused on its mission to develop and deliver a risk management and disclosure framework for organisations to report and act on evolving nature-related risks. Other initiatives are looking at societal-related assessment and disclosure requirements, including the proposed Taskforce on Inequality-related Financial Disclosures (TIFD).[1] However, there are inherently societal and cultural dimensions to nature-related dependencies, impacts, risks and opportunities that need to be considered in assessment, management and disclosure. Ultimately, the recommendations of the TCFD, TNFD and TIFD should provide market participants with guidance on integrated sustainability disclosures covering climate, nature and societal considerations.

This guidance is relevant for users to interpret and apply both of the core components of the TNFD framework: the TNFD’s LEAP approach for assessment of nature-related risks and opportunities and the TNFD draft disclosure recommendations.

This is a draft for feedback from market participants by 1 June 2023 and  the Taskforce will be publishing a first version of this guidance as part of the TNFD’s recommendations and guidance package in September 2023.

The guidance is structured as follows:

  • Section 2 provides an overview of the TNFD recommended disclosure guidance on stakeholder engagement.
  • Section 3 provides guidance on stakeholder engagement as part of the LEAP approach.

TNFD disclosure recommendation on stakeholder engagement

TNFD framework specifies: ‘Issues discussed and concerns raised during engagement with affected stakeholders should be taken into consideration when preparing the content of the TNFD recommended disclosures.’

The figure below shows the draft recommended disclosure on stakeholder engagement in the context of the overall draft disclosure recommendations for v0.4.

Overview of the draft disclosure guidance

The TNFD draft disclosure recommendation Risk and Impact Management D sets out that organisations should: Describe how affected stakeholders are engaged by the organisation in its assessment of, and response to, nature-related dependencies, impacts, risks and opportunities [2].

An organisation should include the following information when responding to this disclosure recommendation:

  • A statement of its efforts to comply with international standards of responsible business conduct, and other human rights and stakeholder engagement policy, guidance, and declarations, as set out for example in the UN Guiding Principles on Business and Human Rights, OECD Guidelines for Multinational Enterprises, UN Declaration on Rights of Indigenous Peoples, ILO Convention 169, Convention on Biological Diversity;
  • The organisation’s approach to identifying and addressing grievances related to the organisation’s potential and actual impacts on nature, including the grievance mechanisms that the organisation has established or in which it participates;
  • A list and description of the affected stakeholders engaged by the organisation and a description of how they were identified;
  • A statement of the purpose of the engagement and whether it takes place in relation to assessment, solution-finding, monitoring and/or evaluation of nature-related issues;
  • A description of the mode of engagement, the process used for engagement, whether engagement is one-off, periodic or ongoing, and through formal or informal structures;
  • A description of whether engagement has been based on Informed Consultation and Participation (IPC) and how Free, Prior and Informed Consent (FPIC) has been attained, especially as it relates to Indigenous Peoples and local communities;
  • The results of the stakeholder engagement processes and how those results have been used by the organisation, including evidence that relevant information is disclosed in a timely manner, using appropriate means, and has been incorporated or otherwise addressed in the organisation’s decision-making and responses to nature-related issues;
  • A statement of whether and how senior management and the board are informed about stakeholder engagement processes and their results.

More detailed guidance is outlined in the following sections.

Guidance on engagement with affected stakeholders

Overview of the LEAP approach

The TNFD has developed an integrated approach for assessment and management of nature-related dependencies, impacts, risks and opportunities called the LEAP approach. LEAP provides accessible guidance on how to understand and respond to nature-related risks and opportunities and is a complement to the TNFD disclosure recommendations.

Since v0.1 of the TNFD beta framework, engagement with stakeholders has been recognised as an important component of the LEAP approach for risk and opportunity assessment

Additional Content

The table below indicates how an effective stakeholder engagement process informs each of the key components of the LEAP approach.

Additional Content

Guidance on stakeholder engagement in the LEAP approach

This document provides guidance on stakeholder engagement through all phases and components of the LEAP approach. Specifically, the guidance outlines:

  • The scope and expected outcomes and benefits of engagement with stakeholders;
  • The relevance of existing due diligence standards;
  • The types of stakeholders who might be affected by the organisation’s impacts and dependencies on nature, and responses to nature-related risks and opportunities;
  • The various modalities of engagement with affected stakeholders;
  • The importance of Informed Consultation and Participation (ICP) and Free, Prior and Informed Consent (FPIC) of Indigenous Peoples and local communities as part of a full and effective engagement process;
  • When and why these engagement processes may be appropriate, based on the types of nature-related issues involved and the needs and objectives of the organisation and its stakeholders; and
  • Insights for incorporating stakeholder engagement and its results into organisational systems for action, feedback and monitoring and evaluation.

The guidance has been developed based on leading international standards, guidelines and frameworks, including but not limited to the:

Scope and benefits of stakeholder engagement

The TNFD’s core concepts and definitions[3] make clear that people are part of nature, have both dependencies and impacts on nature, and can act as stewards to restore and conserve nature. Dependencies and impacts on nature are particularly relevant for communities whose lives and livelihoods depend directly on the land and water, such as Indigenous Peoples and local communities. As a consequence, there are important equity, societal and cultural dimensions of nature-related issues such as:

  • The distribution of access to environmental assets;
  • The distribution of benefits from the provision of ecosystem services;
  • Who is affected by changes in the state of nature (both negative and positive);
  • Who is affected by impact drivers (such as air, water and soil pollution);
  • The links between nature and culture;
  • Who is affected by an organisation’s responses to nature-related risks and opportunities; and
  • The distribution of all related costs and benefits.

While the focus of stakeholder engagement processes will vary depending on the context and the issues of concern/areas of opportunity, the principles that make such engagements effective are broadly the same for good collaboration and relations.

This guidance focuses on stakeholder engagement in situations where the organisation’s activities are contributing to, mitigating or seeking to adapt to nature impacts (both negative and positive) and dependencies on nature, or where the organisation is assessing nature-related opportunities and/or risks. The guidance highlights the importance of engagement with broader stakeholder groups in mitigating,
assessing and responding to nature-related issues, but focuses on engagement with affected stakeholders, especially those whose human rights might be affected (including Indigenous Peoples’ collective rights).

Purposes and benefits of good stakeholder engagement

Understanding nature and nature-related issues from the perspectives of affected stakeholders provides the following important outcomes and benefits to an organisation:

Additional Content

When companies take an integrated approach to human and environmental due diligence and underpin these processes with meaningful engagement with affected stakeholders, they will be well placed to develop a full understanding of nature-related issues and enhance the reputational benefits of responsible business.

Stakeholder engagement and due diligence standards

International standards

Human and environmental due diligence are central to the international standards of responsible business conduct set out in the UN Guiding Principles on Business and Human Rights[4] and the OECD Guidelines for Multinational Enterprises.[5]

Engage with affected stakeholders

International standards on environmental and human rights due diligence include an expectation that organisations engage with potentially affected stakeholders throughout the due diligence process. This applies to the organisation’s nature-related issues and responses to those, wherever these may negatively affect stakeholders’ human rights, as well as other aspects of the organisation’s activities and business relationships.

Identify and assess actual and potential negative impacts

Human rights due diligence involves an organisation identifying and assessing actual and potential negative impacts on people’s human rights across its activities and business relationships; avoiding, preventing, mitigating and remediating those impacts with which they are involved; and tracking and accounting for the effectiveness of its efforts.

Address the harms to affected stakeholders

Where negative effects on human rights are directly linked to an organisation’s operations, products or services through its value chain relationships, but without any contribution on its part, the organisation is expected to use its leverage to seek to address the harms to stakeholders.

The conduct of human rights due diligence is further detailed in Doing Business with Respect for Human Rights[6], which is a comprehensive guide for companies with practical advice and real-life examples to apply the UN Guiding Principles on Business and Human Rights.

Access and Benefit Sharing (ABS)

The Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilisation (ABS) to the Convention on Biological Diversity (CBD) is a supplementary agreement to the CBD. It aims to promote the conservation and sustainable use of biodiversity, while also ensuring the fair and equitable sharing of benefits that arise from the use of genetic resources. The protocol is based on the principle of Prior Informed Consent (PIC)[7] being granted by a provider to a user and negotiations between both parties to develop Mutually Agreed Terms (MAT) to ensure the fair and equitable sharing of genetic resources and associated benefits.

Principles of access and benefit sharing are key to any engagement between organisations, Indigenous Peoples and local communities and the quality and nature of that dialogue should be disclosed. High-quality dialogue and collaboration between organisations,  Indigenous Peoples and local communities embracing these principles, are a sign of a genuinely collaborative approach to the use of genetic resources – and environmental assets more broadly – and traditional knowledge.

The stakeholders in focus

The UN Guiding Principles define stakeholder engagement as an:

‘ongoing process of interaction and dialogue between an enterprise and its stakeholders that enables the enterprise to hear, understand and respond to their interests and concerns, including through collaborative approaches.

An organisation’s stakeholders are defined as the people or groups who can directly or indirectly be affected by the organisation’s activities or through its value chains, as well as those who might have an interest in, or may influence, the organisation’s activities. This guidance focuses on stakeholder groups that might be affected by an organisation’s nature-related activities or value chains and  includes the following groups:[8]

  • Affected communities: including people or groups living or working in the same area that have been, or may be affected, by an organisation’s nature-related activities or through its value chain relationships. Affected communities can range from local communities living adjacent to the organisation’s operations or the site of its activities to those living at a distance but affected, for example, by nature loss, such as the loss of migratory species, or impact drivers, such as water or air pollution that the organisation generates. They can include Indigenous Peoples, who have internationally recognised rights about their lands, territories, resources, cultures, traditional knowledge and the conduct of their affairs, and the right to Free, Prior and Informed Consent before activities affecting their lands may proceed.
  • Own workforce: including an organisation’s full-time and part-time direct employees; employees on short-term contracts or zero hours contracts; non-employee workers who are individual contractors supplying labour (including so-called ‘gig’ workers); workers provided through employment agencies; and migrant workers.
  • Value chain workers: including all individuals performing work in an organisation’s upstream or downstream value chain, where that work relates to the organisation’s own products or services. They may include migrant workers, workers providing on-site security or cleaning services; smallholder farmers, workers involved in waste picking in a recycling process, and informal workers. They may be at any tier in the organisation’s value chain.
  • Consumers and end-users: including all individuals who acquire, consume or use the organisation’s goods and services for personal use, either for themselves or for others, and not for resale or commercial purposes.

These groups are not mutually exclusive. Workers in the workforce or value chain may be members of affected communities, while others may be consumers of products. This guidance does not cover specific standards and expectations regarding trade union rights and workers’ human rights to freedom of association and collective bargaining, nor into forms of social dialogue[9].

Vulnerable groups

Within each group of stakeholders, the greatest care and attention should be given to the most vulnerable[10] and marginalised people, given that they can be particularly at risk of harm from an organisation’s activities that may cause negative impacts on nature. Vulnerable stakeholders may also stand to gain the most from approaches that integrate their concerns and perspectives into an organisation’s nature-related strategies and achieve positive nature outcomes.

Depending on the local context, vulnerable groups may include migrant workers, children or youth, Indigenous Peoples, women and people with disabilities.

Multi-stakeholder processes and collaborations

Multi-stakeholder processes may and typically should involve representation from affected stakeholders and aim to address nature-related issues of shared interest. For example, integrated landscape management approaches involve multi-stakeholder processes aimed at improving the allocation and management of land to achieve social, economic and environmental objectives while preserving valuable ecosystems and the services they provide. Since landscape approaches recognise the interconnections between people and nature, they are well-suited to participatory processes and governance structures that empower marginalised groups.

Although many of the approaches highlighted in this guidance are applicable to multi-stakeholder processes, this guidance is not focused on the conduct of such processes, which can raise additional issues of governance and management. Instead, this guidance is centered on hearing and understanding the perspectives of affected groups, so their insights can inform the identification of nature-related issues and the potential negative impacts on people, potential responses to those impacts (including landscape approaches), and assessments of their effectiveness. The feedback collected should feed into and motivate a broader multi-stakeholder process of collaboration, but it should be a precursor to such initiatives.

Preparedness for stakeholder engagement

Before engaging with affected stakeholders, it is critical that organisations have the right policies, processes, systems and strategy in place to assess and respond to nature-related issues effectively.

This section highlights the importance of organisational preparedness and provides guidance on when and how to conduct effective stakeholder engagement when applying the LEAP approach.

Organisational preparedness

“Relationship building takes time. Many of the hallmarks of good relationships – trust, mutual respect, understanding – are intangibles that develop and evolve over time, based on individual and collective experiences and interactions. For this reason, companies are now beginning to engage with stakeholders at a much earlier stage of a project than in the past. This is especially true for larger, more complex or controversial projects, where companies are initiating engagement at the very early … phases, signalling to communities and other local stakeholders that their views and well-being are considered important.” [11]

Policies and systems for stakeholder engagement

Effective engagement with stakeholders who may be affected by the organisation’s nature-related issues and responses, should be formally integrated into the organisation’s policies, processes and systems.

To be effective, this should include a clear policy framework on engagement with stakeholders that takes a long-term view and focuses on building relationships, avoiding negative impacts, achieving positive outcomes for stakeholders and identifying opportunities for mutual benefit.

The organisation should have robust policies to prevent and address any coercion, manipulation,  intimidation, redress and grievances of affected stakeholders.

Information flows, responsibilities and accountability

Stakeholder engagement needs to be effectively managed, with appropriate anticipation and a clearly defined strategy, set of objectives, timetable, budget and allocation of responsibilities. Setting an organisation up for success in its engagement with stakeholders involves:

  • Ensuring all staff are aware of the stakeholder engagement policy and processes;
  • Informing third parties who interact with stakeholders in connection with the organisation’s business about the policy and any current engagement processes or resulting agreements, in order to help ensure that these are supported and not undermined;
  • Establishing clear responsibilities and accountabilities, including to senior leadership within the organisations, for the appropriate conduct of engagement with stakeholders in line with the organisation’s policies;
  • Ensuring staff responsible for stakeholder engagement have appropriate training and experience and understand the local context and operating environment, including an understanding of local languages, customary law and community protocols;
  • Building a culture where staff who are not part of formal engagement processes with affected stakeholders recognise their own responsibility for supporting and sustaining positive relationships with stakeholders through their own practices; and,
  • Appropriate processes and expectations for informing senior management and the board of significant issues arising in the conduct of stakeholder engagement or regarding significant issues raised through those processes.

The World Economic Forum’s Global Future Council on Human Rights[12] has developed guidance on board duties to ensure an organisation’s  engagement with affected stakeholders. The guidance highlights five questions for an organisation’s board to ask to determine how well the organisation responds to stakeholders affected by its operations.

Resource allocation

Stakeholder engagement requires adequate resources if it is to succeed, including human and financial resources, time and in some situations also technological resources.[13] This may include the  availability of key representatives and assistance with building the capacity of affected stakeholders. This could occur, for example, if an engagement involves technical issues on which stakeholders will require training to participate on equal terms, or the ability to hire an expert advisor of their choosing.

Resources for stakeholder engagement should be agreed up front in the process, recognising that needs may evolve, and should be supported by management.

Engagement processes can fail if they overlook the resource of time. Project and activity timelines need to factor in the time needed for stakeholders to put their own preparations in place for the engagement. Sufficient time must also be allowed  for the engagement itself, traditional/customary governance systems, particularly where there are complex issues, divergent perspectives, and significant consequences to the decisions that will be made.

Where the resource of time is overlooked or underestimated, this can undermine relationships with the stakeholders concerned and have serious consequences for the success of the proposed activities, particularly if  stakeholders then seek other avenues to raise concerns that have not been resolved.

Embedding into organisational strategy

Engagement with affected stakeholders in the context of on-going business activities is not a one-off activity or peripheral process. To succeed and play its necessary role in the LEAP approach for identification, assessment and management of nature-related issues, stakeholder engagement should be embedded into the wider organisational strategy and responses. This can be important, at the very least, to ensure that adequate time and other resources are allocated to the stakeholder engagement process.

The organisation’s strategy can leverage the following insights from stakeholder engagement to apply the LEAP approach:

  • Where and how affected stakeholders depend on the same ecosystem services as the organisation, particularly areas with low integrity ecosystems, and/or of high biodiversity importance and/or water stress, and the potential effects of nature loss and degradation on their basic rights and welfare;
  • Where and how the organisation’s strategy for managing nature-related risks and opportunities implies impacts on, or opportunities for, affected stakeholders and whether and how negative impacts will be avoided or minimised; and,
  • Whether and how estimations of the resilience of the organisation’s strategy on nature-related issues takes sufficient account of the perspectives, priorities, needs and plans of affected stakeholders and the quality of the organisation’s existing relationships.
Mapping affected stakeholders

The starting point for stakeholder engagement in the LEAP approach is to develop a full understanding of the stakeholders who:

  • May have shared dependencies on nature alongside the organisation, in areas with low integrity ecosystems and/or of high biodiversity importance and/or of water stress, and where nature loss and degradation have potential impacts on their basic rights and welfare;
  • May be affected positively or negatively by the organisation’s impacts on nature;
  • May be affected by an organisation’s responses to nature-related issues, including mitigation and adaptation strategies, and any related innovations or changes in their business model;
  • May be important to advance nature-related opportunities and bring added value to the realisation of such opportunities.

Organisations should consider all four categories of potentially affected stakeholders (as outlined in section 3.5), including affected communities, the organisation’s own workforce, value chain workers, and end-users and consumers. Stakeholder groups who are particularly vulnerable to harm should be prioritised for engagement. Care should be taken not to assume that one or other group is not affected, without evidence for that conclusion.

Stakeholder groups are far from homogenous. Migrant workers, women workers, young workers, people with disabilities and some ethnic or racial groups may have distinct vulnerabilities and perspectives that need to be included through the stakeholder engagement process. Similarly, women, youth, distinct racial groups and other sub-groups within communities and among smallholder farmers  may have experiences and perspectives that are important to understand to effectively identify the range of nature-related issues resulting from an  organisation’s strategies and action plans.

Identifying Indigenous Peoples and Local Communities depends on the context and differs from country to country. In some countries, their occupation and use of lands and territories before colonial invasion serve as a standard means of identifying them. Other features, including attachment and use of their lands, or marginalisation based on methods of life or forms of production that are different from the dominant model, are more relevant in other contexts, such as in African countries. Particular attention should be provided to Indigenous Peoples in voluntary isolation, who are difficult to identify and often the most vulnerable.

The mapping process should distinguish these sub-groups clearly and seek to understand the distinct ways in which these groups may need to be engaged  to understand how they may be affected and to share their perspectives.


In many situations, organisations will engage with certain stakeholders through their representatives, where engaging with the group collectively is not possible or not appropriate to the purpose, or where stakeholders choose to engage via such representatives.[14]

In these situations, organisations should ensure that the individuals concerned are recognised by the stakeholders as their legitimate representatives. In the case of Indigenous Peoples, this is based on their culture, customary law and established practices and traditions, while for workers, this is based on their election through processes that align with international standards.

It can be important to ensure that the legitimacy and perceived integrity of representatives is not undermined by paying them for their engagement, while also recognising that such arrangements may be essential for them to be able to dedicate the time needed away from other work or livelihoods. It is also important  to understand whether representatives are representing the perspectives of all groups within their constituency, including otherwise vulnerable and marginalised individuals.

Organisations can seek verification that representatives are communicating the results of engagement back to their constituents by talking periodically to a sample of individuals.

Situations where direct engagement is not possible

In certain circumstances, it may not be possible for an organisation to engage directly with stakeholders if, for example, this exposes them to risk or  they are physically difficult to reach. This can be particularly relevant for  financial institutions, given  the breadth and scale of nature-related issues across a lending, insurance or investing portfolio, where financial institutions are often far removed from the companies and locations where dependencies, impacts, risks and opportunities arise.

In this case,  organisations must look for other avenues to gain insight into their likely perspectives and experience, such as  credible proxies or third-party experts. Distinctions between these groups are summarised below.

A perceived lack of time should not become a rationale for defaulting to engagement with alternative sources, which can quickly contribute to poor relationships with affected stakeholders, create risks to the success of the activities or initiative on which engagement is focused, and prevent opportunities for collaboration.

There are some important distinctions between affected stakeholders and their representatives, credible proxies and experts:

  • Potentially affected stakeholders and their legitimate representatives: individuals who have been, or could be, affected by an organisation’s nature-related issues, and response to those. These could include its own workforce, workers in the value chain, smallholder farmers and their families, members of local communities and Indigenous Peoples, and their legitimate representatives such as indigenous leaders and local trade unions.
  • Credible proxies: individuals with sufficiently deep experience in engaging with affected stakeholders from the relevant region or context, such as women workers on farms within the region, Indigenous Peoples, local communities or migrant workers, who can help to convey their likely concerns effectively. Credible proxies might include development and human rights NGOs, international trade unions and community-based organisations, including faith-based organisations.
  • Recognised experts: individuals who can bring knowledge or expertise regarding the kinds of concerns, issues and priorities that affected stakeholder groups have been known to convey, and the types of nature-related impacts and dependencies concerned, within relevant geographical contexts. Recognised experts might include academics, anthropologists and researchers with expertise in the groups concerned.

Designing and conducting stakeholder engagement

Once affected stakeholders and their legitimate representatives have been identified, there is an opportunity to involve them in the design of the engagement process. This is particularly relevant as organisations apply the LEAP approach to evaluate their dependencies and impacts on nature and assess their nature-related risks and opportunities. It can help ensure that there is alignment between the organisation and the stakeholders concerned about the purpose of the engagement, the mode of engagement used and its potential outcomes. It can also help ensure that the approaches adopted are culturally appropriate and supportive of participation and inclusion.

Engagements where the expectations of the organisation and the affected stakeholders are misaligned can lead to an erosion in relationships that jeopardise  the intended benefits.

General principles of good engagement

Respected guidance identifies a range of principles that should guide any stakeholder engagement process, regardless of the mode of engagement.

Engagement process principles should:[15]

  • Be targeted at those most likely to be affected;
  • Be responsive to the perspectives, needs and interests of disadvantaged and vulnerable groups, and Indigenous Peoples and local communities;
  • Be based on the prior disclosure and dissemination of relevant, objective, meaningful and easily accessible and understandable information in a timeframe that enables engagement in a culturally appropriate format;
  • Consider the different access and communications needs of various groups and individuals, especially those who are vulnerable or disadvantaged, and use language, formats and techniques that are culturally appropriate;
  • Be two ways, enabling all participants to exchange views and information, hear from others, take the initiative in raising issues and have their issues addressed, including outside of formal meetings;
  • Be carried out in a non-discriminatory manner, free of external manipulation, interference, coercion, discrimination and intimidation, including the application of ethical codes of conduct to ensure cultural behaviours are respected, especially for Indigenous Peoples and local communities;
  • Be gender-inclusive, recognising that men and women often have differing views and needs; and
  • Be adequately documented both in substance and process.

Further engagement principles are covered in the next sections of this guidance and in the IFC Stakeholder Engagement: A Good Practice Handbook for Companies doing Business in Emerging Markets, IUCN stakeholder engagement guidance, and ICMM’s Stakeholder Research Toolkit

Modes of engagement

Stakeholder engagement encompasses a broad variety of methodologies, from ‘pushing’ information out to stakeholders (‘pitch’ or ‘disclose’), to ‘pulling’ information in from stakeholders (‘consult’), to engaging in a problem-solving dialogue with stakeholders (‘collaborate’), to partnering and sharing power of decisions and actions (‘agree’).[16] The different modes of engagement are not mutually exclusive and may take place in parallel with different groups or in cycles, with the caveat that ‘pitching’ will never be sufficient on its own.

The stakeholder engagement methodologies can make a LEAP assessment more collective, holistic and robust.

Examples of modes of engagement

Disclose: In all engagement processes, organisations will need to disclose information to affected stakeholders about the full range of nature-related issues affecting them, including, importantly, the potential harmful impacts on stakeholders of negative nature-related impacts.

For example:

  • In considering a strategy to improve plastic waste management and recycling where waste-pickers typically do most of the work collecting and sorting the waste, it is essential to begin the engagement process by disclosing what the changes in the strategy will mean for their livelihoods and for their health and safety in the waste-picking process.
  • In advance of an engagement with local communities regarding planned changes in water usage and recycling, those communities will need to understand both the opportunities and benefits that these changes might bring in terms of the sustainability of their own water supply or potential job creation in the area, and to be informed about any potential negative impacts in terms of water flows and distribution, or other impacts.

Consult: organisations will need to consult with affected stakeholders as part of the identification, assessment and management of nature-related issues. For example:

  • In considering a strategy to move a part of its operations to a less water-stressed region, an organisation may consult with workers and their representatives about the effects on jobs, particularly on low-paid workers. This may help identify opportunities for reskilling, for some workers to transfer to other locations, or for other terms that ease the transition for that workforce.
  • In considering the restoration and protection of wetlands, an organisation may consult with communities that use or otherwise claim rights to the lands that would be acquired for those purposes. This can help identify their dependencies on the land and the cultural and land-related concerns of any Indigenous Peoples that are present. It can lead to a better and shared understanding of the viability of different land-related options and of the agreements that would be needed with affected communities to avoid impacts on them, maximize potential benefits and ensure business continuity.

Collaborate: engagement with affected stakeholders may involve collaboration in certain processes or to achieve certain outcomes.

  • For example, an organisation may collaborate with local communities to arrive at a joint assessment of local water usage and nature-related impacts to determine a shared response and plan of action for  the impacts.

Agree: engagement may require clear agreements and partnerships where decision making, and action is shared for nature-related issues to be managed. This can be particularly necessary in engagements with Indigenous Peoples, given their right to Free, Prior and Informed Consent about activities affecting their lands, territories and resources.

For example:

  • An organisation may engage and negotiate with Indigenous Peoples to reach an Access and Benefit Sharing Agreement on a use of genetic resources that derives from Indigenous Peoples’ traditional knowledge, and to share the economic benefits with those Peoples.

An organisation may engage with smallholder farmers to reach a form of agreement or partnership that introduces  more sustainable farming methods, supports the creation of a local co-operative and provides benefits in the prices paid and security of supply.

Enabling participation

The design of any engagement will need to consider the practical arrangements. Attention should be paid to any barriers that stakeholders may face to participation. These may be:

  • Access to timely information;
  • Barriers of language or literacy;
  • Ease of access to certain locations;
  • Barriers regarding trust and confidence to engage openly and without fear of retaliation;
  • Cultural appropriateness of venues, such as meetings in large, official office buildings with heavy security compared to a local village or farm site;
  • Timing of meetings where attendance can be limited by holidays, harvest time or busy work periods, including times of the day when women are typically busy; and
  • Barriers faced by certain sub-groups who may need separate spaces and means to raise their voices, such as women in situations where their voices are marginalised in community decision-making, or migrant workers who fear for their jobs if they raise concerns.

The International Finance Corporation’s Good Practice Handbook for Companies on Stakeholder Engagement[17] highlights several key factors that should be considered to ensure the effective integration of gender considerations in stakeholder engagement processes.

Stakeholders will need to be fully informed in advance of any engagement process to understand what the process is, what the timeframe and timetable and objectives are, and background information so they can prepare their thinking and any supporting resources.

Organisations need to consider not only the resources that they will need to bring to the engagement, but also the resources required of the stakeholders concerned. Engagement with those concerned can be important in understanding those resource needs. Organisations can work with stakeholders to identify costs and how they can be minimised or covered so that they are not a barrier to engagement.

Capacity-building support

Affected stakeholders may also need time, resources, and support to build their own capacity so that they can engage as equals in the process. For example:

  • If an organisation is drawing on scientific data on ecosystems to assess the viability of an activity or strategy, it is important that the stakeholders have the capability to understand and interpret that information and trust that it is legitimate and gathered and used without bias;
  • In instances where there are diverse stakeholders involved, such as smallholder farmers from across a region or who farm different commodities, they may need support and resources to organise their own voices and concerns so that they can engage effectively with the organisation.

In the design phase, an organisation can engage with stakeholders and their representatives to identify such needs and how they can be resourced in ways that are acceptable to the stakeholders. This can include, if necessary, bringing in third-party expertise that the stakeholders identify or otherwise recognise and accept.

Outcomes from engagement processes where stakeholders feel, at the time or subsequently, that they did not have the opportunity to engage on an informed and equal basis will be inherently fragile and may generate lost trust and poor relationships into the future. They may also lead to formal objections and obstruction to the organisation’s plans.

Indigenous Peoples and Free, Prior and Informed Consent

Indigenous Peoples enjoy collective rights as recognised ‘peoples’ under international human rights law. These are set out in the International Labour Organisation’s Convention 169 on Indigenous and Tribal Peoples, the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) and the Convention on Biological Diversity (CBD).

There is no single, agreed definition of Indigenous Peoples. The primary principle is that groups are able to self-identify as Indigenous Peoples. International Labour Organisation (ILO) Convention 169 highlights that Indigenous Peoples are typically distinct cultural groups with traditional lifestyles that differ from other segments of a country’s population in terms of language, customs, their relationship to the land and livelihoods. They have their own social organisation, typically including their own traditional customs and/or laws.

The human rights of Indigenous Peoples include a range of substantive rights. For example, rights to:

  • Own, use, develop and control the lands, territories and resources that they possess by reason of traditional ownership or other traditional occupation or use, or which they have otherwise acquired;
  • Determine and develop priorities and strategies for the development or use of their lands or territories and other resources;
  • Maintain, control, protect and develop their cultural heritage, traditional knowledge and traditional cultural expressions, as well as the manifestations of their sciences, technologies and cultures, including human and genetic resources, seeds, medicines, knowledge of the properties of fauna and flora, oral traditions, literatures, designs, sports and traditional games and visual and performing arts; and
  • Maintain, control, protect and develop their intellectual property over such cultural heritage, traditional knowledge and traditional cultural expressions.

Article 8j of the Convention on Biological Diversity (CBD)

“Each Contracting Party shall, as far as possible and as appropriate:

Subject to its national legislation, respect, preserve and maintain knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyles relevant for the conservation and sustainable use of biological diversity and promote their wider application with the approval and involvement of the holders of such knowledge, innovations and practices and encourage the equitable sharing of the benefits arising from the utilization of such knowledge, innovations and practices.”

The UNDRIP sets out the specific right of Indigenous Peoples to have their Free, Prior and Informed Consent (FPIC) sought in relation to activities affecting their land, territories or other resources, and the right to provide or to withhold that consent.

While the right to Free, Prior and Informed Consent is particular to Indigenous Peoples, where an organisation’s activities affect the lands, waters and livelihoods of other local communities, they may judge it appropriate to apply other approaches, such as an Informed Consultation and Participation (ICP)[18] process. Doing so may help reduce risks and secure opportunities and benefits associated with the activities.

The OECD Due Diligence Guidance on Meaningful Stakeholder Engagement in the Extractive Sector and the Business Reference Guide to the UN Declaration on the Rights of Indigenous Peoples highlight a range of additional considerations when the mode of engagement is based on the objective of Free, Prior and Informed Consent.

Legal requirements for FPIC

ILO Convention 169, UNDRIP and CBD set out certain duties of states regarding the conduct of FPIC, in situations where public or private sector activities affect Indigenous Peoples’ lands, territories and resources, or their broader right to self-determination. In a growing number of countries, such duties are reflected in national legislation in varying degrees and with varying levels of specificity.

Care should be taken to ascertain the extent and quality of any prior engagement process with Indigenous Peoples on which an organisation plans to rely. As the International Finance Corporation notes in its Stakeholder Engagement Handbook:[19]

“In some sectors, such as natural resource extraction for example, government may be required to engage with indigenous communities prior to the involvement of a private company in the project. The manner in which such consultation takes place and the level of stakeholder satisfaction following such engagement can have direct implications for the project company that is subsequently granted an exploration license in an area impacting indigenous communities. For this reason, it is advisable to conduct due diligence on prior consultations with indigenous peoples to determine at what stages such engagement took place and what commitments were made or what unresolved issues still exist.”

Further guidance and information on the conduct of FPIC can be found in the UN Food and Agriculture Organisation (FA) toolkit.[20] The CBD also adopted Mo’ otz Kuxtal Voluntary guidelines[21] for the development of mechanisms, legislation or other appropriate initiatives to ensure the “prior and informed consent”, “free, prior and informed consent” or “approval and involvement”, depending on national circumstances, to access the traditional knowledge of Indigenous Peoples and Local Communities and for fair and equitable sharing of benefits arising from the use of their knowledge that is relevant for the conservation and sustainable use of biodiversity.

Stakeholder engagement in systems for action and feedback

Stakeholder engagement will only succeed and add value for all parties if it delivers results. Without this, the process risks being seen by stakeholders as insincere, and relationships may worsen rather than improve as a result, increasing risks for the organisation and undermining opportunities that may otherwise have materialised.

It is therefore important that, as the organisation prepares to respond to nature-related issues in the LEAP approach, it also:

  • Has internal systems for integrating the views and proposals of stakeholders into decision-making at management level;
  • Ensures that commitments or agreements are formally recorded and integrated into systems to ensure they are implemented, with accountability for action;
  • Keeps affected stakeholders informed of progress, changes or delays in the implementation of commitments or agreements and explains any reasons for changes or delays; and
  • Keeps affected stakeholders informed of the results and conclusions of the project.

Providing feedback to stakeholders on how their inputs in an engagement process have influenced the organisation’s decisions or actions, or any reasons why particular feedback has not been acted on, is important to maintain positive relationships and a foundation for future engagement. Without such feedback, frustrations can fester, assumptions may be made about the organisation’s motivations and practices, which, at worst, may culminate in pushback or protest when the organisation seeks to proceed with its plans.

Where the mode of engagement is intended to be one of collaboration, or a process to reach and implement an agreement, continuous updates on developments from all involved are essential to ensure success.

As part of their governance of stakeholder engagement, organisations should have formal and accountable internal processes and mechanisms to track and report back regularly on commitments and agreements made.

Grievance mechanisms

Stakeholder engagement processes should enable the development of positive relationships to surface and address concerns about the impacts on of an organisation’s nature-related plans on stakeholders.

At the same time, grievances may arise about the conduct of the process, the implementation of its results, or substantive issues that a stakeholder feels have not been appropriately addressed. Similar risks exist in any such process. A well-defined and functioning grievance mechanism that provides a recognised and effective channel for such issues to be surfaced, raised and formally addressed is important so that grievances can be identified and resolved before they compound, escalate and undermine the engagement process. It is also important to track grievances, the company’s response and the outcome to ensure timely closing and so lessons can be learnt.

The international standards on responsible business conduct (i.e., the UNGPs and OECD guidelines) set out an expectation that all businesses should have in place an effective operational-level grievance mechanism for individuals and communities who may be adversely affected by the company’s activities, which includes its responses to nature-related issues. They establish clear criteria for the effectiveness of such mechanisms.[23]

Grievance mechanisms are distinct from the process of stakeholder engagement itself – neither is a substitute for the other, but they are complementary and mutually reinforcing.[24]

Engaging stakeholders in monitoring and evaluation

Where an organisation is seeking to develop nature-related metrics and targets, it can be important to include the development of these within the stakeholder engagement process to:

  • Jointly develop metrics and monitoring mechanisms with stakeholders, especially those most affected;
  • Ensure that the metrics and targets are seen as credible by those most directly affected by the outcomes and reflect outcomes that are of greatest significance to their interests and wellbeing;
  • Ensure that inputs to the evaluation of progress against targets are credible, seen as legitimate and provide for qualitative as well as quantitative factors, as appropriate;
  • Build confidence that there will be accountability for outcomes based on the clarity and transparency with which they will be measured and evaluated; and,
  • Enable easy access to the data needed to evaluate progress against targets, not least where affected stakeholders may be best positioned to gather and provide certain types of data.

The TNFD has published additional guidance on target-setting for users of the TNFD framework. Including affected stakeholders in the design, monitoring and evaluation of progress towards nature-related targets can help ensure the credibility of the outcomes that the organisation reports back to stakeholders, including through formal reporting. This will also ensure Indigenous Peoples and Local Communities can exercise custodian responsibilities to act on behalf of the environment and support the change management process. As with other forms of collaborative engagement, stakeholders will need to have the technical capacity to engage in joint monitoring and evaluation, or to be supported in building or accessing that capacity.

Stakeholder engagement is a process, not an event or a one-off exercise. Organisations need to evaluate whether an engagement process is leading to the desired outcomes and positive relationships with affected stakeholders so they can  identify opportunities for learning and improvement to strengthen both ongoing and future engagement processes.

The evaluation of engagement processes requires measurable indicators and necessitates feedback from the stakeholders concerned.  Indicators will be most credible if developed with the stakeholders concerned, and if agreed upfront in the design of the engagement process. Feedback may be gathered through existing engagements or through separate in-person, survey-based, digital or other interactions in simple and culturally appropriate language.

Organisations may also engage an independent expert to evaluate their stakeholder engagement activities. To ensure that feedback from stakeholders effectively highlights opportunities to strengthen and improve stakeholder engagement processes, it is important to ensure that individuals feel able to provide their honest views, without fear of repercussions.

Details of this engagement with stakeholders in the evaluation of an activity or initiative can be found in the Shift Project’s Stakeholder Voice Report.[3] Guiding indicators to evaluate stakeholder engagement process are detailed in the OECD Guidance for Meaningful Stakeholder Engagement in the Extractive Sector [25] and the ICMM Understanding Company-Community relations toolkit.[26]