Stakeholders

Definition

Stakeholders are individuals or groups that have an interest in the success and decisions of a business. They can affect or be affected by the organization's actions, objectives, and policies.

5 Must Know Facts For Your Next Test

1. Stakeholders include internal parties like employees and managers, as well as external parties such as customers, suppliers, investors, and the community.
2. In the context of the Balanced Scorecard, stakeholders are essential for providing diverse perspectives that help in evaluating performance across multiple dimensions.
3. Sustainability reporting often addresses stakeholder concerns about environmental, social, and governance (ESG) issues to demonstrate corporate responsibility.
4. Effective stakeholder engagement can lead to improved business value through enhanced reputation, better risk management, and stronger relationships.
5. The interests of stakeholders must sometimes be balanced against one another; for example, prioritizing long-term environmental sustainability over short-term financial gains.

Review Questions

• Who are considered stakeholders in a business context?
• How does the Balanced Scorecard incorporate stakeholder perspectives?
• Why is stakeholder engagement important in sustainability reporting?

Related terms

Balanced Scorecard:

A performance measurement framework that includes financial and non-financial metrics to provide a comprehensive view of organizational performance.

Sustainability Reporting:

The practice of disclosing information on a company's economic, environmental, and social impacts to demonstrate accountability.

Corporate Social Responsibility (CSR):

A business model that helps companies be socially accountable to themselves, their stakeholders, and the public.