Stakeholder Engagement in Guidelines and Legislation

The OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights expect companies to engage stakeholders on an ongoing and meaningful basis throughout the due diligence process.

What do the guidelines say?

Stakeholder engagement is an integral part of due diligence

Stakeholder engagement and should take place throughout all steps of the process (such as policy development, risk assessment, addressing adverse impacts, and providing access to remedy).

Stakeholders

Stakeholders are individuals or groups (or their legitimate representatives) whose rights or interests are (or may be) affected by a company’s activities, products, or services. These include communities, workers, consumers, trade unions, NGOs, industry peers, business partners, and investors. Within this group, particular attention is given to rights-holders: stakeholders whose human rights may be at risk.

Meaningful engagement

Meaningful engagement means that it is ongoing and based on two-way communication and good faith. Companies should share information with stakeholders in a timely, understandable, and accessible manner. They should also remove barriers to participation, especially for vulnerable or marginalised groups.

Alternative sources

Where direct engagement is not possible, companies are expected to rely on other credible sources, such as civil society organisations.

What does this mean for companies?

For companies, this means that stakeholder dialogue is not a one-off activity, but a structural part of how you operate. In practice, this means that you:

• Systematically engage stakeholders in all steps of your due diligence process
• Prioritise stakeholders who are most affected
• Actively listen and demonstrate how their input informs decisions and actions
• Invest in accessible and safe forms of dialogue
• Consult alternative sources where direct dialogue is not possible

Relevant resources

• OECD (2023), OECD Guidelines for Multinational Enterprises on Responsible Business Conduct.
• OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct.
• UN Guiding Principles on Business and Human Rights (2011).

The Corporate Sustainability Reporting Directive requires companies to report on material sustainability topics. Engaging stakeholders is essential in identifying these topics and substantiating strategic choices. Companies must also report on how they engage stakeholders.

What does the directive say?

The CSRD is further elaborated in the European Sustainability Reporting Standards (ESRS), which specify what and how companies must report. The ESRS are expected to be republished in 2026.

Definition of stakeholder engagement

The ESRS define stakeholder engagement as “an ongoing process of interaction and dialogue between the undertaking and its stakeholders that enables the undertaking to hear, understand and respond to their interests and concerns”.

Definition of stakeholders

Stakeholders are those who can affect or be affected by the undertaking. The ESRS distinguish two main groups of stakeholders:

• Affected stakeholders: individuals or groups whose interests are affected or could be affected – positively or negatively – by the undertaking’s activities and its direct and indirect business relationships across its value chain
• Users of sustainability statements: including investors, lenders, business partners, trade unions, civil society, governments, analysts, and academics.

Double materiality assessment

Companies must determine their material sustainability topics through a double materiality assessment (impact and financial materiality). Stakeholder engagement is essential here, as stakeholders provide insights into relevant impacts, risks, and opportunities.

Stakeholder influence on strategy

Companies must explain how stakeholder interests and views are considered in their strategy and business model.

Targeted dialogue on risk topics

Several thematic standards require consultation or dialogue with (affected) stakeholders, for example in relation to grievance mechanisms for workers and communities.

What does this mean for companies?

For companies, this means that stakeholder engagement plays a central role in both the content and substantiation of sustainability reporting. In practice, this means that you:

• Actively involve stakeholders in identifying and prioritising material topics
• Incorporate their perspectives in assessing impacts, risks, and opportunities
• Are transparent about how stakeholder input informs strategy and decisionsv
• Organise stakeholder dialogue structurally, not only for reporting purposes
• Establish processes to capture and follow up on stakeholder signals (e.g. through grievance mechanisms)

This directive requires companies to structurally integrate stakeholder engagement into their due diligence on human rights and environmental issues.

What does the directive say?

Stakeholder engagement as an integral part of due diligence

Companies shall carry out effective stakeholder engagement throughout the due diligence process, including in relation to the identification, assessment, prioritisation, prevention, mitigation, cessation and remediation of actual and potential adverse human rights and environmental impacts.

Definition of stakeholders

Stakeholders include employees of the company, employees of its subsidiaries and business partners, trade unions and workers’ representatives, as well as individuals or communities whose rights or legitimate interests are or could be directly affected by the company’s own operations, those of its subsidiaries, or those of its business partners, including their legitimate representatives.

Meaningful engagement

This means:

• Engagement is based on genuine, two-way communication and dialogue, conducted at appropriate stages and frequency throughout the due diligence process
• Companies provide relevant, adequate and timely information prior to consultations, in a manner that is accessible to stakeholders
• Companies identify and address barriers to engagement and ensure that stakeholders are protected against retaliation, including through appropriate measures to safeguard confidentiality and anonymity where necessary

Use of alternative sources

Where direct engagement is not possible or additional expertise is needed, companies must consult other reliable sources such as civil society organisations, legal entities, or experts in human rights and environmental issues.

Grievance mechanisms and dialogue

Companies must establish or participate in accessible, predictable and transparent complaint and grievance mechanisms. Affected stakeholders should be able to raise concerns and engage in dialogue on adverse impacts and appropriate remediation.

Continuous improvement

Companies must periodically update their due diligence policies and measures, including based on stakeholder input.

What does this mean for companies?

For companies, this means that stakeholder engagement is a core element of responsible business conduct and must be continuously embedded in decision-making and due diligence processes. In practice, this means that you:

• Systematically engage stakeholders in identifying, assessing, addressing, and remediating risks and adverse impacts
• Prioritise directly affected stakeholders (rights-holders)
• Ensure open and safe dialogue with room for genuine interaction
• Share information in a timely, understandable, and accessible way prior to consultations
• Actively remove barriers to participation, with particular attention to vulnerable groups
• Ensure safe participation, for example through confidentiality and protection against retaliation
• Establish accessible grievance mechanisms and follow up on stakeholder signals
• Use additional sources (such as NGOs or experts) when direct dialogue is not possible or insufficient
• Use stakeholder input to continuously improve policies and measures

Relevant resources

• Directive: Articles 3, 13, 14 en 15 and Recital 65.
• Directive amendments

The EU Forced Labour Regulation does not contain explicit requirements for companies regarding stakeholder engagement. At the same time, stakeholder dialogue does play an important role in identifying forced labour in supply chains.

What does the regulation say?

No explicit requirements on stakeholder engagement

The regulation does not prescribe that companies must engage stakeholders to comply.

Dialogue as a means to understand risks

It is essential for companies to actively gather signals about (risks of) forced labour through stakeholders in the value chain.

Relevant stakeholders

Particularly workers’ representatives, local trade unions, and NGOs in high-risk areas can provide valuable insights.

Role of authorities

Iinvestigative authorities will also engage with stakeholders to assess risks of forced labour.

What does this mean for companies?

Even without an explicit obligation, stakeholder dialogue helps you identify and mitigate forced labour risks in a timely manner. In practice, this means that you:

• Proactively engage with stakeholders in high-risk areas, such as trade unions and NGOs
• Actively collect signals about potential forced labour in your value chain
• Incorporate these signals into your risk assessment and follow-up actions
• Use stakeholder insights to identify and address issues at an early stage
• Reduce the risk of products being (potentially) withdrawn from the market

Relevant resource

• Regulation articles 14, 17 and 18.

The EU Deforestation Regulation contains limited explicit requirements on stakeholder engagement, but in practice, dialogue plays an important role within the due diligence requirements.

What does the regulation say?

Limited explicit requirements

The regulation does not extensively prescribe whether and how companies should engage stakeholders.

Dialogue as part of risk assessment

Stakeholder input helps identify deforestation risks and is therefore indirectly part of the due diligence statement.

Free, Prior and Informed Consent (FPIC)

Companies must engage with Indigenous peoples to ensure free, prior, and informed consent.

Supply chain collaboration

Strong relationships with suppliers are important, for example to obtain reliable geolocation data and support compliance with the regulation.

What does this mean for companies?

Under the EUDR, stakeholder dialogue is not mandatory but serves as a practical tool to comply with the regulation and reduce risks. In practice, this means that you:

• Engage stakeholders to better understand deforestation risks
• Proactively engage with Indigenous peoples to ensure FPIC is properly respected
• Invest in strong relationships with suppliers across your value chain
• Collaborate on reliable data (such as geolocation data)
• Support suppliers, for example through capacity building or investments, to enable compliance

Relevant resource

• Regulation articles 10 and 11