What to do when you have no ....
QUESTION 1 Use the stakeholder model of business environments, examine the factors external to the company which contributed to Enrons eventual downfall. Stakeholders are the groups of people or individuals who depend on the organization to fulfill their own goals and on whom the organization depends. Depending on the relationship between the stakeholder and the firm we can divide the different stakeholders in two different groups, the internal and the external stakeholders. The internal stakeholders are - Employees: - Managers And the external stakeholders are - Owners: shareholders - Suppliers - Customers - Partners - Governments - Houston community - US citizens - Governments from other countries - Citizens from other countries - Competitors - Public interest groups: Amnesty international - Journalists - Economists/ analysts - Financial institutions (world bank) The World bank cancelled loans to finance projects The World Bank refused on several occasions to fund projects that Enron was planning to have in countries outside the USA. Their analysis often claimed that the price of power generated by the project would have been too high and the projects werent always economically viable. Environmental groups have also lobbied several times to stop loan approvals at the bank. Environmental organizations have written reports on environmental and social records on Enron as one of the multinational water companies. They claimed that companies like Enron were heavily involved in corruption, pollution, connections to oppressive regimes and human rights abuses, whereas a supplier of water should be aware of the public interest, putting people and environment first and that they should be subject to proper rules of democratic accountability. Customers in other countries accused Enron to supply dirty water which damaged the reputation but also the confidence that customers had. Amnesty international accused Enron of : - environmental pollution - lobbying - human rights abuses - bribery allegations - lack of transparency Local and national governments disputed Enrons business Profits were perceived to come at the expense of local consumers Amnesty international claimed that Enron mistreated employees in low paid countries Other governments were claiming to have received threats from US diplomats Partnerships exposed deals and debts which they had to conceal when marketprice fall Potential purchaser pulled out when financial situation got revealed Shareholders pulled out when financial situation got revealed. Increasing Accountability through External Stakeholder Engagement Caroline Neligan One World Trust, Houses of Parliament, London, SWIA 0AA. UK OWT Charity No. 210180 For further information please contact Caroline Neligan, GAP Research Officer at neliganc@parliament.uk 27/08/2003 2 Increasing Accountability through External Stakeholder Engagement Contents Introduction ..3 Who is a stakeholder? ...............................................................4 What does engagement mean? ..............................................6 Where are decisions taken? 7 What makes engagement effective? ..8 Conclusion 11 Resources . 13 One World Trust, Houses of Parliament, London, SWIA 0AA. UK OWT Charity No. 210180 For further information please contact Caroline Neligan, GAP Research Officer at neliganc@parliament.uk 27/08/2003 3 Introduction International organisations operating in the 21st Century, regardless of their activities or mandate, do not operate in a vacuum. Increasingly, organisations that work at the international level, be they transnational corporations (TNCs), inter-governmental organisations (IGOs) or international non-governmental organisations ( NGOs), are conscious of their ethical responsibility to ensure that their activities are not undertaken to the detriment of society or the environment. The decisions these organisations make will affect others, and if they are to demonstrate that they are accountable for these decisions they must be responsive to the voices of their stakeholders. Integrating the views and needs of those affected by certain decisions is important for a number of reasons. Firstly, where individuals and communities feel that their needs are not being met and no effective accountability mechanisms are present, dissatisfaction is often expressed through protest (Global Accountability Report, 2003). Integrating the views and needs of those affected by certain decisions can not only help reduce conflict, but can also lead to better outcomes (Greenhall & Rovere p.3). Moreover, organisations have to take an increasing number of factors into account when undertaking their operations. For those organisations that truly seek to be accountable and responsible for their actions in terms of environmental and social equity, there is an increasing recognition that these aims cannot be achieved by acting in isolation. The engagement of governments, the private sector, civil society and citizens to reach these ends is vital. The need for stakeholder engagement is, therefore, gaining increasing acceptance within all the types of organisation studied in the Global Accountability Project (GAP). However, the concept is ill-defined and risks being used to describe (and therefore suggest the accountability of) processes that do not truly enable stakeholders to have their voices heard at significant levels of the decision-making process.