Why is the stakeholder approach important to social responsibility? 500 Legitimacy of stakeholders and their interests 514

8 © ISO 2007 - all rights reserved success of an organization depends on its ability to identify, to take into consideration and to systematically 489 manage the interests of multiple stakeholders. 490 Specifically concerning the purpose of improving its social responsibility, an organization should: 491  Identify all its stakeholders in order to develop an understanding of their interests that are relevant to 492 sustainable development and the welfare of society; and 493  Engage with those [key] stakeholders – to listen, understand and respond to their expectations and 494 concerns. 495 Subsequent to identifying and engaging with its stakeholders, an organization may find that there are a 496 large number of interests that require attention. A method of prioritizing the interests should be employed 497 that is transparent to the stakeholders, as it is likely that not all interests can be satisfied at one time, or in 498 some cases at all. 499 4.4.2 Why is the stakeholder approach important to social responsibility? 500 By identifying and working with interests that are relevant to sustainable development and the welfare of 501 society, it is possible to develop mutually beneficial outcomes for a wide range of stakeholders. For 502 example, corporations that behave in a socially responsible manner will benefit by creating value for their 503 shareholders in terms of higher profits, their customers for example by enhancing the quality of the 504 products, their employees for example by improving the working conditions, their suppliers for example 505 by agreeing on fair contracting and payment practices and the local communities in which they operate for 506 example through community investment programmes. In other words, socially responsible corporations 507 strive to create value for all their [key] stakeholders. 508 However, mutually beneficial outcomes may not always arise when organizations are addressing social 509 responsibility issues. There can be direct conflicts between the aims of an organization and the interests of 510 its stakeholders. The clearest and most repeated example of this concerns environmental impacts. Every 511 organization has impacts on the environment that can be challenging to address, in particular in the manner 512 in which stakeholders may desire, while pursuing its organizational goals. 513

4.4.3 Legitimacy of stakeholders and their interests 514

The determination of whether a stakeholder’s interests are legitimate, or whether indeed a stakeholder itself 515 is legitimate, can cause difficulty for an organization because it may not be the ultimate decision maker of 516 legitimacy. The legitimacy of some stakeholders is determined by a legal framework. In situations that are 517 not controlled by law or legal agreement, legitimacy should be determined by reference to the concepts of 518 sustainable development and the welfare of society. 519 4.4.4 What are the benefits of using the stakeholder approach? 520