To improve decision making, every stakeholder – both internal and external –needs to be given a voice, says Isabelle Deschamps, the mining group’s Chief Legal Officer, Governance and Corporate Affairs ...
In recent years, companies have come under mounting pressure to embrace a more stakeholder-focused model of capitalism that places value on the longer-term interests of employees, communities, and civil society, breaking with a long tradition of shareholder primacy.
The resulting balancing act between delivering profits and meeting responsibilities to society and the environment is no mean feat, and requires business leaders to understand the needs, interests, and expectations of a diverse array of stakeholders if they are to have any hope of achieving that balance. Listening may be the key.
In essence, that is my role as Chief Legal Officer, Governance and Corporate Affairs at mining group Rio Tinto. Whether it’s engaging with governments and civil society groups, which are pushing us to provide materials the world needs in a more responsible way, or rebuilding the trust of the indigenous communities on whose land we operate, I give all of Rio’s stakeholders a voice.
As leaders, it’s important to both employ and engage with those who excel in the areas that we don’t. Together, we can find solutions to problems that are bigger than ourselvesIsabelle Deschamps
Rio appreciates the benefits of listening to different voices and considering other perspectives. Because when we listen, we learn. Those voices include internal as well as external stakeholders. Rio employs 52,000 people globally, and the company is striving to create a workplace where employees feel supported and empowered and have the courage to speak up if something isn’t right.
As part of that commitment, in March 2021, we commissioned an independent review of our workplace culture, surveying more than 10,000 employees. The findings were heartbreaking, with bullying, sexual harassment, racism, and other forms of discrimination all identified.
Despite the risk to Rio’s reputation, the executive committee on which I sit made the findings public, releasing our Everyday Respect report. Ultimately, we felt it was important to demonstrate transparency and accountability to provide a genuine foundation for changing our culture. And because it was the right thing to do. That commitment goes far beyond creating a safe, respectful, and inclusive workplace, and includes respect for the world around us, too.
Geopolitical tensions, persistent inflation, economic weakness, climate change, and sustainability. Business leaders are dealing with an unprecedented range of challenges simultaneously, making it harder than ever to know how to prioritize, navigate, and communicate effectively with teams. Scenario planning, listening and leading in new ways are part of the answer. In Issue IX of I by IMD, we unpack new approaches to dealing with the polycrisis that's facing us.
Many stakeholders are demanding that companies take more aggressive action on climate change. We’re not here to replace government action, but Rio has placed climate change and the low-carbon transition at the heart of our business strategy, while recognizing that we do have a large carbon footprint.
The green transition will create substantially higher demand for copper, lithium, and other future-facing commodities that we mine. So, we aim to increase our exposure to these commodities, but in the safest and most sustainable way possible. Because how we produce these materials is equally important, given that our assets are going to be around for, potentially, generations to come.
There are some critics who are against so-called “woke capitalism”, or the idea that a company should look beyond its profits. The concept of stakeholder-focused business has become wildly popular, helped by the increase in digital transparency in the social media era. And I don’t want stakeholder scrutiny to go away because it helps us make better, long-term decisions.
As leaders of large and complex businesses, it’s easy to get sucked into the day-to-day operations, but it’s also important to pause and reflect on the bigger picture and what you’re trying to achieve for every stakeholder. That’s where listening comes in.
In navigating this new era of corporate social responsibility, companies will of course come across opposing stakeholder views. In our leadership team at Rio, everyone has an equal voice and is free to disagree. And actually, embracing that conflict helps us to make more effective choices because we get a better pulse on what’s happening across the business and beyond.
You cannot please everyone, but you will need to manage the tension (whether real or imagined) between stakeholders inside and outside the company and mold some kind of a consensus. In doing that, it helps to first truly understand what the different concerns are, not just what you think they may be.
Empathy is a source of strength- Isabelle Deschamps
And by feeding back these dilemmas, often the stakeholders themselves propose solutions. So, the trick is not just to listen to diverse voices, but also to admit that you don’t have all the answers and to find the people who do. As leaders, it’s important to both employ and engage with those who excel in the areas that we don’t. Together, we can find solutions to problems that are bigger than ourselves.
Such partnerships were invaluable for Rio when we needed to quickly mobilize resources to locate a missing radioactive capsule that was lost in transit after leaving one of our remote mine sites in Western Australia earlier this year. That involved working closely with the Australian authorities to locate and recover the capsule. It was a remarkable feat, given that the missing part measured just six by eight millimeters and was lost on a desert highway that stretches 1,400 kilometers. It just goes to show what can be achieved when different stakeholders come together.
All of this often requires a vastly different skillset from that which many of today’s executives – who will have come up through the ranks focused on competition rather than collaboration – can hope to possess. First and foremost, stakeholder engagement takes spades of empathy, a kind of listening skill that all too often is suppressed in leaders because it denotes vulnerability. That is a big misconception. By helping leaders become curious about the needs and problems of their stakeholders, empathy is a source of strength.
Finally, trust is also at the heart of such collaborations. But trust is not built overnight, and it can be lost in an instant. Rio has in the past breached the trust placed in the company by the traditional owners of the lands on which we operate, but we are working to earn back the trust that has been lost by being transparent, by listening, and by working in genuine partnership.
With more companies feeling the pressure to deliver for their broader stakeholders, they face a steep learning curve and will need to get used to dealing with the discomfort. No matter how they choose to navigate this shifting landscape, though, it’s clear they will need to give these varied groups a voice – and listen.
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