Establishing a Dialogue with Stakeholders

ESTABLISHING A DIALOGUE

WITH STAKEHOLDERS

Direction of Innovation and Sustainability - INTERNAL USE

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Stakeholder Engagement

In the current business environment, companies interact with an ever more diversified range of target audiences whose expectations are continuously changing.

These target audiences – or stakeholders – can affect or be affected by a company’s divergent interests.

Developing a formal engagement process offers the company a risk management tool and contributes to establishing equitable, ethical, transparent, and long-term relationships, in addition to corporate sustainability.

Learning to foster dialogue and develop skills to establish lasting relationships requires practice, time, commitment, and an open mind to diverging viewpoints. The convergence of ideas can bring about genuine and respectful cooperation, the foundation for generating value for all parties involved with InterCement company activities.

This document is intended to offer guidance to InterCement employees on the engagement practices they should adopt vis-à-vis their stakeholders.

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STAKEHOLDERS IN VALUE APPROACH

Build Value

Regulate

Endorse and Influence

Perceive

Build Value

Endorse and Influence

1.

2.

3.

4.

5.

8. Third Sector 9. Professional Associations 10. Educational and Research Institutes 11. Media

Customers Employees Shareholders and Investors Suppliers Sector Companies

Regulate

Perceive

6. Government 7. International Organizations

12. Local Communities 13. Society

Stakeholders: Means the individual or group that affects or is affected by an organization’s activities, plans, and/or projects, whether positively or negatively; stakeholders have specific interests, influence, or authority. They are also referred to as “internal and external customers”.

Engagement: Means an organization’s efforts to understand and engage stakeholders, and incorporate their concerns and needs in the organization’s activities and decision-making processes.

Dialogue: Means the exchange of viewpoints and opinions to explore different perspectives, needs, and alternatives, with a view to fostering mutual understanding, trust, and cooperation on a given strategy or initiative.

Five Reasons to Engage 1. To obtain operating licenses (legal and social licenses); 2. To establish partnerships. To marshal resources (knowledge, people, visions) to solve shared challenges;

3. To obtain information for the purpose of continuous enhancements to internal processes;

4. To identify stakeholder demands; 5. To build a solid reputation for the company.

Premises of Engagement 1. Pro-active Approach: We endeavor to foster constructive dialogue with our stakeholders by adopting a pro-active approach. To ensure ongoing dialogue, formal and lasting communication channels must be established;

2. Long-Term Commitment: Engagement plans should be executed and tracked throughout the year, and should be adapted to the company’s setting and that of its interlocutors;

3. Transparency and Consistency: We must follow through with our commitments and stated plans. Credibility is founded on the positions taken and the conduct displayed day to day;

4. Building Quality Ties: Beyond superficial and formal dialogue, this component offers a major opportunity to identify mutual benefits through contributions capable of enhancing the company’s management and strategy;

5. Engagement as Part of the Business: The engagement process should be seen as a risk management and control tool.

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Stakeholder Engagement Plan

InterCement incorporated its stakeholder relations process in the company’s management system through the Stakeholder Engagement Program.

The objective of the program is to provide the company with the necessary instruments and skills to ensure its Production Units forge well-structured relations with their principal target audiences.

The proposed methodology is based on standard AA1000, developed by the United Nations

Environment Program – UNEP and Cement Sustainability Initiative – CIS.

Leaders at the respective Production Units with primary responsibility for local institutional relations should form Engagement Groups to perform the following stages:

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2.

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Establishment of the Engagement Group Analysis of specific aspects and impacts Analysis of stakeholders Development of Engagement Plan Approval and execution of corresponding activities Monitoring and reporting

Based on the diagnostic analysis of key issues and stakeholders, the most appropriate strategies and tactics for each priority target audience should be selected. There is no standard plan. Each case should be considered separately.

The Stakeholder Engagement Plan is a continuous process and must be reviewed annually.

The Engagement Group has primary responsibility for the status and progress of the Stakeholder Management Plan at the Production Unit. It should be composed of 3-5 employees, including the Unit leader and build relationships with the Unit’s key stakeholders. The inclusion of members of the Community Volunteer and Interaction Incentive Committee (Comitê de Incentivo ao Voluntariado e Interação com a Comunidade – CIVICO) is recommended.

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Dialogue with Stakeholders

An important element in the dialogue maintained with stakeholders involves managing differing viewpoints. Initiatives that create value for a specific group can destroy value for another. Even if a particular group is benefited by a given action, its members may be left with the perception or “feeling” that something was lost. Therefore, in the area of stakeholder relations perceptions are often as important as facts and data.

Building dialogue based solely on dry analyses of the data may fail to take into account the feelings of the parties involved.

Another cause for discord resides in the interpretation of responsibilities by the parties involved. Stakeholders with less influence may have legitimate questions that the company may not be in a position to modify or for which it does not have responsibility. This occurs frequently in situations in which State and government action is either absent altogether or minimal.

As such, the need to develop a constructive dialogue is clear. The following considerations and behaviors should be taken into account: › Establishing a secure environment; › Listening before speaking; › Putting oneself in the place of others to understand their specific context; › Displaying a willingness to break with paradigms and biases; › Giving as much importance to the process as to the final product.

Models of Dialogue Under InterCement model of dialogue, each Production Unit is expected to present a stakeholder engagement plan on an annual basis. The following models of dialogue may be considered:

New Enterprises

Existing Enterprises

Pre-hearing meetings

Thematic meetings with specific stakeholder groups

Public hearings

Formal meetings to present the project

Feedback to demands

Respond and formalize communication channel (email and telephone)

Feedback to demands

Formalize communication channel (email and telephone)

Open door

Official program to receive stakeholders at Production Units

Annual meetings

Annual inputs for Operational Planning

External meeting agenda

Face to face meetings with stakeholders to discuss specific issues

LEARN MORE: Open Doors (Portas Abertas), see Innovation and Sustainability Department content on Integration Portal

For purposes of the external meeting agenda, the following dialogue methods may be used on a case-by-case basis.

Method

Application

› To establish personal relationships Private Conversations › To broach sensitive topics › To address specific issues

Workshops

› To involve stakeholders in resolving a particular challenge › To forge a relationship between stakeholders

Focus Groups

› To identify viewpoints on a given question › To test the reaction to a measures adopted by the company

Townhall Meetings

› To ensure legitimacy › To ensure full participation

Evaluation (+) Interaction between parties ( - ) Representativeness ( - ) Time demand (+) Participants see themselves as

stakeholders and owners of the decision ( - ) Demand on the organization and method

(+) Enables solutions to be tested ( - ) Demand on organization

and method

(+) Reach a large number of people ( - ) Potential of losing control of

the meeting. “Hijacking of agenda” by radical groups.

LEARN MORE: ACCOUNTABILITY (2011); AA1000 Stakeholder Engagement Standard 2011 IFC (2007); Stakeholder Participation: Manual of Best Practices for Doing Business in Emerging Markets

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Case Study

Pedro Leopoldo Unit: Creating Value through Engagement Inaugurated in 1952, the Companhia de Cimento Portland Cauê was consistently seen as a model of industrial and economic development in Pedro Leopoldo, a city located in greater metropolitan Belo Horizonte. In 1998, Cauê was acquired by Camargo Corrêa Cimentos, currently InterCement, initiating a period of adaptation to the new controlling entity’s values and management models. In regard to stakeholder relations, changes in the company were achieved quickly.

Through 1998, the company maintained a stakeholder relations process which was largely unstructured and reactive to stakeholder demands. Each section or department established external contacts in a decentralized and uncoordinated fashion without management oversight or supervision of the various relationships. In regard to community relationships, Cauê maintained what could best be classified as a charity-based strategy consisting of modest donations to festivals, churches, and other requesting parties. The absence of a well-defined strategic and management vision of the organization’s relationships undermined construction of a solid corporate reputation.

Following acquisition, the company adopted a series of unpopular measures. These included a review of existing positions and salaries, staff cuts, and fencing of the plant, an area used as a passageway by the local population. Unions, communities, and even employees were unhappy with the new management. At that critical juncture, a well-structured stakeholder relationship process could have assuaged distrust in the company.

The company’s transformation was kick-started with the adoption of a new approach and attitude toward its stakeholders. A pro-active stance was adopted in an effort to foster local development. “Intercement employees began to participate in community life and the community began to participate in the company’s life,” says Uelton Marques, control and quality coordinator at the Unit.

As such, a genuine and respectful relationship was established, with the Community Development Committee (Comitê de Desenvolvimento Comunitário – CDC) serving as a forum for dialogue with external audiences.

The new management system contributed to building strong relationships. Adoption of ISO 14.001 processes and implementation of the Stakeholder Management Program, based on AA1000, served to standardized how relationships were consolidated.

This strategy for building dialogue, trust, and transparency in relationships generated positive outcomes for the company.

The Unit emerged as a model for the news media, unions, and government, and was frequently invited to take part in community and civic events. Productivity levels improved significantly in line with employee satisfaction. The Unit’s favorability rating climbed from 47 points in 2006 to 76 in 2010. “We built open relationships, shifting our focus from demands to cooperation,” notes Mônica Machado, regional manager for Human Resources.