Is the Environment a stakeholder?

byTam M. | reviewed 18/02/2021

The natural environment can be affected by a company's activities and, through channels such as climate change, can have an effect upon the company. (Boutilier, R. 2011).

For at least the last 15 years Stakeholder Theorists have debated whether our natural environment should be seen as a Stakeholder.

is the environment a stakeholder argument for and against

Nardia Haigh, and Andrew Griffiths (2007, p. 347) identify 'five interlinking lines of reason' which have been used in the debate. These lines of reason spring from the following questions:

is there a moral obligation between organizations and the environment?
can something without human attributes be a stakeholder?
is business dependent/partly dependent on the natural environment? If it is should it consider the environment as a stakeholder?
is Freeman's broad definition of a stakeholder as someone who 'can affect or is affected by' adequate? see Stakeholder Definition for more on this
does including the enviroment break the law of theoretical parsimony? A good theory should provide the simplest possible explanation. Would including the environment would expand the reach of stakeholder theory making it less useful?

The case for including the Natural Environment as a Stakeholder

In 1995 in his paper entitled 'Should trees have managerial standing? Toward stakeholder status for non-human nature' Starik proposed that the non-human natural environment can and should be incorporated into stakeholder management. He argued that:

the natural environment is a vital part of the business environment
the concept of a stakeholder is wider than just human/political/economic considerations
the natural enviroment can be easily incorporated into stakeholder management processes
including the environment would bring a 'more holistic, value-oriented, focused and strategic approach to stakeholder management'

Starik draws on Freeman's definition of stakeholders as those 'who can affect or be affected by' and argues that the

"human-caused environmental deterioration of the planet appears to call for all organizations to consider as Stakeholders as many natural environment entities as possible. (Starik, 1995, p210)."

The case against considering the Natural Environment as a Stakeholder

Philips counters arguing that the deterioration of the planet is not in itself a reason to include the environment as a stakeholder. For him Stakeholder Theory is not intended to be a 'comprehensive moral theory', however, an organization may have a responsibility to the environment through its obligation to a community living within that environment.

"The organization has an obligation, not to the non-human natural environment itself, but to the community within which it operates, to be a good steward of at least local environmental resources. (Phillips, 2003, p.146)."

In his book 'A Stakeholder Approach to Issues Management' Robert Boutilier draws on theoretical parsimony pointing out that inclusion of non-humans as Stakeholders would make the stakeholder concept so broad it would not be possible to create plans or strategies using stakeholder theory.

What about Climate Change?

However, Nardia Haigh, and Andrew Griffiths suggest that the natural environment, specifically as it relates to climate change should be part of a strategic perspective. They draw on the Stakeholder Salience model arguing that climate change combines power, legitimacy, urgency and proximity damaging the ability of business to operate, withholding resources, impacting products, market and infrastructure (Haigh and Griffiths). For Haigh and Griffiths the pragmatic impact of climate change supersedes moral and ethical considerations as the natural environment forces business to consider it as a stakeholder. I would suggest in a similar way to the industrial revolution in Britain, when trade unions forced businesses to engage with their employees as Stakeholders.

Considering the Environment is a pragmatic necessity

Just as Stakeholder Management has become a pragmatic reality for organizations see Stakeholder Theory for more on this. For some businesses the natural environment will become (and for some already is) a powerful, legitimate, urgent and high proximity stakeholder. In these cases the impact of the business on the natural environment and the impact of the natural environment on the business will, and is already, being considered by managers. Check out this list of climate change stakeholders!

Is the Environment a Stakeholder - bibliography

Robert Boutilier, 2011. A Stakeholder Approach to Issues Management (Strategic Management Collection), Business Expert Press. Robert Phillips, 2003. Stakeholder Theory and Organizational Ethics , Berrett-Koehler Publishers Nardia Haigh and Andrew Griffiths, September 2009 The natural environment as a primary stakeholder: the case of climate change, in Business Strategy and the Environment, Volume 18, Issue 6, pages 347–359, [online] Available at: https://onlinelibrary.wiley.com/doi/10.1002/bse.602/abstract [Accessed 01 February 2016]. Starik, M. 1995. Should trees have managerial standing? Toward stakeholder status for non-human nature Journal of Business Ethics, 1995, Volume 14, Number 3, Page 207 - 217. [online] Available at: https://link.springer.com/article/10.1007%2FBF00881435 [Accessed 02 February 2016].