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ACCA Strategic Professional · Strategic Business Leader · Stakeholder analysis and organisational social responsibility

Kestrel Mining employs most workers in a remote town. It plans to close a mine to improve profit. The community has little formal power but is strongly affected, and the local council has some regulatory influence. Applying the stakeholder concept that CSR requires the company to consider the legitimate claims of those affected, which action is most consistent with a stakeholder-based CSR approach?

The company should consult the community and council and consider mitigation such as retraining. Stakeholder-based CSR gives weight to the legitimate claims of affected groups even when they have little power. Ignoring them, informing only shareholders or hiding the plan reflects a narrow shareholder view rather than social responsibility.

  1. AIgnore the community because it has low power on Mendelow's matrix and the closure is lawful
  2. BConsult the community and council, and consider mitigation such as retraining, even though they lack formal powerCorrect
  3. CInform shareholders only, since they are the owners and bear the residual risk
  4. DDelay publication of the closure until it is complete, to prevent opposition

Explanation

Stakeholder-based CSR recognises that those affected have legitimate claims regardless of their power. Consultation and mitigation addresses this. Ignoring low-power groups follows a narrow power-based view, and informing only shareholders or concealing the plan breaches the broader responsibility.

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