Photo by LuckyBusiness on iStock
December 11, 2025
Authors
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Manager, Energy, Extractives, Transport, and Industrials, BSR
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Manager, Technology and Human Rights, BSR
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Laura Dugardin
Former Associate, Human Rights, BSR
Key Points
- Community engagement involves building respectful, mutually beneficial, ongoing, two-way relationships with people and groups who may be impacted by business-related operations, infrastructure, environmental change, and economic shifts in their area.
- Conducting community engagement can help companies avoid costly operational disruptions and ensure that social and environmental impacts that risk derailing investments are proactively addressed.
- BSR shares international standards governing company responsibilities to community members, key drivers for community engagement and its business value, and practical tips on conducting community engagement.
Following our first blog on stakeholder engagement in a changing business landscape and our second on ensuring internal alignment ahead of engagement activities, this is the third blog in a series unpacking the importance of stakeholder engagement, the impact of recent regulations, and aligning stakeholder engagement with well-established industry best practices and expectations set out in standards such as the United Nations Guiding Principles (UNGPs) and the OECD Guidelines.
Local communities play a key role in shaping a company's reputation, license to operate, and ability to attract and retain employees. Stakeholders like customers, suppliers, governments, and investors frequently attract attention from companies because of their recognized roles as enablers of business. However, engagement with people living near business operations and facilities is also key to avoiding costly operational disruptions and ensuring that social and environmental impacts that risk derailing investments are proactively addressed.
Community engagement goes beyond information sharing and corporate philanthropy. It is a foundation of responsible business conduct, central to human rights and environmental due diligence, and essential for ensuring that business activities do not cause unintended harm. If done well, it strengthens trust, prevents conflict, and improves outcomes for both companies and communities. When overlooked or done poorly, repercussions can include project failure, costly delays or remediation processes, and reputational damage.
Who is Included in Community Engagement?
As explored in our blog on stakeholder engagement in a changing business landscape, stakeholders are people or groups who affect or are affected by a company’s operations. Affected stakeholders are those whose human rights may be directly impacted by a business activity, product, or service. This category includes community members, who may be impacted by business-related operations, infrastructure, environmental change, and economic shifts in their area.
Engagement is essential to understand how a company’s operations intersect with local livelihoods, cultures, and ecosystems because it can reveal impacts that may not be otherwise visible to a company.
Communities are not monolithic; different groups have distinct identities, expectations, and rights. Some community members—such as Indigenous Peoples, women, children, and persons with disabilities—are protected by additional international instruments that elaborate specific rights and engagement expectations.
Why Should Companies Conduct Community Engagement?
Like other forms of stakeholder engagement, local community engagement involves building respectful, mutually beneficial, ongoing, two-way relationships with people and groups in the places where a company operates. Engagement should be culturally appropriate, gender-responsive, attentive to power dynamics, and tied to clear accountability for how input influences decisions.
While community engagement is ideally conducted in a sustained, iterative manner, it is especially crucial as part of decision-making ahead of events with potential local impacts. Examples include site openings and closures, construction, significant operational changes, or responses to regulatory requirements.
Drivers for Community Engagement and Its Business Value
| Driver | Business Value of Community Engagement |
|---|---|
| Resilience and License to Operate | Community engagement is a strategic business imperative that supports operational resilience and a company’s long-term license to operate. By engaging proactively and transparently, companies build legitimacy amid rising scrutiny and demonstrate to investors, employees, and socially minded customers how they put responsible business principles into action. |
| Legal and Market Expectations | Regulatory expectations for community engagement continue to rise. The Corporate Sustainability Reporting Directive (CSRD) already mandates effective engagement with affected communities as part of sustainability reporting, and the Corporate Sustainability Due Diligence Directive (CSDDD) will require companies to conduct affected stakeholder engagement during operational and value chain due diligence with oversight from the board. |
| Climate Transition Credibility | Involving communities in decarbonization and resilience strategies is key to their credibility. In a joint statement, the ILO and OHCHR noted that just transition is grounded in human rights standards and that integrating human rights in just transition processes requires affected stakeholder engagement, including with communities, workers, and trade unions. |
| Reduction of Costly Disputes and Delays | Community contention can shutter projects, trigger litigation, and have long-lasting reputational impacts. Recent examples in the energy, mining, and extractives sectors have seen unmanaged community concerns escalate into legal disputes brought by local NGOs and environmental groups. As a result, companies have needed to retroactively strengthen commitments to transparency, establish reparation processes, or significantly shift project plans. |
Conducting Community Engagement
Community engagement requires additional attention from companies to ensure it is truly meaningful and appropriately contextualized. Practical tactics include:
- Investing in internal understanding and alignment by equipping key functions with training, ensuring they can champion these practices across the organization
- Introducing practical, easy-to-use tools and clear guidance to ensure practices are smoothly adopted into local operations
- Ensuring early engagement and genuine consultation with stakeholders ahead of business-critical decisions to generate buy-in—reflecting stakeholder input through concrete examples and outputs that can be shared
- Embedding board oversight of stakeholder engagement mechanisms and input as part of strategy and risk mitigation
BSR supports companies in planning and conducting community engagement, including mapping and prioritizing stakeholders, determining approaches, and facilitating engagement. Approaches range from monitoring public positions to sharing information, actively soliciting feedback, and co-creating management measures. Recent work includes producing community engagement guidelines for internal use and delivering a train-the-trainer model to enable further engagement, conducting a stakeholder mapping to include previously overlooked community leaders and local organizations, designing a social investment tool to prioritize community investment decisions, and developing strategies and tools to help implement a social risk management approach for new company projects.
Stakeholder engagement, as a responsible business tool grounded in international standards and increasingly part of regulatory requirements, remains crucial for companies to strengthen relationships and make better decisions when it comes to managing risk. To learn more about how BSR can help your company develop and implement a meaningful approach to stakeholder engagement, reach out to BSR’s Human Rights and Transformation teams.
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