Investors pushing for sustainability: How firms assess the urgency of stakeholder requests
Urgency, along with power and legitimacy, is one of the key determinants of stakeholder salience and is at the core of the question when and how firms respond to stakeholder requests. Despite its central role in stakeholder theory, urgency and its effects on firms’ responses are poorly understood. In the context of sustainable investing, we study how firms evaluate the urgency of investors’ environmental, social and governance (ESG) requests and how this evaluation affects the firms’ responses. We conduct 40 interviews with investor relations professionals, sustainability officers and board members which show that the evaluation of a request’s urgency relies on the firm’s intention to respond to the request. By revising the concept of urgency, we show that urgency is not inherent to the request but the firm’s capability and willingness to respond decides what is deemed urgent. Out of the requests that firms can and want to respond to, we identify the criticality of the request to the stakeholder as the key determinant of urgency. Time sensitivity of requests increases the level of urgency, but criticality is the necessary condition for urgency to arise. We contribute to stakeholder theory by being the first study that analyzes urgency, the role of its underlying attributes and their relationship to another.
Keywords: Stakeholder theory, urgency, sustainable investing, interviews