MBA Stakeholder and ESG Concept Card Template

Stakeholder and ESG Concept Card: [Company, case or course session]

A concept card for stakeholder analysis and ESG reporting as they are taught in the ethics, strategy and sustainability parts of a leading MBA core: who counts as a stakeholder and how much attention each one gets (stakeholder salience), what "material" means in financial reporting and in impact reporting (single and double materiality), how the EU and ISSB reporting regimes stood in October 2026, and how a greenhouse gas inventory is built from scope 1, 2 and 3 activity data. It is for MBA students preparing a case, an ethics or strategy class, or a sustainability elective, and for managers who need to read a sustainability statement critically. Source basis: Freeman (1984) and Mitchell, Agle and Wood (1997) for stakeholder theory and salience; IFRS S1 and IFRS S2 (ISSB, June 2023); the CSRD and ESRS as amended in 2026; the GHG Protocol Corporate Standard and Scope 3 Standard, written in original words. Regulatory facts are dated; check the official text before you rely on them. The companies, numbers and emission factors are fictional or illustrative and were computed in Python. Replace every [bracketed] value and every row marked Example. This is a learning aid, not legal, audit or reporting advice.

Document control

Contents

• When to use it
• The idea in plain language
• Formulas and notation
• Reporting regimes as of October 2026
• Assumptions and limits
• How managers use it
• Worked example A (fully solved)
• Worked example B (half solved)
• Exercise C (unsolved)
• Connections to other cards
• Common mistakes and misconceptions
• Self-test questions
• My notes and next steps
• Sources and further reading
• Answer key

When to use it

One-sentence rule: use stakeholder salience to decide whose claims need attention first, materiality to decide which sustainability matters a company must manage and disclose, and a GHG inventory to locate the emissions that a climate target or disclosure has to cover.

In class this card usually supports the second half of a case discussion: after the economics are clear, the instructor asks who else is affected, what the company is obliged to disclose, and whether the stated climate goal is credible given where the emissions sit.

The idea in plain language

Stakeholders. Freeman (1984) defined a stakeholder as any group or individual who can affect or is affected by the achievement of the firm's objectives. That definition is wide on purpose: it covers investors, employees, customers, suppliers, lenders, communities, regulators, activists and the natural environment represented through others. The managerial problem is that a wide definition gives no priorities. Mitchell, Agle and Wood (1997) answered with salience: the degree to which managers give priority to competing claims. Salience rises with three attributes. Power is the ability to impose one's will (through money, force, law or reputation). Legitimacy is the perception that the claim is proper or appropriate within accepted norms. Urgency is the degree to which the claim is time-sensitive and critical to the claimant. A stakeholder with one attribute is latent, with two is expectant and with all three is definitive. Attributes change over time: a community without power can gain it through a regulator or a media campaign.

Shareholder and stakeholder views. Friedman (1970) argued in a widely read New York Times Magazine essay that the social responsibility of business is to increase its profits within the rules of the game, and that managers who spend shareholders' money on social goals are taxing them without a mandate. Stakeholder theory holds that firms create value through relationships with all stakeholders and that managers owe duties beyond shareholders (Freeman 1984; Donaldson and Preston 1995). In practice the debate is narrower than it sounds: many stakeholder investments are justified on long-run shareholder value grounds (enlightened shareholder value), and the open questions are about trade-offs that do not pay back.

Materiality. Information is "material" when leaving it out or getting it wrong would change a decision. The question is: whose decision? Under financial materiality (the ISSB view in IFRS S1), the user is the investor or lender, and a sustainability matter is material when it could reasonably be expected to affect the company's cash flows, access to finance or cost of capital. Under impact materiality (part of the EU ESRS view), a matter is material when the company has, or could have, a significant effect on people or the environment, whatever the effect on its own finances. Double materiality means a matter is reported when it passes either test. A matter often starts as an impact (the inside-out view; outside-in financial effects come later): pollution first harms a river, then a fine, a lawsuit or a lost licence turns it into a financial risk. The European Commission used the term "double materiality" in its 2019 non-binding guidelines on climate reporting, and the CSRD made it a legal basis for reporting.

Greenhouse gas scopes. The GHG Protocol Corporate Standard splits a company's emissions into three scopes. Scope 1 is direct emissions from sources the company owns or controls (fuel burned in its boilers and trucks, refrigerant leaks). Scope 2 is indirect emissions from the generation of electricity, steam, heat or cooling the company buys. Scope 3 is all other indirect emissions in the value chain, split by the Scope 3 Standard into 15 categories (8 upstream, such as purchased goods and transport, and 7 downstream, such as use of sold products). For a retailer or a brand, scope 3 is usually by far the largest part, which is why a target that covers only scopes 1 and 2 can look ambitious and change little.

Formulas and notation

Emissions from one activity are activity data times an emission factor, and the inventory is the sum:

Scope 2 is reported in two ways (GHG Protocol Scope 2 Guidance, 2015). Location-based uses the average grid factor; market-based uses the factors of the contracts the company holds, with a residual mix factor for the rest:

Spend-based scope 3 estimates multiply spend by an environmentally extended input-output factor:

Emission intensity per unit of revenue:

A common convention for scoring double materiality (choose and disclose your own scales):

Salience classes from Mitchell, Agle and Wood (1997), with P, L, U present (1) or absent (0):

Reporting regimes as of October 2026

Register U9 of the library's update register covers this section. As of October 2026 (checked 2026-10-28):

What follows from the dates: a company can be outside the CSRD after 2027 and still face ESRS-style data requests from in-scope customers (the amended directive caps what can be demanded from smaller value-chain partners), ISSB-based rules in another listing market, and investor questionnaires. For a manager the practical question is rarely "are we in scope?" alone; it is "which users need which information, under which standard, from when?". For the full disclosure work, use finance/issb-sustainability-disclosure (ISSB) and finance/sustainability-double-materiality-assessment (ESRS).

Assumptions and limits

1. Salience is perception. Mitchell, Agle and Wood describe what managers pay attention to, not what is morally owed. A dependent stakeholder (legitimate and urgent, no power) may deserve more than it gets. Salience is a descriptive and diagnostic tool; use the ethics frameworks in mba/mba-ethics-guide for the normative question.
2. Binary attributes hide degree. Real power and legitimacy are continuous and contested. Score them 0 to 3 when the class needs nuance, and say who judged them.
3. Materiality scores are judgements. The 1 to 5 scales and the threshold of 10 used here are a common convention in practice, not rules from IFRS S1 or ESRS. The standards require a process and its disclosure, not a formula. A different threshold changes the list.
4. Severity before likelihood for human rights. Under the ESRS approach, for potential negative human rights impacts severity takes precedence over likelihood, so a low-probability but grave impact can be material. A pure product of the two can hide it.
5. Emission factors are uncertain. Spend-based scope 3 factors average over whole industries and price levels; a 10% price rise raises "emissions" by 10% with no physical change. Supplier-specific data are better when available.
6. Organisational boundary. The inventory depends on the consolidation approach (equity share, financial control or operational control). Two analysts using different approaches get different scope 1 and 2 totals.
7. Double counting across companies is expected. One company's scope 1 is another's scope 3. Totals cannot be added across a supply chain to get an economy-wide figure.
8. The factors in this card are illustrative. They are rounded, plausible values for teaching, not official factors. Use the factors your reporting regime or data provider specifies.

How managers use it

Worked example A (fully solved): Northfield Outdoor Co.

Situation (fictional). Northfield Outdoor Co. is a mid-size outdoor-gear retailer and brand with stores, a distribution centre (DC) and e-commerce. Revenue for the year is USD 640 million; it has 1,600 employees. The board asks three questions: which stakeholders need attention in a dispute over a new DC, which sustainability topics are material, and where its emissions are. All numbers and factors are Example values.

Step 1: salience. Each group is scored present (1) or absent (0) on power, legitimacy and urgency.

Reading: the regulator (SH-04) is the immediate priority. The employees (SH-02) have a legitimate and urgent claim but no power on their own; management should act before a union or inspector gives them power, which would make them definitive. The blockade (SH-03) is power plus urgency without legitimacy in the eyes of most observers; the response is safety first and an offer of a legitimate channel, not concessions under pressure.

Step 2: double materiality. Scales are 1 to 5; threshold $\tau = 10$ on a 1 to 25 score. Impact severity is the mean of scale, scope and irremediability; potential impacts are multiplied by likelihood.

Excel, with scale, scope and irremediability in C:E, impact likelihood in F, magnitude in G and financial likelihood in H: severity =AVERAGE(C2:E2), impact score =AVERAGE(C2:E2)*F2, financial score =G2*H2, material =IF(OR(AVERAGE(C2:E2)*F2>=10,G2*H2>=10),"Material","Not material").

Reading: under a financial-only (ISSB) lens, only DM-01 and DM-03 pass. Under double materiality (ESRS), DM-02 and DM-04 are added because of their effects on people and the environment. DM-02 also shows limit 4: supply-chain labour abuse is a human rights impact, so its severity of 4.00 would justify reporting even with a lower likelihood. Data privacy (DM-05) falls below the threshold here, but an analyst should challenge the financial magnitude of 4 with likelihood 2: one large breach can move it.

Step 3: GHG inventory. Factors are illustrative.

Intensities at USD 640 million revenue: scopes 1 and 2 (market-based) 4.15 tCO2e per USD million (=(926.4+1728)/640); all scopes 155.5 tCO2e per USD million (=99494.4/640). Purchased goods alone are 88.6% of the market-based total (=88200/99494.4).

Conclusion. Northfield's footprint is a supplier footprint. A plan to put solar panels on every store would address part of 1.7% of emissions; the decisive levers are fabric and material choices, supplier energy and transport. The spend-based factor is the weakest number in the inventory, so the first improvement is supplier-specific data for the top suppliers that make up most of category 1 spend. The renewable contracts lower scope 2 from 2,432.0 to 1,728.0 tCO2e under the market-based method; both figures must be shown, and the claim must be backed by contractual instruments that meet the Scope 2 Guidance quality criteria.

Worked example B (half solved): Corvane Robotics footprint

Situation (fictional). Corvane Robotics, a venture-backed warehouse-robotics company, prepares its first inventory for an investor questionnaire. It burns 420,000 kWh of natural gas (factor 0.183), buys 2,900,000 kWh of electricity (grid 0.380; its supply contract has a supplier-specific factor of 0.200), spends USD 58 million on purchased goods (spend factor 0.30 kgCO2e per USD) and sold 1,200 robots, each using 14,000 kWh of electricity over its life (use the grid factor 0.380 for category 11, use of sold products).

Questions:

1. Which scope dominates, and what share of the market-based total is category 11? [ ]
2. Corvane's investors hold board seats and have asked for the inventory before the next funding round. Classify them on P, L, U. [ ]
3. Why can category 11 be a lever for Corvane even though it does not control its customers' electricity? [ ]

Exercise C (unsolved): Tallow Creek Medical Center

Tallow Creek Medical Center, a regional hospital (fictional), is not in scope of any mandatory regime but its lenders ask for a sustainability summary. Using the scales above:

1. Classify on P, L, U: (a) the nurses' union raising unsafe staffing ahead of contract talks, (b) the state health regulator inspecting after a complaint, (c) patients' families posting about long emergency waits, (d) a bond investor with covenants. Which group is definitive?
2. Score three topics with your own reasoning: anaesthetic gas emissions (some anaesthetic gases have very high global warming potentials), patient data privacy, and access to care for uninsured patients. Which are impact-material, which financially material?
3. The hospital burns 3,200,000 kWh of gas (0.183), buys 9,500,000 kWh of electricity (grid 0.380) and uses 400 kg of an anaesthetic gas with an illustrative factor of 2,540 kgCO2e per kg. Compute scopes 1 and 2 (location-based) and the share of scope 1 that comes from anaesthetic gases.
4. Write two sentences for the board on what the inventory leaves out.

Connections to other cards

Common mistakes and misconceptions

1. "Stakeholder theory means ignoring shareholders." It treats shareholders as one important group among several; the dispute is about trade-offs that do not pay back, not about whether investors matter.
2. Salience equals moral priority. Salience describes attention. Dependent stakeholders without power may have the strongest moral claim.
3. Single materiality equals double materiality minus a bit. The two lenses ask different questions for different users; a matter can be impact-material and financially immaterial (DM-02 above) and the reverse.
4. Treating the threshold as given by the standard. Neither IFRS S1 nor ESRS sets a numeric threshold; the company sets it and must explain it.
5. Reporting only one scope 2 figure. The GHG Protocol Scope 2 Guidance asks for both location-based and market-based figures when the company operates in markets with contractual instruments.
6. Ignoring scope 3 because it is "not ours". For many firms it is most of the footprint and where the business risk sits (supplier carbon costs, product regulation).
7. Adding emissions across companies. One company's scope 1 is another's scope 3; summing across a value chain double-counts.
8. Confusing an ESG rating with materiality. Ratings from different providers use different weights and often correlate weakly; they are not a materiality assessment.
9. Quoting the pre-2026 CSRD scope. The Omnibus I amendment changed the thresholds and dates; always state the version and date you used.
10. Spend-based factors as precise numbers. They are estimates; report one decimal at most and say so.

Self-test questions

1. Define a stakeholder in Freeman's (1984) sense, and name the three salience attributes of Mitchell, Agle and Wood (1997).
2. A group has legitimacy and urgency but no power. What class is it, and what usually happens next?
3. State the difference between financial materiality and impact materiality in one sentence each.
4. Under double materiality, is a topic that is impact-material but financially immaterial reported? Why?
5. Classify into scopes: (a) diesel in the company's own trucks, (b) electricity bought for stores, (c) a supplier's factory emissions for goods the company buys, (d) electricity used by customers to run the company's products.
6. A company buys 1,000,000 kWh. The grid factor is 0.40 and half the electricity is covered by renewable contracts at 0; the residual mix is 0.50. Compute location-based and market-based scope 2.
7. Spend on purchased goods is USD 50 million at 0.35 kgCO2e per USD. Compute category 1 emissions. Then prices rise 10% with no change in volume: what happens to the estimate, and what does that tell you?
8. Why might a retailer's scopes 1 and 2 target be misleading?
9. What did Friedman (1970) argue, and what is the strongest stakeholder-theory reply?
10. As of October 2026, what two cumulative thresholds define the amended CSRD scope for EU undertakings, and from which financial years?
11. Why does severity take precedence over likelihood for potential human rights impacts?
12. Name two reasons two analysts could get different scope 1 totals for the same company.

My notes and next steps

Sources and further reading

• Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Pitman.
• Mitchell, R. K., Agle, B. R., and Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: defining the principle of who and what really counts. Academy of Management Review, 22(4), 853-886.
• Donaldson, T., and Preston, L. E. (1995). The stakeholder theory of the corporation: concepts, evidence, and implications. Academy of Management Review, 20(1), 65-91.
• Friedman, M. (1970). The social responsibility of business is to increase its profits. The New York Times Magazine, 13 September 1970.
• Khan, M., Serafeim, G., and Yoon, A. (2016). Corporate sustainability: first evidence on materiality. The Accounting Review, 91(6), 1697-1724.
• Eccles, R. G., Ioannou, I., and Serafeim, G. (2014). The impact of corporate sustainability on organizational processes and performance. Management Science, 60(11), 2835-2857.
• International Sustainability Standards Board (2023). IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information; IFRS S2 Climate-related Disclosures. https://www.ifrs.org
• European Union. Directive (EU) 2026/470 (Omnibus I) amending the CSRD, on EUR-Lex: https://eur-lex.europa.eu/eli/dir/2026/470/oj/eng ; European Commission, corporate sustainability reporting: https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en
• World Resources Institute and World Business Council for Sustainable Development. The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (revised edition, 2004); GHG Protocol Scope 2 Guidance (2015); Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011). https://ghgprotocol.org
• Textbooks, by name only: Crane, A., Matten, D., Glozer, S., and Spence, L., Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization (Oxford University Press); Freeman, R. E., Harrison, J. S., Wicks, A. C., Parmar, B. L., and de Colle, S., Stakeholder Theory: The State of the Art (Cambridge University Press, 2010).
• Open resource: OpenStax, Business Ethics (CC BY-NC-SA 4.0), https://openstax.org/details/books/business-ethics, chapters on stakeholders and sustainability.

Answer key

Worked example B. CV-02 = 1,102.0 tCO2e. CV-03 =2900000*0.2/1000 = 580.0. CV-04 = 17,400.0. CV-05 =1200*14000*0.38/1000 = 6,384.0. Market-based total =76.9+580+17400+6384 = 24,440.9 tCO2e (shown as 24,441 when rounded). (1) Scope 3 dominates (23,784.0 of 24,440.9, 97.3%); category 11 is 26.1% (=6384/24440.9). (2) Power (board seats, funding) and legitimacy (owners); urgency is present because they need it before the round: definitive. If there were no deadline they would be dominant. (3) Product design (energy efficiency per pick) cuts customers' electricity use and is a selling point; category 11 links the climate goal to the product roadmap.

Exercise C outline. (1) Union: power (strike), legitimacy, urgency (talks): definitive. Regulator: definitive. Families: legitimacy and urgency, power through media, arguably dependent becoming dangerous or definitive. Bond investor: dominant, definitive if a covenant is close to breach. (2) Anaesthetic gases: high impact (climate), modest financial; privacy: high financial (fines, trust) and impact on patients; access: high impact, financial depends on the payer mix. (3) Gas 585.6 tCO2e (=3200000*0.183/1000); anaesthetic gas 1,016.0 (=400*2540/1000); scope 1 = 1,601.6; scope 2 location-based 3,610.0 (=9500000*0.38/1000); anaesthetic share of scope 1 = 63.4% (=1016/1601.6). (4) Scope 3 (medicines, devices, food, patient and staff travel) is missing and probably largest; factors are illustrative.

Self-test.

1. Any group or individual who can affect or is affected by the achievement of the firm's objectives. Power, legitimacy, urgency.
2. Dependent. It relies on others with power (a regulator, union, NGO or management) to advance its claim; if it gains power it becomes definitive.
3. Financial: could reasonably be expected to affect the company's cash flows, access to finance or cost of capital, which matters to investors. Impact: the company's actual or potential significant effects on people or the environment.
4. Yes: under double materiality passing either test is enough, because the users include those affected and those who assess the company's impacts, not only investors.
5. (a) Scope 1, (b) scope 2, (c) scope 3 category 1, (d) scope 3 category 11.
6. Location-based 400.0 tCO2e (=1000000*0.4/1000); market-based 250.0 tCO2e (=500000*0/1000+500000*0.5/1000).
7. 17,500.0 tCO2e (=50000000*0.35/1000). After a 10% price rise the spend-based estimate rises to 19,250.0 with no physical change: spend factors measure money, so switch to physical or supplier data for the main categories.
8. Scopes 1 and 2 are often below 5% of a retailer's footprint (2.7% for Northfield), so the target leaves most emissions untouched.
9. Business's social responsibility is to increase profits within the rules of the game; spending on social goals is spending other people's money without a mandate. Reply: value is created through stakeholder relationships, many stakeholder investments raise long-run value, and markets and rules are incomplete (externalities), so profit within the rules does not guarantee that harm is avoided.
10. More than 1,000 employees on average and more than EUR 450 million net turnover, both required, for financial years beginning on or after 1 January 2027 for EU undertakings (Directive (EU) 2026/470; check EUR-Lex and national law).
11. Because the harm to people can be grave and irreversible; multiplying by a low likelihood could hide a risk that the company has a responsibility to prevent.
12. Different consolidation approaches (equity share, financial or operational control), and different factors or estimation methods (for example the refrigerant global warming potential used).

Revision history

Standard and licence note

Based on Freeman (1984), Mitchell, Agle and Wood (1997), IFRS S1 and IFRS S2 (ISSB, 2023), the CSRD as amended by Directive (EU) 2026/470 and the revised ESRS, and the GHG Protocol Corporate, Scope 2 and Scope 3 standards, as checked on 2026-10-28. The text, scoring convention, worked examples, exercises and questions are original; no textbook text, standard text or published case is copied. Northfield Outdoor Co., Corvane Robotics and Tallow Creek Medical Center are fictional, and the emission factors are illustrative. This card is independent and not affiliated with or endorsed by any business school, standard setter or public authority. Check the current official texts before you rely on them. Template licence: MIT.