The Role of Stakeholders in Corporate Governance: Investigating Stakeholder Influence on Corporate Sustainability Actions

Corporate governance has evolved beyond a shareholder-centric model to one that acknowledges the critical role of stakeholders in shaping business strategies, sustainability efforts, and ethical decision-making. This thesis explores the influence of stakeholders on corporate governance, particularly their impact on corporate sustainability actions. By examining theoretical frameworks such as Stakeholder Theory, Agency Theory, Institutional Theory, and Legitimacy Theory, the study provides a comprehensive understanding of how businesses balance profitability with ethical responsibility and long-term sustainability. Using a secondary data-based approach, this research analyzes academic literature, industry case studies, and governance reports to uncover patterns of stakeholder influence. Case studies from industries such as technology (Google, Apple), finance (BlackRock, Vanguard), energy (ExxonMobil, Tesla), and mining (Paladin Energy) illustrate how diverse stakeholder groups including investors, regulators, NGOs, consumers, and local communities shape corporate policies and sustainability strategies. Additionally, governance mechanisms such as ESG reporting, sustainability disclosures, shareholder activism, and regulatory compliance are examined to assess how businesses integrate stakeholder expectations into their decision-making processes. Findings suggest that stakeholder influence varies based on factors such as power, legitimacy, and urgency, as outlined in governance models like the Power-Interest Grid and Mitchell et al.’s Stakeholder Salience Model. While many companies are increasingly adopting sustainability driven governance, challenges such as greenwashing, information asymmetry, and cultural differences in stakeholder expectations continue to hinder effective stakeholder engagement. This study contributes to corporate governance literature by offering a multi-industry perspective on stakeholder influence, bridging the gap between theoretical insights and real-world governance practices. The findings provide valuable insights for business leaders, policymakers, and investors seeking to develop more transparent, inclusive, and sustainability-driven corporate governance models.