Stakeholder Rights

Chapter Eight: Employees, Customers, Suppliers, Society, and the Environment

First: Introduction

Modern governance no longer focuses only on shareholders, but has expanded to include all stakeholders. Chapter Eight of the Regulations (Articles 80-83) governs the relationship between the company and its multiple stakeholders: employees, customers, suppliers, creditors, society, and the environment. This expansion reflects a deep understanding that the company’s long-term sustainability is linked to the health of its relationships with all these parties.

Companies that treat stakeholders as independent parties with respected rights build strong reputations, attract the best talent, enjoy customer loyalty, and avoid legal and societal disputes. Conversely, companies that ignore stakeholders may achieve short-term profits but risk their sustainability. This article reviews the rights of each stakeholder category, protection mechanisms, and best practices.

💡  Key Insight Stakeholders are not a burden on the company but partners in its success. A satisfied employee produces more, a loyal customer buys more and recommends the company, a trusted supplier provides better service, an accepting community opens doors to growth. The smart company invests in these relationships, not only because it is an ethical duty, but because it is a successful business strategy.

Second: The Expanded Concept of Governance

1. From Shareholder Model to Stakeholder Model

1.1 Traditional Model

• Focus on shareholder only.
• Maximizing shareholder value.
• Milton Friedman model.
• Prevailed in the second half of the 20th century.

1.2 Modern Model

• Maximizing value for all stakeholders.
• Long-term sustainability.
• “Stakeholder Capitalism” approach.
• Business Roundtable 2019 declaration.

2. The Global Shift

2.1 International Standards

• OECD Principles — expanded to include stakeholders.
• ICGN Stewardship Principles.
• UN Global Compact.
• ISO 26000.

2.2 ESG Standards

• Environment.
• Social.
• Governance.
• Advanced measurement standards.

3. Saudi Context

3.1 Vision 2030

• Sustainable development.
• Empowering women.
• Saudization.
• Environment (Saudi Green).
• Diversity and tolerance.

3.2 Regulatory Developments

• Expanding ESG disclosure requirements.
• Sustainability standards.
• Voluntary and mandatory reporting.
• Environmental disclosures.

Third: Employee Rights

1. Regulatory Frameworks

1.1 Saudi Labor Law

• The basic framework.
• Basic employee rights.
• Working hours, leaves, wages.
• Work safety.

1.2 Governance Regulations

Article (80) of the Regulations:

• Respecting employee rights.
• Providing safe work environment.
• Training and development.
• Fair treatment.

2. Basic Rights

2.1 Wages and Remuneration

• Fair wage.
• Timely payment.
• Incentives.
• Bonuses.
• Promotions.

2.2 Working Conditions

• Safe environment.
• Reasonable hours.
• Leaves.
• Health insurance.
• Retirement.

2.3 Professional Development

• Training.
• Continuous education.
• Career guidance.
• Career path.

2.4 Dignity and Respect

• Non-discrimination.
• Protection from harassment.
• Personal respect.
• Privacy.

3. Employee Protection Policies

3.1 Non-Discrimination Policy

• Based on gender, race, religion.
• In employment, promotion, wages.
• Rigorous application.
• Disclosure.

3.2 Whistleblowing Policy

• Whistleblowing system.
• Reporter protection.
• Investigation.
• Corrective procedures.

3.3 Grievances Policy

• Clear channels.
• Processing in reasonable time.
• Confidentiality.
• Fairness.

4. Saudization and Diversity

4.1 Saudization

• Compliance with Saudization ratios.
• Developing Saudi cadres.
• Alignment with Vision 2030.
• Disclosure of Saudization ratios.

4.2 Women Empowerment

• Employing women in leadership positions.
• Supportive work environment.
• Flexible policies.
• Disclosure of women ratios.

4.3 People with Disabilities

• Employing people with disabilities.
• Appropriate work environment.
• Suitable accommodations.

Fourth: Customer Rights

1. The Basic Requirement

Article (81) of the Regulations:

• Respecting customer rights.
• Providing high-quality services/products.
• Transparent disclosure.
• Processing complaints.

2. Basic Rights

2.1 Quality

• Products/services meeting standards.
• Without defects.
• As promised.
• With warranty.

2.2 Fair Price

• Price transparency.
• No market exploitation.
• Without hidden fees.
• Without misleading.

2.3 Complete Information

• Accurate information about the product.
• Clear terms and conditions.
• Simple language.
• Available in Arabic.

2.4 Privacy

• Protection of personal data.
• Compliance with PDPL.
• Consent for use.
• Security.

2.5 Complaints Handling

• Easy channels.
• Quick response.
• Fair solutions.
• Escalation when needed.

3. Related Regulations

3.1 Consumer Protection Law

• General consumer rights.
• Quality obligation.
• Disclosure obligation.
• Penalties.

3.2 Personal Data Protection Law

• Comprehensive framework.
• Consent.
• Rights.
• Procedures.

3.3 Sectoral Regulations

• For banks (SAMA).
• For telecommunications (Communications Authority).
• For insurance (Insurance Authority).

Fifth: Supplier Rights

1. The Requirement

Article (81) of the Regulations:

• Fair treatment of suppliers.
• Commitment to contracts.
• Timely payment.
• Relationships based on respect.

2. Best Practices

2.1 Fair Selection

• Transparent criteria.
• Fair competition.
• No favoritism.
• Documenting the process.

2.2 Fair Contracts

• Balanced terms.
• Clear obligations.
• Dispute resolution procedures.
• Respect for parties’ rights.

2.3 Timely Payment

• Commitment to terms.
• Without delay.
• Without exploitation.
• Long-term relationships.

2.4 Partnership

• Joint development.
• Knowledge transfer.
• Support.
• Mutual benefit.

3. Local Suppliers

3.1 Local Support Policy

Based on Vision 2030:

• Preferring Saudi suppliers.
• Supporting SMEs.
• Technology transfer.
• Building local supply chains.

3.2 Local Content

• Commitment to local content policies.
• Disclosure of local content ratios.
• Developing local suppliers.

Sixth: Creditor Rights

1. Basic Obligations

1.1 Timely Payment

• Commitment to payment dates.
• Without delay.
• According to contracts.

1.2 Financial Transparency

• Accurate financial statements.
• Risk disclosure.
• Regular communication.

1.3 Respecting Terms

• Loan covenants.
• Debt limits.
• Guarantees.
• Other obligations.

2. In Cases of Difficulty

2.1 Early Disclosure

• About any financial difficulties.
• Without concealment.
• Proactive communication.

2.2 Restructuring

• Honest negotiation.
• Respect for creditor rights.
• Fair treatment.

2.3 Legal Procedures

• Compliance with Saudi Bankruptcy Law.
• Preventive settlement.
• Financial reorganization.

Seventh: Corporate Social Responsibility

1. The Framework

Article (83) of the Regulations:

• Disclosure of social responsibility.
• In the annual report.
• Within approved programs.

2. Areas

2.1 Education and Training

• Supporting educational institutions.
• Scholarships.
• Training programs.
• Innovation.

2.2 Health

• Supporting hospitals.
• Health campaigns.
• Awareness.

2.3 Housing

• Housing initiatives.
• Supporting needy families.

2.4 Relief

• In disasters.
• Humanitarian support.

2.5 Culture and Sports

• Supporting events.
• Sponsoring activities.
• Heritage.

3. Social Responsibility Policy

3.1 Content

• Vision and objectives.
• Priorities.
• Budget.
• Governance.

3.2 Approval

• From the Board.
• Periodic review.
• Linked to strategy.

Eighth: Environmental Responsibility

1. Reference Frameworks

1.1 Saudi Green Initiative

Local initiative:

• Planting 10 billion trees.
• Transition to renewable energy.
• Reducing emissions.
• Environmental preservation.

1.2 International Commitments

• Paris Agreement.
• Sustainable Development Goals (SDGs).
• TCFD standards.

2. Environmental Disclosures

2.1 Requirements

• In listed companies.
• Gradually.
• ESG standards.

2.2 Content

• Carbon emissions.
• Energy consumption.
• Water consumption.
• Waste.
• Environmental activities.

3. Transitions

3.1 Circular Economy

• Recycling.
• Reducing waste.
• Sustainable design.

3.2 Renewable Energy

• Transition to solar energy.
• Wind.
• Efficiency in use.

Ninth: Sustainability Reports (ESG)

1. Evolution in Saudi Arabia

1.1 The Framework

• Voluntary encouragement initially.
• Gradual standards.
• Mandatory disclosures increasing.

1.2 Statistics

According to OECD 2025:

• 94 companies disclosed sustainability practices in 2024.
• In the largest 100 Main Market companies: 65% disclosed (compared to 58% in 2023).
• Continuous growth.

2. International Standards

• Global Reporting Initiative (GRI).
• Sustainability Accounting Standards Board (SASB).
• Task Force on Climate-related Financial Disclosures (TCFD).
• International Sustainability Standards Board (ISSB).

3. Benefits

• Attracting responsible investment.
• Competitive advantage.
• Risk management.
• Strong reputation.
• Employee and customer loyalty.

Tenth: Reporting and Protection System

1. For Employees

1.1 Reporting Channels

• Internal and independent.
• Multiple.
• Confidential.

1.2 Protection

• From retaliation.
• From dismissal.
• From threats.

2. For Other Stakeholders

2.1 Customers

• Customer service.
• Complaints units.
• Consumer protection authorities.

2.2 Suppliers

• Communication channels.
• Dispute resolution.

2.3 Society

• Public reporting channels.
• Relevant government bodies.

Eleventh: Common Challenges

1. “Balance” Challenge

Balancing interests of all:

• Solution: dialogue with all parties.
• Clear policies.
• Decision-making with comprehensive approach.

2. “Cost” Challenge

Investment in stakeholders:

• Solution: measuring return.
• Long-term benefits.
• Competitive advantage.

3. “Measurement” Challenge

Difficulty measuring impact:

• Solution: international standards (ESG).
• Specific indicators.
• Independent reports.

Twelfth: Best Practices

1. At the Philosophy Level

• Real commitment: not just rhetoric.
• Integration: with strategy.
• Leadership: from the top.
• Sustainability: long-term.

2. At the Management Level

• Comprehensive policies: for each category.
• Sustainability officer: or committee.
• Sufficient budget: for obligations.
• Follow-up: on performance.

3. At the Disclosure Level

• Comprehensive sustainability reports.
• International standards: GRI, SASB, TCFD.
• Transparency: complete.
• Continuity: in disclosure.

4. At the Dialogue Level

• Listening: to all parties.
• Communication: continuous.
• Response: to observations.
• Real partnership.

Conclusion

Stakeholder rights are an essential part of modern governance. The Saudi Corporate Governance Regulations, especially Chapter Eight, organize this area in a way that reflects governance maturity. Compliance with these requirements is not just regulatory compliance but a business philosophy that builds sustainability, creates value, and achieves competitive excellence.

Developments in environmental and social disclosures, especially in listed companies, reflect the Kingdom’s keeping pace with international trends. With Vision 2030 and its initiatives (Saudi Green, Saudization, women empowerment), Saudi companies are in a distinguished position to lead the transformation. Companies that invest in strong relationships with stakeholders build not just reputation, but create a sustainable model for growth that benefits everyone: shareholders, employees, customers, suppliers, society, and the environment.

🎯  Essential Points to Remember (1) Modern governance transcends shareholders to include all stakeholders. (2) Employees: rights in wages, environment, development, dignity, non-discrimination, Saudization. (3) Customers: rights in quality, fair price, information, privacy, complaint handling. (4) Suppliers: fair selection, balanced contracts, timely payment, partnership. (5) Creditors: timely payment, financial transparency, respecting terms. (6) Social responsibility: education, health, housing, relief, culture. (7) Environmental responsibility: Saudi Green, reducing emissions, sustainability. (8) ESG reports: rapid growth, 65% of largest 100 companies. (9) Comprehensive reporting system for all stakeholders with protection. (10) Real application builds long-term value, not just compliance.

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FAQS

What is the difference between the traditional shareholder model and the modern stakeholder model of governance?

Who are the stakeholders covered under Chapter Eight of the Regulations?

Chapter Eight covers employees, customers, suppliers, creditors, society, and the environment, recognizing that the company's long-term sustainability depends on the health of its relationships with all these parties, not just shareholders.

What are the core employee rights under Article 80 of the Regulations?

They include fair and timely wages, a safe working environment, professional training and development, protection from discrimination and harassment, clear grievance channels, and commitments related to Saudization, women's empowerment, and employment of people with disabilities aligned with Vision 2030.

References and Sources

• Corporate Governance Regulations — Chapter Eight (Articles 80-83).
• Saudi Labor Law.
• Personal Data Protection Law.
• Consumer Protection Law.
• OECD Principles of Corporate Governance — Stakeholder Rights.
• ICGN Stewardship Principles.
• UN Global Compact.
• Global Reporting Initiative (GRI) Standards.
• Task Force on Climate-related Financial Disclosures (TCFD).
• Saudi Vision 2030 — Saudi Green and Sustainability Goals.