Midgley (1995) argues that the major problem facing developing nations and regions today is "distorted development" when economic growth is not accompanied by concurrent progress in social welfare for the entire population. Therefore, businesses are encouraged to be able to pay attention to the social and economic impacts of their activities. One of the tools to measure the impact is the Social Lifecycle Assessment (S-LCA), where the inclusion of stakeholders is an important part.

In UNEP/SETAC Guideline of SLCA, the sub-category of “community engagement”, which differs from sub-category of “local employment” and “access to material and immaterial resources”. lies in stakeholder local community. Community stakeholders include individuals or community groups in relevant decision-making processes, that may be affected by the actions or products of an organization. Organizations should consider these stakeholders in the development and implementation of business policies, particularly those that affect local environment, health and well-being. Community engagement should provide community members with a venue to voice concerns that should be responded with a strategic plan of action. Organizations also foster community engagement through direct involvement in community initiatives and/or through financial support of community projects.

Community engagement may appear in the form of strength of written policies on community engagement at organization level, diversity of community stakeholder groups, number and quality of meetings with community stakeholders, and organizational support (volunteer-hours or financial) for community initiatives. To measure the effectiveness of the community engagement in SLCA, the paper analyses several forms of community engagement as a breakdown of the sub-category. The highest level of community engagement form is expected can effectively mitigate negative social impact of the business activities on local community stakeholder.