John Ruggie’s proposed grievance mechanisms – now being trialled – are central to his goal of establishing a business and human rights framework

In his 2009 report to the UN Human Rights Council, the UN special representative on business and human rights, John Ruggie, acknowledges the critical importance of “access to remedies” – that is, grievance procedures. He notes that too many barriers exist to accessing judicial remedy and too many non-judicial mechanisms are ineffective. “Further improvements, shared learning and innovations are required,” he says.

Announced in August 2009 after extensive consultation, a 12-month pilot project running to November this year will test the principles for non-judicial, company-level grievance mechanisms. Crucially, the findings will form a major part of the special representative’s much-anticipated final report to the UN Human Rights Council in 2011.

Real-life testing

There are four main participants in the piloting project: Columbia’s largest coal miner Cerrejon, Hong Kong textile and garment manufacturer Esquel Group, UK supermarket group Tesco and Russia’s oil and gas project Sakhalin II, which is owned and operated by the Sakhalin Energy Investment Company in which Shell holds a 27.5% stake. These are being evaluated and monitored by the Corporate Social Responsibility Initiative (CSRI) at the Harvard Kennedy School. Findings will be reported early in 2011.

A smaller project in collaboration with HP and two of its Chinese suppliers to review its recent work to introduce improved grievance processes was concluded in February.

Caroline Rees, director of CSRI, says the key objective of the pilot projects is to “reality test” the grievance mechanism principles set out in Ruggie’s 2008 and 2009 reports to the UN.

“Ruggie’s whole approach to his mandate is one of ‘principled pragmatism’ – strengthening the enjoyment of human rights through approaches that can generate real change in the daily lives of people,” she says.

The pilots go further than the seemingly ubiquitous corporate case study, Ruggie said in a podcast for EthicalCorp.com in November.

“These are not just case studies. These companies are actually constructing grievance mechanisms on the ground,” he said. “It’s not just about writing up an experience, it’s actually creating an experience and seeing how it works.”

Venting frustrations

CSRI released a report in January 2008: Rights Compatible Grievance Mechanisms – A Guidance Tool for Companies and their Stakeholders. It concluded that the absence of an effective mechanism to address legitimate concerns may have a serious impact on workers’ ability to enjoy their human rights, maintain their welfare and dignity and benefit from personal and economic development opportunities.

The guidance notes there is often little alternative than to resort to litigation or public protest, to express concerns.

Tesco suffered substantial negative publicity in 2006 when Gertruida Baartman, a South African fruit picker, condemned its labour practices in person at the company’s AGM, claiming that workers were receiving “breadline” wages. Baartman attended the AGM as a shareholder after the charity ActionAid bought her a single share and flew her to London, later winning a meeting with the company chairman.

Four years on, the retailer is trialling the grievance mechanism in South Africa. Tesco already has a labour standards programme in place, as a member of the Ethical Trading Initiative, which focuses on awareness-raising, capacity-building, monitoring and improvement. The pilot represents an opportunity to improve on that.

Tesco’s head of ethical trading policy, Giles Bolton, says a healthy workplace means workers can raise concerns without fear of retribution and, where appropriate, have those concerns addressed.

“We want to see whether it’s possible to design a successful, scaleable dispute mechanism to support these efforts further,” Bolton says.

The social and environmental impacts of Sakhalin Energy’s project have been well documented. The company has been accused of harming the western grey whale population and threatening the livelihood of tens of thousands of fishermen by destroying the key salmon fishing area off Sakhalin Island in the Sea of Okhosk.

In 2005 the project was declared “unfit for purpose” due to environmental concerns by the European Bank for Reconstruction and Development, a potential financier. The chief executive of WWF, Robert Napier, declared in the same year that the project would have a negative impact on the region’s people and environment.

Oleg Bazaleev, Sakhalin Energy’s head of social performance, says a project as large as Sakhalin II inevitably has social impacts, mostly during its main construction phase, which ended in 2009.

“It is important that if a grievance or a concern related to the company and/or its contractors arises then people have an opportunity to communicate the grievance directly to the company,” he says.

“It is important for a complainant [and] it is important for Sakhalin Energy because the company is accountable for its activities. It is also important for the company and contractors’ staff because they must understand that they work for a company that cares.”

Just good business

Zoe McMahon, HP’s global supply chain manager, says an informed workforce, good communications and an effective feedback system are essential for efficient operation in any organisation.

HP conducted training at its China-based suppliers aimed at enabling workers to understand their labour rights and to give them a channel for communicating any concerns that they may have about their working environment.

In China, as many as 200 million workers are internal migrants from the countryside. They have few opportunities to channel their grievances, or to find a resolution, with the support of representatives they trust.

Esquel Group’s Tammy Rodriguez, director of corporate social responsibility, says the labour-intensive nature of the garment manufacturer’s business means effective grievance mechanisms are extremely important for the company.

“Understanding the concerns of the employees and working to address them efficiently and effectively will ultimately benefit our business,” she says. Most of Esquel’s suppliers are based in China, although the grievance mechanism is being tested in Vietnam.

For multinational companies working in difficult environments it is often about managing risk.

CSRI argues that failing to identify grievances early and to address them effectively carries considerable risks, ranging from suboptimal productivity due to low morale, absenteeism and illness among a workforce. Low worker retention is a result meaning that additional training will be required, dealing with the increased employee turnover. Further problems could be preventable strikes, blockades, and even violent action against company property and staff.

It is by now the norm for large companies to implement some form of grievance mechanism for their direct employees as part of their recognised duty of care. These may cover non-discrimination issues or other labour rights standards, or be channels for whistle-blowing on non-compliance with ethical standards or an in-house code of conduct.

If it ain’t broke don’t fix it

“Remedy and dispute resolution tends to be more effective, the more locally they are provided,” CSRI’s Rees says. But many multinationals are not members of or funded by bodies that provide grievance mechanisms, even as a second-tier option.

HP’s McMahon says the availability of independent bodies that can be used as a point of appeal varies considerably.

“Our programme is not intended to replace those official mechanisms, it is our goal to identify where suppliers need assistance with their labour management system, or other aspects of social and environmental responsibility, and support them with tools or training as needed,” she says.

Similarly, although Esquel’s suppliers in China and Vietnam have already implemented grievance mechanisms, their effectiveness is varied.

“Some of the reasons for this are related to cultural norms, the political environment, the legal structure and its effectiveness and, of course, the quality of the management team in place,” Rodriguez says.

“Employees do have recourse to appeal to external, independent bodies such as unions, and/or government authorities, and the Ruggie principles do not affect this right of recourse. The principles are to help companies strengthen their internal “non-judicial” grievance mechanism.”

Sakhalin Energy’s Bazaleev says social performance functions all over the world lack a unified standard.

Sakhalin Energy has a well-developed grievance procedure, with several features that set it apart from many grievance procedures in the industry. It is driven by resolving grievances in a manner that is satisfactory to complainants: the grievance is considered resolved when the complainant signs a statement of satisfaction, Bazaleev says.

“Thus there are sufficient grievance mechanisms in place at Sakhalin Energy and its contractors to ensure human rights are not mistreated,” he says.

Sakhalin Energy and its contractors’ staff have recourse to appeal to external, independent bodies.

“The purpose of the testing of the Ruggie principles using the Sakhalin Energy’s experience was not to evaluate or assess Sakhalin Energy’s grievance mechanism but, rather, to gain an understanding of how the company currently deals with grievances, and how the Ruggie principles and guidance points can be integrated into their current grievance mechanism,” he says. So far the results have been “quite positive”.

Tesco’s Bolton says there will always be problems across large supply chains, even though the retailer believes its South African suppliers are making important progress across a range of labour standards.

“One of the things we want to understand better from the pilot is the effectiveness of the formal and informal systems for concerns to be raised that some of our suppliers and farms already have in place.

“We also want to know whether and how a more systemic mechanism can support improved conditions and relationships at farm level – and how it can complement other important channels including trade unions and government.”

A worker-based model

Jenny Chan, chief coordinator at Students & Scholars Against Corporate Misbehaviour (Sacom) – a non-profit workers’ rights advocacy organisation – emphasises the importance of adequate worker representation on the shop floor.

“Workers’ representation, or unionising, is an area that I would like Professor Ruggie to explore further,” she says. “When we think of good, functioning grievance mechanisms on the shop floor, we need to look into worker representation, and the lack thereof. In view of the mobility of the migrant workforce, the installation of a representative structure for workers to voice their concerns will certainly help strengthen worker-management dialogue.”

Chan calls for democratic, factory-wide elections, so that workers will be able to elect their representatives. Elected worker representatives should be able enjoy their right to collective bargaining.

Sacom has been working with HP in two factories in China as a local independent trainer. “HP has taken strong initiatives to facilitate grassroots labour groups such as Sacom to implement labour rights training for workers and managers in its supply chain, despite the fluctuations of the global market in 2008 and beyond,” Chan says.

Seeking the right balance

Although laudable, the proposed grievance mechanism principles contain some glaring omissions and are not “rights compatible”, says Peter Frankental, economic relations programme director at Amnesty International UK. He points to two glaring omissions – transparency of information and consideration of outcomes.

“The imbalance of power between the company and the complainant is unlikely to lead to a fair settlement, insofar as the company is not required to share information which is necessary to establish causation, responsibility and impact,” he says.

Sacom’s Chan also has concerns about the power relationship and hierarchy in a typical company, saying a multistakeholder approach would be preferable.

“I am concerned about who’s going to install the grievance mechanisms – by the management alone is not a good idea; by managers and workers together is better, but still not enough,” Chan says.

Frankental says that to be “rights compatible” the grievance mechanism would need to restore the victims to their position before the violation occurred and might also require guarantees of non-repetition. He says there are few occasions in which a victim of abuse can expect to receive a just settlement, when the perpetrator “holds all the cards”.

“Essentially what is being proposed is a procedure where the perpetrator has to agree to submit itself to mediation, and has to endorse the solution, the parameters of which it has complete control over,” he says.

CSRI’s Rees disagrees, saying company-level mechanisms have every opportunity to restore victims to their position before a violation occurred, “and in some instances may be able to do so in a more meaningful way than a judicial process can, since they have more flexibility to agree on outcomes that address all manner of cultural, access, livelihood, recognition and other impacts courts may be less able to respond to”.

Grievance mechanisms can also provide commitments of non-repetition – but no mechanism can provide guarantees.

“The fact that some company-level mechanisms are ineffective does not detract from this, any more than the fact that courts in some parts of the world are corrupt detracts from the potential and importance of court systems,” Rees says. “The aim of the pilot is precisely to test principles that can improve effectiveness.”

Amnesty, along with the Core coalition – an alliance of NGOs, trade unions and companies – is calling for a Commission on Business, Human Rights and the Environment to provide a non-judicial complaints mechanism that is fair and independent and has some investigatory and enforcement powers.

“Professor Ruggie’s proposed mechanism, while laudable in many respects, is not a substitute for an ombudsman function of this kind,” Frankental says.

Rees says Ruggie has always made clear that companies should have effective grievance mechanisms as a means of early identification and remedy of problems. They are not a substitute for state-based mechanisms, which he has also insisted need continual augmenting and improving.

Test pilots

  • Cerrejon in Colombia – a joint venture of Anglo American, BHP Billiton and Xstrata.
  • Esquel Group, based in Hong Kong (clients include US labels Tommy Hilfiger, Hugo Boss, and Abercrombie & Fitch) – piloting a mechanism at its clothing factory in Vietnam.
  • HP – working on a mini-pilot with two suppliers in China.
  • Sakhalin II in Russia – working with Sakhalin Energy Investment Company, the joint venture of Shell, Gazprom, Mitsui and Mitsubishi.
  • Tesco – working with a group of fruit suppliers in South Africa.

Principles and guidance for effective rights-compatible grievance mechanisms

1. Legitimate and trusted: The grievance mechanism should be perceived as legitimate by the affected stakeholder groups that may need to access it, and should be jointly designed and overseen by the company and those stakeholder groups concerned.

2. Publicised and accessible: The grievance mechanism should be publicised to, and readily accessible by, all parties who may need to access it.

3. Transparent: The grievance mechanism should operate on a presumption of transparency of process (eg decisions on complaint acceptance) and outcomes, while allowing for dialogue to remain confidential and, where requested, for complainant confidentiality.

4. Based on engagement and dialogue: The grievance mechanism should focus on engagement and dialogue between the parties, with the aim of identifying sustainable, rights-compatible solutions that are acceptable to all.

5. Predictable in terms of process: The grievance mechanism should provide predictability in terms of the key steps and options within the process, should be time-bound where appropriate and provide for agreed outcomes to be monitored.

6. Fair and empowering: The grievance mechanism should seek to redress imbalances in power, knowledge and influence between the company and potential complainants to enable informed dialogue, a shared responsibility for outcomes and a process based on respect.

7. A source of continuous learning: The effectiveness of the mechanism should be measured and cumulative lessons from complaints should be reviewed to identify systemic changes needed to either company practices or the workings of the grievance mechanism.

Source: Grievance Mechanisms: a Guidance Tool for Companies and their Stakeholders, Corporate Social Responsibility Initiative, John F Kennedy school of government, Harvard University, January 2008.



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