In Search of Effective Corporate Grievance Mechanisms: Can Mandatory Due Diligence Laws be a Progressive Force?

Abstract

Mandatory human rights due diligence (mHRDD) laws are currently being proposed and/or implemented in countries around the world. Increasingly, these laws place obligations on corporations to establish or participate in corporate grievance mechanisms (CGMs). CGMs have the potential to ensure that rightsholders are empowered to hold corporations accountable for their human rights performance. But our limited knowledge of how CGMs operate indicates that many are not producing results that are valuable for workers and communities. CGM provisions in mHRDD laws in Germany and Norway, and draft laws produced in the European Union and Brazil are rudimentary and unlikely to produce better-performing CGMs. Analysis of Norwegian mHRDD corporate reporting identifies that many corporations fail to understand the basic elements of an effective CGM. The article therefore argues that requirements for CGMs in mHRDD laws will only be a progressive move if such laws also demand disclosure of information that empowers national authorities, as well as civil society actors and researchers, to scrutinize CGMs to ensure they are effective. Disclosure requirements must speak to three issues: (1) how accessible CGMs are, (2) the way complaints are handled, and (3) the remedies provided to rightsholders. If, as a result of scrutiny of this data, mHRDD laws can produce well-functioning CGMs, this could lead to rightsholder concerns becoming more central to due diligence processes, potentially addressing cosmetic compliance with due diligence obligations.

1. Introduction

Both human rights due diligence (HRDD) and corporate grievance mechanisms (CGMs) have risen to prominence from a human rights perspective in recent years, largely as a result of the UN Guiding Principles on Business and Human Rights (UNGPs). Over the decade since their publication, the UNGPs have become the most significant international instrument in relation to corporate human rights responsibilities. The UNGPs are grounded in three pillars: the state duty to protect human rights, the corporate responsibility to respect human rights, and the requirement to provide access to remedy.

The first pillar of the UNGPs requires states to protect against human rights abuses, including ‘taking appropriate steps to prevent, investigate, punish and redress such abuse through effective policies, legislation, regulations and adjudication’. The second pillar places a responsibility on corporations to respect human rights. This is primarily achieved through undertaking human rights due diligence. HRDD is a multi-faceted process which requires companies to first assess their actual and potential human rights impacts, then to address any adverse impacts they identify, to monitor the success of their responses, and finally to communicate to stakeholders the action that they have taken (Principles 17–21). Finally, the third pillar is ‘access to remedy’ requiring corporations to provide for, or cooperate in, systems to address human rights complaints and remedy adverse impacts where those have occurred.

According to the UNGPs, access to remedy is provided first and foremost by judicial mechanisms (Principle 26). However, other mechanisms are also identified as important, including private forms of remedy in which the government has no direct role. These include grievance mechanisms run by the company themselves (‘internal grievance mechanisms’), and those in which multiple companies participate (Principle 29). The latter category includes grievance mechanisms run by multi-stakeholder initiatives (MSIs) (frameworks for cooperation among businesses, civil society and other stakeholders often aimed at meeting social and environmental objectives) and other groups (for example business associations). Collectively we term these ‘corporate grievance mechanisms (CGMs)’. They are the focus of this article. At the moment, there are concerns that many CGMs do not appear to be effective from a rightsholder perspective (see discussion in section 2). It is in this context that human rights due diligence laws could have an impact.

One of the most notable recent actions by states to fulfil their duty to ‘protect’ has been the introduction of mandatory HRDD legislation (mHRDD laws) transforming the corporate responsibility to respect human rights from a voluntary commitment into a legal obligation. Different versions of mandatory HRDD laws have been introduced in Germany, France and Norway (Deva 2023). An EU Corporate Sustainability Due Diligence Directive (CS3D) has also been adopted in 2024, which will require all EU governments to introduce mandatory due diligence legislation within the next two years.¹ Beyond Europe, Brazil and Colombia are also considering proposals for laws which include mandatory due diligence.² In light of these developments, HRDD looks set to metamorphize from a voluntary activity undertaken by a small number of pioneer companies to a set of obligations which many thousands of companies globally will be required to undertake. More recent mHRDD laws, including the German law, the EU CS3D and the Brazilian proposal, all include a requirement for companies to establish or participate in CGMs.³

There are mixed views about the potential of mHRDD laws to actually improve human rights performance by companies on the ground. Optimists argue that they will require companies to identify, prevent and mitigate their human rights abuses and create legal consequences or administrative penalties for non-compliance which will make companies take these obligations seriously (Ruggie et al. 2021). However, other commentators are concerned that companies may adopt strategies of ‘cosmetic compliance’ by adopting the formal processes and practices required of HRDD laws, but in such a way that they do not take rightsholder concerns seriously or identify and address the human rights abuses for which they bear responsibility (for example Landau 2019; Quijano and Lopez 2021).

Study of existing HRDD practice has also raised concerns. It has found that HRDD is a methodologically complex process, which is beset by challenging power dynamics and may marginalize the concerns of rightsholders (Harrison 2023). The numbers of practitioners capable of undertaking robust and meaningful HRDD is very small, but mHRDD laws are making HRDD an obligation with which thousands of companies must now comply. This increases the risks of a race to the bottom in HRDD practice (Harrison 2023). There is some hope that the threat of administrative enforcement or litigation will act as an incentive to drive up standards. But these actions can take a long time to come to fruition and the degree to which government officials and judges will be capable and willing to be involved in deep scrutiny of corporate practice of HRDD is uncertain (Landau 2024). Overall, then, corporations appear likely to continue to have significant control over HRDD processes. MHRDD laws will significantly increase the amount of HRDD which takes place but may well reduce its quality.

While HRDD and mHRDD laws have been the subject of extensive analysis, there has been very little focus on CGMs and the role they might play when mandated by mHRDD laws. Many CGMs were created prior to mHRDD laws coming into force. They can take diverse forms and be set up to achieve a variety of different aims from improving community-company relations to enforcing a particular set of certification standards (Grama 2022). But, when mandated by mHRDD laws, they should be a mechanism for rightsholders to complain about corporate misconduct and, where those complaints are upheld, remedies must be provided to rightsholders, as required by the UNGPs. Also, the complaints raised through CGMs can inform the HRDD process in a way that puts rightsholder concerns at the centre of the process, thereby potentially addressing cosmetic compliance.

In the rest of this article, we consider the requirements of mHRDD laws for CGMs. Can mHRDD laws provoke the instigation of CGMs which actually address the concerns of rightsholders and provide remedies where rights have been infringed? And can those CGMs inform and improve wider HRDD processes? We first review the current scholarship which investigates the practice of CGMs, including our own detailed empirical analysis of MSI CGMs, to understand how individual CGMs are currently performing (section 2). We find that the vast majority of CGMs lack the kind of transparency which makes external scrutiny possible. But those CGMs which are sufficiently transparent to allow for analysis of their performance often have serious deficiencies. These include impediments to accessing the system, problems with the way the complaints are handled, and inadequate remedies provided when claims are upheld.

We then review requirements in mHRDD laws which require companies to establish or participate in CGMs (section 3). We argue that none of these laws are attempting to impose requirements on CGMs that will ensure that those mechanisms are effective for complainants. Nor will they allow lawmakers or other interested parties to make informed judgments about the effectiveness of existing complaints mechanisms. We demonstrate the nature of the problems in practice by examining reporting practices in relation to the Norwegian Transparency Law. We review how 30 of the largest companies in Norway have reported on their CGMs and find serious deficiencies.

In section 4 we then propose a framework by which mHRDD laws can facilitate effective scrutiny of CGMs. We argue that the requirement of transparency that is found in the UNGPs’ Effectiveness Criteria (Principle 31) can be the starting point for meaningful scrutiny in the future. But we draw on insights from corporate disclosure and forensic accounting literature to argue that mHRDD laws and regulations need to be drafted and interpreted so as to require the disclosure of key specified aspects of the complaint system and how it functions. The mandatory provision of this information can then be the basis for useful scrutiny by key stakeholders of how individual CGMs are functioning and the outcomes they are producing for rightsholders.

In section 4 a-c, we argue that information must be disclosed relating to three specific areas, identified in our MSI study as a vital basis for effective scrutiny of MSIs: key characteristics of the complaints filed with the CGM; the CGM’s investigatory and adjudicatory capacity; and its ability to provide remedy to rightsholders. In each of these areas we argue that the provision of key facts and figures allows for a series of critical questions to then be posed by national authorities and interested third parties. The answers to these questions will reveal either strengths or deficiencies in the CGM in question. Collectively, these questions provide an analytical framework for evaluating the performance of CGMs and enhancing their performance in the future.

Section 5 then offers concluding thoughts about some of the underlying ways in which scrutiny of corporate behaviour needs to change if mHRDD laws are to have a positive impact on corporate accountability via the CGMs they mandate. It also reflects on how corporate CGMs might enhance HRDD processes and thereby become an important component of mHRDD laws.

2. Current state of knowledge concerning CGMs

There is a serious debate about the capacity of CGMs to play any kind of legitimate or meaningful role in addressing human rights-related abuses. Sceptics argue such mechanisms are one aspect of the privatization of governance, giving too much power to companies to set up the processes for judging their own actions and therefore lacking the inherent capacity to address the conflicts that arise between corporations and rightsholders (see discussion in Haines and MacDonald 2020: 841). Some even argue that such mechanisms are utilized to suppress other forms of community mobilization and to distract from forms of remedy which have much greater capacity to hold corporations accountable for human rights violations (see discussion in Grama 2022: 104f). But other commentators, as well as key UN actors, argue that CGMs do have an important role to play, as a complement to judicial mechanisms, in enhancing corporate accountability (Haines and MacDonald 2020: 841). It is argued that CGMs can potentially offer complainants a cheaper and speedier way of obtaining remedies for wrongdoing than judicial mechanisms. In places where judicial mechanisms are failing, they are particularly important for rightsholders who otherwise may have no other means of redress (Laplante 2023).

Yet even the most optimistic assessments of CGMs recognize that they will not necessarily produce valuable results for rightsholders if they do not function ‘effectively’. The UNGPs identify seven effectiveness criteria which seek to ‘provide a benchmark for designing, revising or assessing a non-judicial grievance mechanism to help ensure that it is effective in practice’ (Principle 31). The effectiveness criteria demand that CGMs should be legitimate, accessible, predictable, equitable, transparent, rights-compatible and a source of continuous learning. In recognizing that these criteria primarily focus on the procedural aspects of access to remedy, subsequent UN guidance and analysis by commentators has also emphasized the importance of the outcomes that are achieved for rightsholders (United Nations 2017). According to this perspective, a CGM only provides effective remedies for rightsholders when there is a cessation of the continuing violations of the human rights infringed and restoration to the rightsholder of full enjoyment of rights, and/or adequate reparation for harm suffered due to the lost enjoyment of those rights, taking into account the opinions and needs of the rightsholders themselves. Overall, it is important to recognize that effective CGMs must be effective both procedurally and substantively.

Moving from the theory to the practice of CGMs, there is a relative lack of scrutiny of how different CGMs are performing in practice. The UNGPs’ effectiveness criteria should provide the basis for such scrutiny. They have certainly been influential, in that many corporations claim that their CGMs are aligned with the UNGPs. An increasing number of MSIs make the same claim (Harrison and Wielga 2023). Unfortunately, no official UN body monitors how CGMs that claim to comply with the UNGPs’ effectiveness criteria are actually performing in practice.

There are various corporate surveys and benchmarking processes that do attempt to do some form of monitoring of CGMs. They have found that businesses increasingly report that they have established or participate in CGMs. But these surveys also find that companies provide very little information about their CGMs which demonstrate whether they are effective from a rightsholder perspective.⁴ This is also a key finding of the academic literature, which shows how difficult it is to study how they actually operate in practice (Grama 2022; Laplante 2023).

Internal, company-run CGMs have the lowest levels of transparency. There is so little public information about the nature of claims they receive, how those complaints are then handled and what the outcomes are for rightsholders, that such information has been described as a ‘privatized body of knowledge’ (Owen and Kemp 2017: 132). On the few occasions when sufficient information has been publicly available to study the outcomes they achieve for rights-holders, the results have generally been found to be very disappointing (Grama 2022; Laplante 2023; Maher et al. 2021; Owen and Kemp 2024).

When it comes to MSI complaints mechanisms, there is a little more transparency. Our own study of MSI complaint mechanisms identified 26 MSIs who made public claims that they had CGMs (Harrison and Wielga 2023). But of these, we identified only six that had sufficient information about complaints in relation to three vital categories of information so that some form of evaluation of those systems was possible: that is, (1) the number, types and locations of complaints received, (2) the way in which those complaints were handled by the system, and (3) the outcomes achieved for rightsholders. Our study is unique in systematically analysing data for entire complaints systems in these three categories. It therefore provides some of the basis for arguments made later in this article about the data which should be made available by CGMs as a result of obligations in mHRDD laws. In terms of our substantive findings, there were instances where we found that the best performing CGMs did produce valuable results for rightsholders. But the CGMs we studied, to varying degrees, did not receive the number and/or type of complaints that would be expected in all of the locations where relevant corporate activity was taking place. There were then various problems with the way in which the majority of those CGMs investigated and adjudicated upon complaints they received. In general, they failed (again to very varying degrees) to provide remedies in all the cases where complaints were upheld (Harrison and Wielga 2023). Another study of individual cases from a variety of different non-judicial CGMs, including MSIs, also found generalized failures to provide effective remedies to rightsholders, again with differentiated performances achieved by different mechanisms, depending on a variety of factors (Miller-Dawkins et al. 2016).

The most egregious example of an inadequate CGM is the CGM run by Bonsucro (an MSI for sustainable sugarcane). Bonsucro has explicitly aligned its CGM with the UNGPs, yet it admits that its mechanism has capacity to deal with only three complaints per year. In fact, it has reported only four claims ever made to it (since 2011), and it determined that three of those claims were beyond the scope of its CGM, while finding no breach in the other case (Harrison and Wielga 2023).⁵ How can this be a legitimate CGM through which to tackle all of the human rights issues raised by workers and communities involved or affected by the production of sugar in all companies who are members of Bonsucro when they produce 72 million tonnes of sugar cane around the globe every year? The effectiveness criteria have been left to individual corporations and MSIs such as Bonsucro to interpret as they see fit without measures being taken to ensure meaningful action is taken, despite the fact that such organizations have problems with their legitimacy that have been regularly identified in the academic literature (for example Schleifer 2019; Selfa et al. 2014).

Overall, very few CGMs provide the kind of information about how they are operating to allow any kind of evaluation of their performance. Those CGMs which provide the most information have been found to produce extremely variable results. It seems safe to assume that those corporations and MSIs which are willing to provide more detailed publicly accessible information about their performance are going to be at the higher end of the performance spectrum when compared to those who are not providing that level of detail, or, in many cases, any detail at all about the cases that they handle. Where we have no knowledge of how CGMs are operating, we have no reason whatsoever to trust the results they are producing. On the contrary, confidence that any particular CGM is playing a meaningful role in addressing human rights-related abuses must be based on a detailed understanding of how that CGM is operating in practice.

3. The requirements of mHRDD laws in relation to CGMs

It is in the context of high levels of scepticism about how the vast majority of CGMs are operating that mHRDD laws enter the picture. For the purposes of this article, we define mHRDD laws as any laws which require companies of a certain size to undertake some form of HRDD. We analysed both current and prospective laws to identify those that contain provisions relating to CGMs. The German Act on Corporate Due Diligence in Supply Chains, the Norwegian Transparency Act, the proposed Brazilian National Framework Law on Business and Human Rights and the EU CS3D all have such provisions of varying scope that require companies to establish and/or participate in CGMs. But none of the laws we analysed had provisions that would ensure companies set up or participate in effective CGMs. Nor do they create reporting requirements on companies that would allow national authorities and other interested parties to scrutinize individual CGMs to understand how they are operating.

The Norwegian Transparency Act makes no direct mention of the term ‘grievance mechanism’. It does however require companies to implement appropriate measures to cease, prevent, or mitigate adverse impacts and to provide for or co-operate in remediation and compensation where this is required (section 4). There is then a general requirement to report on these and other measures taken (section 5). The Act explicitly incorporates the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct and companies that fall within the scope of the Act are required to undertake due diligence in line with these guidelines (Landau 2024). When referring to remediation, the OECD Guidelines state that companies should establish or participate in processes to enable remediation, including internal CGMs of the company and those run in collaboration with other stakeholders (such as MSIs). As we will see below, many Norwegian companies appear to have accepted that they have an obligation to establish or participate in CGMs under the Norwegian law and then to report on this practice.

The proposed Brazilian National Framework Law on Business and Human Rights does explicitly require companies to establish mechanisms to guarantee access to remedy (Chapter 2, Section 2, Article 5 and Article 6 Item XVI). But, as with the Norwegian Transparency Act, it does not set any requirements for how those mechanisms should function, and its reporting provisions only require companies to detail their plans to address any violations for which they bear responsibility (Chapter IV, Article XII).

The German Act on Corporate Due Diligence in Supply Chains also explicitly requires that companies establish or participate in a CGM. It does set out some basic requirements in relation to those CGMs; that they must have publicly available rules of procedure, be run by an independent person, be made accessible to potential complainants, maintain confidentiality of claimant identity, and ensure there is effective protection against retaliation (section 8). In terms of reporting, companies must disclose whether they have identified any human rights risks or violations (whether through CGMs or through other means), what those are, how they have been addressed and the company’s assessment of the effectiveness of the measures taken (section 10).

Finally, the EU CS3D Directive requires member states to ensure that companies have procedures in place to allow complainants or various representatives to submit complaints to them, and that these procedures are fair, publicly available, accessible, predictable and transparent (Article 9). Where complaints are determined to be ‘well-founded’ the rights violations should be prevented, mitigated or brought to an end, including by payment of damages to affected workers or communities. There is then a general requirement that companies report on matters covered by the Directive by publishing on their website an annual statement (Article 11).

All of these laws or proposed laws oblige companies to establish or participate in CGMs. But they appear to require little to monitor the quality of those CGMs, which we identified in section 2 above as vital to ensuring that CGMs are effective for rightsholders. The requirements with regard to CGMs in all four of these mHRDD laws are rudimentary and the reporting requirements are minimal. The Norwegian and Brazilian laws merely mandate that CGMs should be put in place. The German law and EU Directive do place some requirements on the CGMs, but they are vague and lack detail. For instance, even though they require corporations to make their CGMs known to rightsholders, there is no specification of the type and extent of action required to make this happen. Even more importantly, the required reporting is weak for all four pieces of legislation. None of the laws mandate any disclosures which would allow an evaluation of key aspects of the complaints process, as identified in the previous section, including whether (1) CGMs are receiving appropriate numbers of complaints, (2) complaints are then being investigated in a timely and appropriate fashion, and (3) CGMs are routinely producing remedies for rightsholders where this is apposite. Academic studies of corporate social reporting are clear that, if reporting is to be meaningful it must require companies to provide specific data that is useful to those monitoring corporate performance and allow them to benchmark the performance of companies against their peers and then effectively address poor performance (Hess 2008, 2019; Lopatta et al. 2023). We return to consider what that data might look like in the next section.

However, even vague reporting requirements can demonstrate deficiencies when companies do not realize that they are revealing their own inadequacies. Only the Norwegian Transparency Act was in force and had received a first year of reports from companies at the time of writing this article. We examined the Transparency Act reports of the top 30 public Norwegian companies by revenue.⁶ Of those companies, 26 provided information about their CGMs as one element of the reporting process. Another 19 companies (63 per cent of the full set of 30) simply noted the existence of pre-existing ‘whistleblower’ or ‘hotline’ systems. Whistleblower systems and hotlines are common corporate functions which serve many purposes but are ordinarily a tool of corporate management and compliance. They may be one element of a fully functioning human rights complaint system, but in themselves they are grossly inadequate to cover all human rights complaints. They allow complaints to be made, but generally only within the normal management structures of the company and without an independent investigation function. They may intersect with, but they are not, comprehensive human rights complaint mechanisms. They make no promises at all with regard to remedy. The fact that companies identify whistleblower systems as the totality of their CGMs shows deep confusion about what companies’ responsibilities are. While seven companies (23 per cent of 30 companies) did report having some form of CGM in addition to their whistleblower system, they merely reported that these exist. They provided no facts or figures to enable scrutiny of whether that CGM was operating effectively for rightsholders inside and outside the company. While this sample is indicative only and is not statistically significant, this data is particularly disturbing given that Norway is strongly supportive of human rights, having the first full, operating mHRDD law, and these are among its richest and most sophisticated companies.

4. A framework for effective scrutiny of CGMs

The key danger identified so far in this article is that mHRDD laws could merely lead to a significant increase in the number of ineffective, even meaningless, CGMs. Rightsholders may then be faced with an ever more confusing ecosystem of CGMs (including individual corporate mechanisms and those run by MSI and industry bodies) and spend increased time and effort engaging with them, without the potential for meaningful results at the end of the process. To avoid this situation, some form of monitoring and scrutiny is needed which can differentiate poorly performing CGMs from those that are performing well and then to drive up standards across the field. Existing mHRDD laws do not place sufficient requirements on CGMs to allow such monitoring to occur and for action to be taken to address poorly performing CGMs.

Independent monitoring of CGMs requires, at a minimum, disclosure of sufficient information by corporate actors about their CGMs to allow key stakeholders to evaluate their performance. The UNGPs’ effectiveness criteria already include a transparency criterion: that CGMs provide ‘sufficient information about the mechanism’s performance to build confidence in its effectiveness’. But companies who have voluntarily adopted the UNGPs have generally interpreted this so as to only provide vague and highly generalized information about their CGMs, and this form of disclosure does not allow for effective external scrutiny (see section 2 above). MHRDD laws must mandate disclosure that can be the foundation for building genuine confidence in the effectiveness of CGMs. This requires learning from previous experience of corporate reporting and its deficiencies. There is now a growing amount of evidence from the corporate social reporting and forensic accounting literature that meaningful disclosure requirements must be targeted and specific rather than generalized and permissive of significant corporate discretion in how corporate actors respond to them (Hess 2008, 2019; Lopatta et al. 2023). Allowing such corporate discretion leads to many companies omitting negative aspects of their performance from qualitative narratives (Lopatta et al. 2023; Roszkowska-Menkes et al. 2024). Furthermore, disclosure must empower those monitoring corporate performance to be able to compare the performance of companies against their peers and then take effective measures to address poor performance where it occurs (for example Hess 2008; Lopatta et al. 2023).

We argue below that, for disclosure requirements to be foundational to effective monitoring and scrutiny, requisite data must cover three core elements of the complaints process, as identified in our MSI study and in section 2 above, that are core to evaluating how it is functioning: (1) the number and nature of claims which CGMs are receiving, (2) the investigatory process which CGMs then adopt with regard to the claims they receive, and (3) the outcomes achieved from those claims for rightsholders. These requirements should be in the mHRDD laws themselves, or at least in regulations promulgated under them. We then show how regulatory authorities, as well as CSOs and researchers, might utilize this data to properly interrogate how well CGMs are functioning both procedurally and substantively, to identify why deficiencies are occurring, and demand enhanced mechanisms in the future. The scrutiny role should be primarily performed by national authorities who need to be properly funded to effectively perform their role. But civil society actors and independent researchers also have a vital role to play in the scrutiny process, to assist enforcement by making national authorities aware of CGM failings, and to interrogate the causes for this. This is particularly the case where budgetary pressures mean national authorities can only play a limited interrogatory role. For this reason, the public provision of data is vital. Finally, these required disclosures can help the companies subject to the mHRDD laws and regulations understand which basic elements of their own CGMs they should monitor, and, if so indicated, improve.

We draw on evidence from our existing research into MSI CGMs in various places to support our arguments about requisite disclosure and follow up investigation. Because of the complete lack of transparency in the vast majority of internal CGMs, we do not have the same evidence-base to draw upon for internal mechanisms. But, in many instances, we argue that the same issues apply. Where we ascertain that there are different considerations that apply to the latter category, we specify those in the text below.

4.1 The claims

The first set of data which national authorities should require involves details about the complaints which have been filed with the CGMs.⁷ Currently, even those CGMs who do report on this issue mostly only report on the number of claims filed. This is not sufficient to make any judgment about how their system is operating. A claim is not a standard unit. For instance, some claims involve one issue brought by one person, others involve multiple claims affecting thousands. Giving just the number of claims has almost no meaning unless there is information about the specific types of claims that have been made. CGMs should therefore make public key details of complaints so as to allow for meaningful scrutiny of the extent to which they are being accessed by complainants who should be accessing it.

The keys elements disclosed should include, at least: (1) the number of claims filed; (2) the type of claimant (for example an individual worker, a community, a union), or where this does not endanger claimants (see more on this in section below), details of the claimant themselves; (3) the location where each complaint took place; and (4) the nature of the allegations, including the damage suffered and which human rights were alleged to be violated (for example fired for refusal to work excessive overtime, crops damaged by pollution).

This information is crucial because it allows for scrutiny of whether the CGMs appear to be receiving the number and types of complaints in the locations where complaints should be occurring. Or, to put it another way, it allows scrutiny of impediments to accessing the complaint system. Analysis of this data can then uncover various problems and deficiencies. The most obvious problem is that analysis will show that the number of complaints is simply very low, given the extent of corporate activity which the complaints system purports to cover (as in the Bonsucro example presented above). National authorities can then follow up with CGMs to ask questions to explore two key hypothesis which then need to be explored for why this might be the case.

First, there is the question of whether the CGM is making potential complainants aware of its existence. A CGM which does not publicize its existence to claimants is worthless. CGMs are not an accepted and universal part of the legal landscape like national courts. There is no reason that potential claimants should know they exist. All CGMs have the basic duty to make themselves, and basic elements about how they operate, known to their potential claimants. Those elements include the system’s scope (who can file against whom for what), procedures (how to file a claim and what the claimant needs to do at each stage), and outcomes (what remedies can be provided). These answer the threshold questions claimants have: Can I file a claim? How do I do it? What will I get and how long will it take? CGMs must make affirmative efforts to present the answers to these questions to potential claimants.

‘Outreach’ is the term for the efforts made by a CGM to inform potential claimants of the essential elements of the system and how it can be accessed. CGMs require an ongoing programme of outreach. The effectiveness of outreach can be judged by its processes and results. With respect to the process used for outreach, information available on the internet is necessary, but is definitely not sufficient. It is of limited usefulness for many types of claimants who may lack computer or internet access and the technical skills or language ability to find information. The forms which outreach should take, and the extent of outreach activity needed will depend on the nature of the CGM, who its potential complainants are, and how they can be effectively engaged. A properly designed outreach system will start with a complainant-centred needs assessment. Subsequent outreach is likely to include activities such as in-person presentations to factory workers and local communities, posters and pamphlets distributed to them, and engagement with NGOs and other groups who can act as intermediaries to publicize the system to potential complainants through their networks. But these organizations cannot be relied upon to spread the word to communities and workers without support for their efforts from those running the CGMs. In terms of results, a successful programme of outreach will lead to increased complainant knowledge of the CGM (which can be assessed) and increased numbers of complaints filed (which should already be monitored).

A second reason why a CGM may receive low numbers of complaints is because complainants who know about the mechanism find it difficult or impossible to make a claim. Inaccessible systems can require complainants to fill in complex forms in languages they do not understand without adequate support from people who understand how the CGM works. Making systems accessible will again depend on key characteristics of potential complainants. Those running CGMs need to consider the languages that complainants speak, their preferred mode of engagement with the CGM (a person on the end of a telephone is more accessible for many potential complainants than a form on a website) and the support and assistance that potential claimants need to successfully lodge a claim.

Sometimes the problems with a system will be more complex than low numbers of all types of complaints in all contexts. Some mechanisms will have problems with particular types of claims, types of claimants and/or particular national contexts. For example, the Fair Labor Association’s CGM primarily engages with trade unions or workers trying to form a union who bring claims on behalf of workers, often in relation to the right to unionize. But a very significant proportion of the factories who produce for FLA members are in China and Vietnam, where state-controlled unions fail to protect the labour rights of their members. No legitimate unions exist. The FLA’s approach to engage with unions, primarily around the right to unionize, cannot function effectively in this context. It therefore needs to work out how its system will function in a country where those unions do not exist, or else admit that its CGM cannot function effectively in this context and identify other accountability mechanisms that can act as an alternative (Harrison et al. 2024).

Another serious impediment to the effectiveness of the claims process is that complainants may suffer from retaliation as a result of submitting their complaints. They can suffer violence, or threats of it, be blacklisted from jobs, or suffer other forms of punishment. Fear of reprisal fundamentally undermines a CGM and limits its real accessibility. The numbers and types of claims will never prove that a serious fear of retaliation is present, but they can be the basis to begin that inquiry in a qualitative way. If the issue is flagged by the claims data, or by potential claimants who legitimately fear retaliation, CGMs should have to demonstrate to national authorities and other interested parties that they have policies and practices that act as effective deterrents against retaliation.

Overall, then, requiring key details about the number and type of complaints can alert national authorities, civil society actors and independent researchers to situations where CGMs are not receiving the complaints that they should be. This allows them to then follow up with questions to such CGMs about issues of outreach, accessibility and efforts to tackle retaliation. Furthermore, this data can trigger questions about how CGMs are performing in particular locations. All CGMs which purport to address complaints by workers and communities in relation to transnational business activity operate within varied legal, political and cultural contexts. It is not acceptable for those mechanisms to adopt one-size-fits-all systems. They must adapt so they are fit for purpose in all of the contexts in which the CGM operates.

4.2 The process

The second type of data which mHRDD laws should be requiring CGMs to divulge relates to the handling of complaints. The data that should be initially disclosed relates to two issues: first, the time which the CGM takes to process the complaints it receives, and second, whether or not the CGM actually undertakes investigations of the complaints itself or leaves the investigatory and evidence presentation processes to be undertaken by the parties to the claim.

On the time taken to process complaints, there should be a minimum requirement that CGMs disclose the average time taken from when a complaint is lodged to when the case is closed. For CGMs where a large number of claims are made, the mean, minimum and maximum time periods of cases concluded in a given year should be provided. It is not possible to specify a universally applicable time period which complaints should take to come to fruition. There are too many variables in terms of the complexity of individual cases. But where CGMs are consistently taking a long time to address complaints (and far longer than other comparable CGMs), this can then trigger follow-up by authorities, CSOs and researchers as to the reason for the delays.

Our investigation of MSI CGMs found there was a great differentiation between the time cases took and the resources deployed by different mechanisms. The average time complaints took from when they were first lodged to the conclusion of the adjudication process varied between 6.9 and 22.4 months (Harrison and Wielga 2023). While some of the difference could be explained by the varying complexity of cases in relation to different types of CGMs in different corporate sectors, these time differences were also indicative of the speed with which the system sought to act, and the resources which different systems had at their disposal to investigate claims. For instance, we identified above how the Bonsucro CGM is only funded so that it can process three cases per year. All other cases lodged within the system are therefore likely to languish for a significant amount of time unaddressed. The speed with which a complaint system operates can be critical for claimants. For instance, if a worker loses a job unfairly and waits too long for a claim to be processed before s/he can be reinstated, this can mean children go hungry, the family leaves its hometown, and even that the job can never be reclaimed. The more CGMs provide data about the time the complaints process takes, the more it will be possible to compare how CGMs in comparable sectors are performing and where delays look excessive.

A second piece of information which CGMs should be required to disclose is whether or not the mechanism has an investigatory capacity. It is particularly problematic where CGMs view themselves as having an adjudicatory function only. This puts the onus on the parties to take the leading role in discovering the relevant facts and presenting them to the adjudicator. Alternatively, the CGM can view itself as having a significant investigative role and have personnel available to investigate, either as part of its staff or as outside consultants. Claims made through CGMs typically involve an extreme case of ‘inequality of arms’, often pitting some of the most disempowered people against rich and powerful companies. This means that putting the responsibility of discovering, presenting and arguing evidence equally on both parties is, in practice, unfair and ineffective. CGMs which are ‘adjudicatory-only’ are likely to produce less adverse findings against a company and can operate with significantly less human resources to process the same amount of cases in the same time as a system which both investigates and adjudicates. This makes them attractive to companies which desire those results and do not care about the human rights consequences.

This data about the time taken to process complaints and the model used to investigate them will provide national authorities and other interested parties with some initial evidence about how complaints are handled. They can then follow up where there are obvious problems. A critical follow-up question about both sluggish and adjudicatory-only CGMs is to inquire as to the number of full-time staff working for the CGM. This should include the numbers of staff who investigate and adjudicate claims, as well as the equivalent time for outside professionals or consultancies hired to work on claims. This will give an indication of the seriousness which the CGM treats the complaints that are submitted to it and the capacity of the mechanism for properly and fully investigating and adjudicating on them in a timely manner. ‘Full time equivalent’ workers is a common business metric and a universal measure of the size of a business division. A company would be expected to track and know this number for its complaint mechanism. This number would include employees, contractors and others who work on the CGM.

4.3 The outcomes

The final type of data required relates to the outcomes that are achieved at the end of cases, and in cases where this is appropriate, the remedies that have been provided to claimants. CGMs need to demonstrate that they are providing remedies to deserving claimants. This is ultimately the most important way in which their effectiveness should be judged. National authorities need to demand data which allows for an interrogation of the outcomes produced and remedies provided.

CGMs have four types of adjudicative outcomes that are possible at the end of a case. First, a case can be determined to be outside the scope of the CGM (for example because the complaint was determined not to relate to one of the mechanism’s standards). Second, a case can be settled between the claimant and the respondent. Third, a case can be ‘lost’ by the claimant either because they dropped the case at some point in the process, or the case was adjudicated and the respondent was judged not to have violated requisite standards. Finally, the complainant can be judged to have ‘won’ the case. This would include all claims in which the CGM determined that the respondent had violated a standard resulting in harm as alleged by the claimant.

CGMs should make public the number of complaints that fall into each of the above categories.⁸ Where complainants have won the case, CGMs should provide information about what remedy was ordered. A CGM should then confirm and record in each case that a remedy actually happened after the order was made. CGMs should make serious efforts to verify that remedies were actually provided. A source which CGMs should use for this information is the claimants themselves. If they confirm that they received what the adjudicators determined they should receive, it is usually safe to conclude that they did. The exception would be when there is pressure put on them to falsely state that the remedy was carried out. This can happen, for example, in a work setting when a claim is made that there has been payment of a bonus owed, but the company only paid a partial amount and told the employee to play along if s/he wants to keep their job. In cases where there are dangers of such pressure, CGMs should seek other sources of evidence to confirm what the claimant says.

Requiring data on the remedy actually provided to the claimant gives national authorities and other interested parties critical information about whether CGMs are ultimately effective. Systems that are functioning effectively will have significant numbers of cases that are won by claimants, and those complainants should be receiving some form of remedy. If all CGMs publish this data then very low rates of remedy would be easy to spot and comparisons could also be made between CGMs with very differentiated outcomes and this would provide the basis for further inquiry into those that were performing poorly.

Our research into MSI CGMs (Harrison and Wielga 2023) found that outcomes varied massively between different CGMs. For instance, three of the six CGMs we investigated (RSPO, Bonsucro and the Forest Stewardship Council) only collectively produced one case where remedy was actually provided to the complainants. The other three CGMs (the Bangladesh Accord (as it was then known), Fair Wear Foundation and Fair Labor Association) all produced significant numbers of cases where some form of remedy was provided: between 41 and 58 per cent of all adjudicated cases. A key reason for the differentiation between these two groups was that the former group lacked the leverage over the respondent companies to enforce their judgments whereas the latter (often, but not always) were more capable of ensuring that the remedies they ordered were actually delivered in practice.

Ensuring that remedies are actually provided to rightsholders is a serious challenge for most CGMs. For CGMs in which companies have volunteered to participate (such as those run by MSIs or Business Associations), the respondent may well find it cheaper and easier to leave the organization rather than provide the remedy ordered by the complaint system. For instance, to allow a ‘hostile’ union to operate or return land now part of a plantation to its rightful owners can be a severe economic blow to a company. The company considered solely as a rational economic actor, should not, without the right incentives, be expected to perform such actions. It is up to those who run the CGM to ensure that they have sufficient leverage over the respondent to guarantee that the remedy they have ordered is actually carried out.

An internal corporate CGM must somehow induce its own corporate management to provide remedy in appropriate cases. It has no obvious leverage. Those who run such CGMs should therefore expect the outside world to be extremely sceptical about the independence of investigations, whether adequate remedies have been ordered and whether they have been paid out in practice. Currently there is almost no transparency about the processes and outcomes achieved by the vast majority of these systems. Internal CGMs can only begin to create any kind of confidence in their legitimacy if they are fully transparent about the process and outcomes of their cases.

5. Concluding thoughts: the potential for mutual enhancement between CGMs and HRDD obligations

There is an urgent need to shine a light on how CGMs are operating. We currently have insufficient information to know whether they are routinely producing valuable results for rightsholders in situations where corporations have abused their rights. The picture that we have from the few CGMs which do provide enough information about their performance for a judgment to be made is mixed. The best performing CGMs do sometimes seem to produce valuable results, indicating that they have potential. But most CGMs have serious limitations (some far worse than others) in three key areas: the complainant’s ability to access the system, how complaints are then handled by the system, and the outcomes and remedies produced for rightsholders at the end. Those few CGMs that publish data about their performance are likely to work better from a rightsholder perspective than the vast majority that do not.

It is in this context that a serious debate is needed about the role of mHRDD laws and whether they can play a progressive and positive role in ensuring that CSMs are effective in addressing the grievances of rightsholders (Laplante 2023). It does not appear to be a progressive move for mHRDD laws to simply mandate that corporations establish or participate in CGMs without safeguards to ensure such CGMs are effective. Our analysis of current (Norway and Germany) future (EU) and proposed (Brazil) mHRDD laws which contain requirements for CGMs suggest this is exactly what is happening. The danger is that this will lead only to an increase in the number of CGMs operating, but no enhancement of corporate accountability or effective remedy for rightsholders. Our analysis of corporate reporting under the Norwegian Transparency Act suggests that companies lack even the most basic knowledge of what an effective CGM is. The worst fears of those commentators who are sceptical of CGMs may then be realized: that corporations who set up ineffective CGMs can argue that they are taking action to provide remedies to rightsholders, thereby avoiding pressure for other potentially more effective forms of accountability such as greater judicial oversight.

To ensure that mHRDD laws are a progressive force when it comes to CGMs, lessons must be learned from existing research into corporate disclosure practices, particularly in relation to corporate social reporting. MHRDD laws and/or national regulating authorities must first mandate the provision of specific facts and figures about CGMs in three key areas: the accessibility of the complaints system, the way complaints are handled, and the outcomes produced for rightsholders, including most importantly, the degree to which they provide remedies for rightsholders. Comparative analysis of these facts and figures will allow poorly performing CGMs to be identified by national authorities themselves as well as by civil society actors and researchers who should have access to this publicly available data. Those actors can then undertake further interrogation to identify the causes of poor performance in the ways we have set out above and demand improvements from those CGMs accordingly. The disclosure of key data is therefore necessary for effective scrutiny of CGMs but it is not sufficient and must be followed by further action.

There are two potential justifications companies and CGMs might have for refusing to reveal the information that should be disclosed as explained above. Neither of these justifications should be allowed to frustrate requirements in mHRDD laws and regulations. The first justification is where its provision would endanger claimants or fail to respect their privacy. CGMs such as those operated by the Fair Wear Foundation and the Bangladesh Accord (now its successor, the Ready-Made-Garment Sustainability Council), which handle many complaints from individual workers do not disclose the identity of complainants in order to protect them from genuine risk of reprisals and other harms. But this appears to be the limit of the protection that claimants need, even in the most serious of cases involving individual claimants making damaging allegations against powerful corporate entities who employ them. Indeed, in many cases the claimants adamantly desire that their identity and the nature of their claims be publicized. However, many other CGMs appear to use privacy and security concerns as an excuse to keep all information about their cases secret all of the time, which has the effect of protecting the perpetrating companies, not their victims. This is part of a long tradition of actors who are in positions of power utilizing that power to refuse disclosure of information without proper and fulsome reasons (for example Zuckerman 1994).

A second justification might be the cost burdens that these disclosures place on businesses. But the costs involved in the collection of this data should be small. The required information described above is extremely basic and requires no analysis. Companies will need to collect this data already if they are making any attempt to know how their CGMs are operating. Information about the number and types of complaints received, the time taken to process them, and the outcomes that are achieved for rightsholders will all be needed by companies to make an informed assessment of the nature of the grievances they are receiving and whether they are handling those grievances appropriately. Immediate questions should be asked of any company which argues that these regulatory requirements impose a significant burden upon them about how they internally evaluate the CGMs which they run and/or participate in.

If it becomes mandatory for companies to disclose the data specified above and then national authorities use that data as the basis for scrutinizing CGMs and demanding that improvements are made, then mHRDD laws could make a significant difference to the lives of individual rightsholders. But CGMs can only do so much by themselves to ensure corporations systematically protect the rights of affected rightsholders. Even a well-functioning CGM can only respond to the issues which are raised by complainants and then, in cases that are upheld, provide remedies to those claimants that address the harms they have suffered. There is a tendency to see cases as individual instances of wrongdoing, even when the CGM is seeing the same types of cases over and over again. CGMs are generally not designed or empowered to address systematic issues. But the fact that CGMs are now being required as part of due diligence laws gives an opportunity to harness the information identified through the complaints process to influence the due diligence process which the corporation must also undertake to comply with its legal obligations.

For instance, a CGM run by an MSI or business association in the apparel supply chain may notice many claims of excessive overtime from particular factories which cluster around certain times. It may be that those factories push their employees unreasonably hard, but it may also be that the brands buying from the factories make unreasonable demands on their suppliers, forcing the factories in turn to put excessive pressure on their workers. Individual complaints can trigger a due diligence process which involves investigating both factory practices and brand behaviour. With respect to the brands, this would involve investigating whether the claims of excessive overtime correlate to particular orders from particular brands. In this way, complainant concerns would be driving due diligence investigations of potential systemic problems.

If we think about the overall possibilities of the issues discussed in this article, then a symbiotic and mutually reinforcing process could be envisaged between HRDD obligations and CGMs. MHRDD laws could lead to data being provided that allows national authorities to investigate how CGMs are functioning, to identify why and how deficiencies are occurring, and to make successful demands that they be enhanced in such a way that those CGMs become trusted to routinely address rightsholder complaints in the future. Those rightsholder complaints could then become a starting point for due diligence inquiries into specific aspects of corporate behaviour. This would put rightsholder concerns at the centre of the due diligence process in a way that might address some of the concerns in the academic literature about cosmetic compliance with mHRDD laws and marginalization of the interests of rightsholders by corporations who are undertaking HRDD.

Conflict of Interest

None declared.

Funding

None declared.

Footnotes

References

Author notes