TABLE OF CONTENTS Oct 2015 - 0 comments

Grievance mechanisms and CSR

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By: Michael Torrance

Grievance mechanisms are a key tool for developing feedback loops with affected communities and stakeholders, including employees, in relation to global projects. Grievance mechanisms are not only good practice, but are part of the CSR approach endorsed by the Government of Canada’s Corporate Social Responsibility (CSR) Strategy for the Extractive Sector (the “CSR Strategy”), and forms part of the expectations of international financiers like Equator Principles banks that apply CSR standards in financing due diligence processes.

The CSR Strategy and Equator Principles both adopt the IFC Performance Standards on Environmental and Social Sustainability (IFC Performance Standards). The IFC Performance Standards provides detailed guidance and requirements on the establishment of grievance mechanisms.

Worker Grievance Mechanisms

A grievance mechanism for workers is also expressly required by IFC Performance Standard 2 – Labour and Working Conditions (PS 2). In a workplace context, a grievance mechanism must address complaints and communications from internal stakeholders, namely workers. Where grievance mechanisms are already provided through a collective bargaining agreement that meets the requirements of PS 2, such mechanisms can be used to satisfy the requirements of this IFC Performance Standard.

The establishment of a worker grievance mechanism ensures concerns are brought to management’s attention and addressed expeditiously. The mechanism should be made available to direct workers as well as contracted workers. Such a mechanism must be developed with an awareness of judicial and administrative mechanisms available in the country for resolution of workplace disputes and should not impede access to these judicial mechanisms.

If workers are not covered by a collective bargaining agreement, under PS 2 grievance, mechanisms would be developed for unrepresented workers. Alternatively a company could discuss with any unions the feasibility of extending grievance procedures under the collective bargaining agreement to non-union personnel.

To ensure its functionality, workers must be informed of the mechanism at the time of hire and informed of how to access the mechanism. This mechanism should be designed in a way that is appropriate for them, easy to understand, and adapted to the communications challenge they may face (e.g., language, literacy levels, level of access to technology).

A clear policy and procedure for expressing workplace concerns should be established by all companies and communicated to all workers in a clear and understandable manner, with training on how the grievance mechanism will operate. Workers’ representatives should be part of the process of implementation.

Community Focused Project Level Grievance Mechanisms

Generally speaking, the IFC Performance Standards require that any project that is likely to generate adverse environmental and social impacts on Affected Communities have in place a project level grievance mechanism. Such a mechanism should be accessible to the Affected Communities and create a process for receiving, addressing, recording and documenting complaints and communications from external stakeholders.

In the case of large projects with potentially complex issues, IFC Performance Standard 1 – Environmental and Social Management Systems, requires that a robust grievance mechanism should be established and maintained from the beginning of the impact assessment process onwards. A grievance mechanism is a locally based, formalized way for a company to accept, assess and resolve community complaints related to company activities. It provides a way to reduce project risk by offering communities an effective avenue for expressing concern and promotes a mutually constructive relationship.

A grievance mechanism should draw upon conflict resolution resources of the company, as well as traditional, customary and private systems of alternative dispute resolution in affected communities, such as mediation, conciliation and arbitration. In developing grievance mechanisms, clients must understand cultural customs and traditions that may influence or impede their ability to express their grievances, including differences in the roles and responsibilities of subgroups (especially women) and cultural sensitivities and taboos. 

The qualitative aspects of a grievance mechanism necessary for its effectiveness include that: communities raising an issue receive acknowledgement of the concern; the company makes efforts to modify its conduct where appropriate;

the company’s response is honest and forthright; and some remedial action is taken where appropriate.

In applying these principles, it is imperative that grievances are not handled in an arbitrary or ad-hoc manner. Grievances should also not be dealt with in a rigid manner that simply reinforces or exacerbates power imbalances.

A well-functioning grievance mechanism provides predictable, transparent and credible processes resulting in outcomes that are seen as fair, effective and lasting, builds trust, and enables systematic identification of emerging issues and trends, facilitating corrective action and pre-emptive engagement. 

Michael Torrance is a lawyer in Northern Rose Fulbright’s Toronto office. 


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