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Due Diligence Compass Practical Guide 5 Phase 5: Grievance ManagementManaging grievances effectively: How do I proceed?ApplicationThis practical guide is intended to help you design a grievance mechanism as effectively as possible.To this end, it describes eight internationally recognized effectiveness criteria in detail and providesexamples of good practice from actual companies. Questions provide orientation on how the criteriacan be implemented in practice.Grievance mechanismA grievance mechanism is ‘a routine, non-governmental process to present grievances abouthuman rights violations in connection with the company.’ The process determines potential negativehuman rights impacts on the part of a company and identifies grievances. In addition to humanrights, grievance mechanisms can also take into account other aspects, e.g. corporate governanceor compliance.Source: Federal Foreign Office (FAQs on NAP Monitoring)Further information on the grievance mechanism is available here.1Why are grievance mechanisms important?Grievance mechanisms are important tools that allow stakeholder groups to make grievances,concerns and questions heard in your company (see the figure on the next page for the grievanceprocedure process). Stakeholder groups are people or groups who influence the company’s actions orwho can be influenced by them.An effective grievance mechanism enables your company to investigate concerns and rectify andredress negative effects on those affected or the environment. It also helps to identify human rightsand environmental risks at an early stage and develop a mutual understanding of the relevant riskswith stakeholders.

Due Diligence Compass Practical Guide 5 Phase 5: Grievance ManagementKey questions for setting up a grievance mechanism What is the role of the grievance mechanism in the company? How does the grievance mechanism complement existing grievance procedures (operational,judicial and extrajudicial)? What are the roles/responsibilities of specific departments/employees? At which levels does the grievance mechanism apply (company headquarters and/or locationsabroad)? Which stakeholder groups should have access to the grievance mechanism (employees in thecompany, employees of suppliers and customers, local residents, etc.)? What channels do you use to offer grievances procedures?You can find more information in the guide ‘Worth listening – Understanding and implementinghuman rights grievance management. A business guide’ from the Global Compact NetworkGermany.Figure: Typical grievance procedure processSource: adelphi illustration based on:Guide Global Compact Network Germany 2018 Worth listening – Understanding and implementing human rights grievancemanagement. A business guide pp. 38-39 Click here.

Due Diligence Compass Practical Guide 5 Phase 5: Grievance Management2Which criteria make grievance mechanisms effective?An effective grievance mechanism should be: 1) dialogue-based; 2) legitimate; 3) accessible; 4)predictable; 5) equitable; 6) transparent; 7) rights-compatible; and 8) a source of continuous learning.These criteria are defined in the United Nations Guiding Principles on Business and Human Rightsand illustrated on the following pages with practical examples.1) Dialogue-basedBrief descriptionThe grievance mechanism should focus on dialogue with stakeholders in order to record grievancesand resolve and redress negative effects. Create an atmosphere that helps stakeholders openly andhonestly address grievances in a constructive manner.Figure: Identification and consultation of stakeholdersSource: adelphi illustration

Due Diligence Compass Practical Guide 5 Phase 5: Grievance ManagementPractical example: TchiboIn the dialogue-based ‘WE’ qualification program, Tchibo aims to create a trusting space for theemployees of its producers to formulate grievances or express wishes. The ongoing goal is foremployees in the production facilities to learn (for example in workshops) to openly address theirproblems at work, such as unfair wages, working hours or discrimination, and solve them together.More information is available here.Questions: ‘dialogue-based’ Do you plan to involve stakeholders in setting up the grievance mechanism? Are those affected involved in processing, checking and clarifying the grievances? Have you contacted all stakeholders and informed them about the establishment of agrievance mechanism? Have you developed target group-specific communication formats?2) LegitimateBrief descriptionThe grievance mechanism’s processes should be designed in such a way that they create trust amongstakeholders and are recognised by all parties involved. The focus is on guaranteeing that thegrievances procedure will be handled fairly. The selection of a suitable channel (or several channels)plays an important role here.

Due Diligence Compass Practical Guide 5 Phase 5: Grievance ManagementFigure: Overview of possible channels of grievance and their potential legitimacySource: adelphi illustrationPractical example: Daimler AGThose affected have the option of contacting Daimler’s whistle-blower system ‘Business PracticesOffice’ by name or anonymously via post, email or online form. Stakeholder groups in Germany canalso turn to an external, neutral mediator. The mediator is an independent lawyer appointed by thecompany who is obliged to maintain confidentiality. As a result, there are several ways for thoseaffected to submit their reports of rule violations in connection with the Daimler Group.More information is available here.

Due Diligence Compass Practical Guide 5 Phase 5: Grievance ManagementQuestions: ‘Legitimacy’ Do you describe the grievances procedure clearly and understandably for all stakeholders? Do you disclose the responsibilities for handling incoming grievances? Are the responsible employees adequately trained? Is the anonymity/confidentiality of the grievance procedure guaranteed? Do the various grievance channels (external neutral intermediary, anonymous online platform,etc.) promote the trust of the stakeholder groups in the grievance procedure?3) AccessibilityBrief descriptionThe grievance mechanism should be available to all stakeholders. To do this, it must be known to thestakeholders and offer appropriate support to those who are faced with particular access barriers.Barriers can arise if grievances cannot be submitted in the national language(s) or if certain technicalrequirements are necessary (e.g. internet access, necessary registration, complicated input masks,etc.).In principle, make sure that the grievance mechanism suits the different stakeholders. This means thatyou can set up different channels. Local grievances offices are usually more easily accessible forthose affected.

Due Diligence Compass Practical Guide 5 Phase 5: Grievance ManagementFigure: Obstacles and measures for better accessibilitySource: adelphi illustration based on:Guide Global Compact Network Germany 2018 Worth listening – Understanding and implementing human rights grievancemanagement. A business guide Click here.Practical example: VAUDEThe mountain sports outfitter VAUDE cooperates with the Fair Wear Foundation as part of itsgrievance mechanism. Workers in production facilities along the value chain have the opportunity todirect their grievances to neutral bodies run by local employees of the foundation (Fair WearFoundation grievance offices). This neutral contact point is offered in addition to internal grievanceprocedures and are be used if the internal procedure does not lead to a solution. The contact personsof the Fair Wear Foundation speak the same language as the workers, come from the same culturalarea and are in the same time zone. Cooperation is also an example of how to increase the legitimacyof a grievance mechanism.More information is available here here.Questions: ‘Accessibility’ Are all stakeholders informed about the existence of the grievance mechanism? Do all stakeholders have sufficient knowledge to use the grievance mechanism? Are there any technical barriers that could prevent the use of the grievance mechanism? Is the grievance mechanism available in all relevant languages?

Due Diligence Compass Practical Guide 5 Phase 5: Grievance Management4) PredictabilityBrief descriptionThe grievance mechanism should follow a clearly defined procedure that is clearly communicated tothe stakeholders. Information should be provided about which steps are taken after a grievance hasbeen received and how long the individual steps take.Practical example: OSRAMThe lighting manufacturer OSRAM has set up a grievance mechanism called ‘Tell OSRAM’ to provideall employees and external parties with a protected channel for violations. Information on the processand duration of the notification procedure can be found on the website. Communication with thoseaffected takes place via a protected mailbox, into which they can also log in anonymously using a username and password (see figure ‘Tell OSRAM online grievance tool process’).More information is available here.Figure: ‘Tell OSRAM’ online grievance tool processSource: adelphi illustration based on:Website OSRAM 2020 Human rights reporting channel Click here.

Due Diligence Compass Practical Guide 5 Phase 5: Grievance ManagementQuestions: ‘Predictability’ Do you disclose the process of the grievance procedure (including the individual steps,responsibilities and employees involved, deadlines, etc.)? Do you specifically inform those affected about the grievance procedure after receivingthe grievance? Do you inform stakeholders about changes in the grievances process?5) EquityBrief descriptionThe grievance mechanism should ensure that all parties involved have sufficient resources toparticipate in the grievance process in a fair, informed manner. Those affected should be givenreasonable access to advice and expertise in order to strengthen procedural justice and arrive atlasting solutions.Figure: Requirements for a balanced grievance procedureSource: adelphi illustrationPractical example: VAUDEThe mountain sports outfitter VAUDE offers regular training on grievance procedures at the productionsites in the supply chain. In these training courses, the workers and the management of the respectiveproduction facility learn about the grievance mechanism and obtain the required contact information.More information is available here here.

Due Diligence Compass Practical Guide 5 Phase 5: Grievance ManagementQuestions: ‘Equity’ Do you check that all stakeholders have the necessary support to use the grievancemechanism? Do you support all stakeholders in filing grievances (e.g. through training)?6) TransparencyBrief descriptionThe grievance mechanism should keep the involved parties informed of the progress of the grievanceprocess and provide information on how well grievances are being recorded and handled. This createstrust in its effectiveness.Figure: Transparency measuresSource: adelphi illustration

Due Diligence Compass Practical Guide 5 Phase 5: Grievance ManagementPractical example: DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbHDEG provides extensive information about its independent grievance system on its website. The publiccan access guidelines on grievance management, guidelines for DEG customers, the processingstatus of submitted procedures, and reports on procedures from previous years.More information is available here here.Questions: ‘Transparency’ Do you inform those affected about the progress of the grievance procedure at regularintervals or when necessary? Do you report at regular intervals about the grievances received and how they are dealtwith (topics, status, etc.)? Do you provide transparent information about the course of the grievance procedure andthe responsibilities?7) Rights-compatibilityBrief descriptionIt must be ensured that the results of the grievance procedure are compatible with national laws andinternationally recognized human rights (including the Universal Declaration of Human Rights of theUnited Nations and the ILO Core Labour Standards). In this context, it can be helpful to list relevanthuman rights as well as environmental issues so that stakeholders understand which issues thegrievance mechanism covers and which it does not.Practical example: adidasadidas is committed to numerous social and human rights standards such as the UN GuidingPrinciples on Business and Human Rights, the ILO Core Labour Standards and the United NationsUniversal Declaration of Human Rights. The company is also a member of initiatives such as the FairLabour Association and the Better Cotton Initiative. Adidas’ extensive grievance mechanisms build onthese frameworks and initiatives, which help ensure compliance with human rights.More information is available here here.

Due Diligence Compass Practical Guide 5 Phase 5: Grievance ManagementFigure: Grievance process at adidasSource: adelphi illustration based on:Guide adidas Summary of Third Party Complaint Process Click here.Questions: ‘Rights-compatibility’ Are you making sure that the basic rights of those affected are guaranteed and thatthere are no negative consequences for filing a grievance? Is the anonymity/confidentiality of those affected guaranteed? Does the procedurecomply with national/international laws and standards? Have you established a process to identify particularly serious grievances? Are thesegrievances prioritised? Does the grievance procedure include the development of solutions and remedialmeasures in line with the needs of those affected? Is the grievance mechanism in line with national and international law?8) Source of continuous learningBrief descriptionExperience and knowledge from the practical application of the grievance mechanism shouldcontinuously flow into the optimisation of its procedures. In this sense, the grievance mechanism is animportant tool in your ongoing improvement process. With the help of the experience and knowledgeyou can, for example, deepen your risk analysis or further develop your measures to design a moresustainable value chain.

Due Diligence Compass Practical Guide 5 Phase 5: Grievance ManagementPractical example: Bierbaum ProenenBierbaum Proenen is a manufacturer of workwear with suppliers in Bangladesh, China, Turkey,Tunisia, Vietnam, and other locations. In cooperation with the Fair Wear Foundation (FWF), thecompany has introduced comprehensive grievances management at all production sites.Bierbaum Proenen uses the experience from this as the foundation for a continuous improvementprocess to identify further risk areas and review the effectiveness of measures. It has been shown thatrecurring training courses, audits and a continuous exchange between the employees of theproduction facilities, their management and Bierbaum Proenen have very successfully contributed toincreasing the employees’ awareness of their own rights.More information is available here here.Figure: Sequence of a grievance process at Bierbaum ProenenSource: adelphi illustration based on:Sustainability Report Bierbaum Proenen GmbH & Co. KG 2019 Sustainability Report 2019 p. 51 Click here.Questions: ‘Source of continuous learning’ Do you evaluate the grievances at regular intervals? Do you consider the results of this evaluation for the development and optimisation ofmeasures? Are you checking the effectiveness of the grievance mechanism?

problems at work, such as unfair wages, working hours or discrimination, and solve them together. . Source: adelphi illustration Practical example: Daimler AG . adidas is committed to numerous social and human rights standards such as the UN Guiding Principles on Business and Human