Ruggie's Third Pillar - Can Slaves Get Remedy Through Operational Grievance Mechanisms

United Nations Guiding Principles: Pillar 3 - Effective Remedy
Modern Slavery and ‘Corporate Operational Grievance Mechanisms’
Considerations for Innovation

Introduction

With the United Nations Guiding Principles on Business and Human Rights as my backstop, I want to record the key points of a talk I gave to the Nexus Global Working Group on Human Trafficking https://www.nexusglobal.org/working-group-on-human-trafficking where I considered the role of corporate operational grievance mechanism (OGMs) in combatting modern slavery.  The Nexus Working Group is a commendable community trying to combat modern day slavery.  I recommend it to you.  I made comments under the following headings which I summarise in this blog.  Please share your views so we can keep improving the debate:  

(1)    Where pressure is coming from for companies to have an OGM.
(2)    Why OGMs are a good “bottom-up people-centred” mechanism.
(3)    The importance of ‘co-design’ when designing OGMs
(4)    The need to learn from other policy communities to improve OGMs. 
(5)    Challenges to overcome for OGMs to provide remedy for modern day slaves. 
(6)    The role of post-audit remediation alongside OGMs as a remedy mechanism. 


Background

United Nations Secretary General Special Representative Professor John Ruggie and his team put an important marker in the ground with the UN Guiding Framework and Principles on Human Rights and Business (UNGPs).  The UNGPs outlined ‘Three Pillars’ which together comprise the international normative framework governing business and human rights. 

¥    Pillar 1: States have duty to protect human rights, 
¥    Pillar 2: Corporates have a responsibility to respect human rights
¥    Pillar 3: Effective remedy should be provided when rights are breached. 

Ruggie was concerned with how business activities impact all human/labour rights.  More recently ‘modern slavery’ has been highlighted as the apex human rights issue attracting much global attention.  It is important that modern slavery be highlighted, because it is atrocious that some 46 million slaves exist in the world today.  However, in trying to combat slavery, and when thinking of the role business can play, there can be no better framework on which to fall back for guidance than the existing UNGPs.  We should use the current political focus on modern slavery to bolster respect for the UNGPs and ensure that business does not forget their responsibility to respect all human/labour rights, not just slavery.

(1)    Where is pressure coming from for companies to have an OGM? 

It is ‘good for business’ to operate an OGM, because employees and other stakeholders appreciate it, and because it’s a good way of heading off grievances before they mushroom into expensive litigation.  In addition, there is pressure on companies to establish OGMs due to the strengthened international normative framework, which has led to more rigorous international, domestic and sector specific certification standards requiring OGMs, despite the fact that domestic legal pressure remains weak. 

At the international level the UNGPs specify that there are three ways to fulfil ‘Pillar 3 Access to Remedy’ of which the third relates to OGMs.  These are:  

1.    State based judicial mechanisms. Meaning access to justice through civil and criminal courts, with the consequent requirement that there be adequate laws, state enforcement/investigative machinery, and prosecution capacity.
2.    Non-state based judicial mechanisms.  Including National Human Rights Mechanisms, Ombudsmen, Employment/Arbitration Tribunals. 
3.    Non-state based grievance mechanisms.  Meaning company or industry-wide grievance mechanisms, including Organisation for Economic Cooperation and Development (OECD) National Contact Points.  

Companies who have directly signed up to do business in accordance with the UNGPs or who have signed up to the UN Global Compact need to create OGMs.  Companies established or operating in OECD member states also need to consider the reach of the OECD Guidelines for Multinational Businesses (which incorporated the UNGPs by amendment in a wonderful example of UN and OECD working together harmoniously).  A company could find itself in an OECD National Contact Point mediation involving an allegation it had contravened the OECD guidelines, including as a result of having an inadequate or non-existent OGM process. 

Other regional associations are incorporating the UNGPs into their policy.  For example, the European Commission (EC) reports on how it is implementing the UNGPs and the Africa Commission (AC) is working on its own policy incorporating the UNGPs.  As regional associations pressure their member states to show progress on the UNGPs, companies operating in those jurisdictions may come under increased pressure to show how they are discharging their responsibility to protect human rights, including through the provision of OGMs. If you know of advances in policy in other regional associations, for example, ASEAN, Caricom, etc., please leave a comment, or email me at michelelaw@cerno.solutions. 

Companies also feel pressure to provide OGMs where they have signed up to other domestic or sector specific codes of conduct.  These include the ETI Base Code, SA8000, the Extractive Industries Transparency Initiative, the Kimberly Process, the Voluntary Principles on Security and Human Rights, and in agriculture, the Roundtable on Sustainable Palmoil.  We also now have the Corporate Human Rights Benchmark, which ranks companies on how well they provide remedy to stakeholders.  I’ve not listed all the relevant codes of conduct that include a requirement to provide an effective OGM.  Can you leave a comment or email me with ones I’ve missed?

There is, however, a lack of domestic legal pressure on companies to provide OGMs. I cannot find one “principles based” domestic law suggesting that a company create an OGM as a way of showing that its human rights due diligence is rigorous.  For example, here in the U.K., the Modern Slavery Act (MSA) does not list ‘the establishment of an OGM’ as one of the factors a company seeking to comply with the Act could point to as a sign it was doing its best to combat modern slavery in its business and supply chain.  

Perhaps remedy was left out of the MSA because, as many businesses struggle just with the threshold of meaningful risk assessment and due diligence, requiring OGMs was considered too onerous. To my mind the fact that the MSA does not flag OGMs is unfortunate and a missed opportunity, sending a signal to companies already trying to create or operating OGMs that the U.K. government does not see this as essential as part of a strategy to combatting slavery in your company’s business or supply chain.  If anyone is privy to the debates that went on around the time of the promulgation of the MSA can you tell me if remedy was discussed? What’s the background to it been excluded? 

(2) Why OGMs are a good “bottom-up and people-centred” mechanism.

If we compare risk assessment, audit, and OGMs as tools available to companies to discharge their responsibility to protect human rights, my view is that OGMs are the most bottom-up, people-centered, tool.  This is because their primary purpose is to provide victims with effective local remedy – a very people-centered output, and because I would suggest that a best practice principle in their design should be ‘co-design’ – reaching out in a people-centered way to include the views of all relevant stakeholders in how they are designed.  

‘Risk assessment’ and ‘audit’ are both essential components of due diligence.  However, their primary purpose is to provide insight for the company, upon which it then decides what actions to take to discharge its human rights responsibility.  So, risk assessment and audit are by their nature one step removed from delivering any immediate benefit to external stakeholders.  In addition, they have been criticized as not being sufficiently people-centered in the way they are currently conducted.  Risk assessments are often done from board rooms far away from the reality of operations, and are based on third party information.  Audits are often conducted by auditors not trained to spot signs of forced labour and audit remediation plans are considered best practice if drawn up by suppliers, but may not incorporate the views of rights-holders.  Human Rights Impact Assessments which include engagement with local stakeholders are a better take on ‘risk assessment’, and if audit processes start to engage local stakeholders more, or even start to be run by trusted local stakeholders, then they will become more bottom up/people centered tools. 

It can also be noted that over time as a company analyses the kinds of conflicts that come up through an OGM (respecting confidentiality), they can provide a ‘people-centered’ map of where the company may not not discharging its responsibility to protect human/labour rights.  A company can rely upon that map to make systemic changes to business practice.  A caveat here is that not all grievances – for example cases involving modern slavery – might come to an OGM, so risk assessment and audit (done well) remain critical parts of a due diligence strategy to combat modern slavery in a company’s business and supply chain and to discharge their responsibility to respect human rights. 

(3) The importance of ‘co-design’ as a best practice principle in the design of OGMs

An OGM is a non-judicial grievance mechanism and Ruggie outlines their effectiveness criteria in the UNGPS as follows: 

a.    Legitimate: enabling trust from the stakeholder groups for whose use they are intended, and being accountable for the fair conduct of grievance processes;
b.    Accessible: being known to all stakeholder groups for whose use they are intended, and providing adequate assistance for those who may face particular barriers to access;
c.    Predictable: providing a clear and known procedure with an indicative time frame for each stage, and clarity on the types of process and outcome available and means of monitoring implementation;
d.    Equitable: seeking to ensure that aggrieved parties have reasonable access to sources of information, advice and expertise necessary to engage in a grievance process on fair, informed and respectful terms;
e.    Transparent: keeping parties to a grievance informed about its progress, and providing sufficient information about the mechanism’s performance to build confidence in its effectiveness and meet any public interest at stake;
f.    Rights compatible: ensuring that outcomes and remedies accord with internationally recognized human rights;
g.    A source of continuous learning: drawing on relevant measures to identify lessons for improving the mechanism and preventing future grievances and harms;

Operational-level mechanisms should also be:

h.    Based on engagement and dialogue: consulting the stakeholder groups for whose use they are intended on their design and performance, and focusing on dialogue as the means to address and resolve grievances.

These are all good principles. I would place significantly more emphasis on ‘consult’ to suggest a best practice approach should be very squarely rooted in ‘co-design’.  A co-design process envisages a company and its stakeholders sitting together as equals to agree the actual design process, the end structure, and the ADR methodology to be adopted by the OGM. This may be what was meant by consult, but to my mind ‘consult’ suggests the company is the more powerful player, whereby it has a view of the OGM, but then ‘consults’ with ‘stakeholder’ to amend/get buy-into that view. If I were being ‘consulted with’ I would immediately feel like the weaker player, and I’d feel that even if I approved of the OGM structure and ADR methodology, it would be less owned by me and more by the corporate. I might not therefore trust it to fairly assess my grievances against the company. 

You might roll your eyes at “co-design”, because its messier and takes more time, money, and effort to get right.  But it will lead to better results.  In addition, an unintended positive consequence of a co-design process is that it provides an opportunity to improve relations between the company and its stakeholders as they work together to build the OGM.

(4) Learning from other policy communities.

The reason this cuts so close to the bone for me is that I’ve spent most of my career as a conflict, rule of law and security sector reform expert.  Always as a human rights lawyer, but also as a mediator and facilitator, ensuring I take a rights-based perspective, but without an exclusive focus on ‘modern slavery’.  In those other policy communities we think about how to make society function in accordance with the rule of law and to be peaceful; about what alternative dispute resolution mechanism are best suited to different contexts to achieve those ends; and how to ensure that poor, vulnerable and marginalised citizens can access justice and security through both the formal and informal justice and security systems (judiciary, police, prosecution, prisons, non-state justice mechanism, e.g. tribal elders).  

To my mind there must be some read-across from lessons learned by these policy communities, for business and human rights practitioners now focussed on giving effect to Pillar 3 of the UNPGs.  A clear example of this read across is the principle of ‘co-design’.  In peace processes if protagonists do not co-design the peace negotiation process or the actual terms of the agreement, it will simply fall over.   

I’ve witnessed so much silo work throughout my career.  It would be great now if under the auspices of the UN, OECD, or other such fora, these different policy groups all of which look at issues of ADR, access to justice, and remedies under different banners, could share experience to save reinventing wheels. What do you think? I’d love your views.

(5) But even if well designed, can OGMs ever address modern slavery? 

OGMs are well suited to contexts where identified stakeholders are affected by the actions of a lead company who owes them a duty of care, for example, where a mine has caused environmental pollution or where villagers have been forcibly moved without compensation.  Modern slavery is a different sort of grievance and I feel that the following three issues complicate whether an OGM can provide remedy for victims of modern slavery.  We need to think how to resolve these challenges, and we can then ensure that improved audit remediation processes act as a form of informal justice mechanism capable of providing victims of modern slavery with remedy. (This should be done anyway).  Issues are: 

•    The formal justice system’s role in addressing modern slavery. 
•    The challenge of OGMs in supply chains. 
•    Modern slaves are unlikely to access OGMs. 

The formal justice system’s role in addressing modern slavery:  As noted earlier, an OGM is an informal non-state justice mechanisms that draws on ADR principles.  Such informal mechanisms are not considered appropriate for criminal matters, and slavery is a crime.  If the formal justice system worked well, those found guilty would end up in prison and victim(s) would receive compensation.  However, the rule of law is weak in many jurisdictions where slavery is prevalent.  There will be inadequate laws, lack of enforcement officers, lack of prosecutors, and judges unfamiliar with the law.  Corruption and bribery might be a factor.  In addition, the formal justice system can be inaccessible and might not provide victims with adequate remedy.  Courts might be far away, intimidating, and the process expensive.  Financial compensation might be unenforceable in successful prosecution could force the factory to shut, so the freed slave could not return to improved working conditions, which might have been their preferred form of effective local remedy. 

Thus, due to weak rule of law and/or the limited effectiveness of compensation provided by a court, a victim of slavery will not always receive adequate access to justice through the formal justice system.  It would therefore be good to consider how an ADR process – whether that be an OGM or an audit remediation programme – could provide more effective local remedy for victims, without usurping (in fact ideally while bolstering) the formal justice system.  Thoughtful innovation here is needed.  It might be good to draw lessons from the role of restorative justice in criminal matters.  It would be good to draw on the expertise of legal empowerment, rule of law and security reform experts when thinking how to do this.   

The challenge of OGMs in supply chains. 

You could envisage a situation where a multinational bound by the UNGPs or any other code of conduct requiring an OGM, wanted to collaborate with their suppliers to design a ‘jointly owned OGM’ that had jurisdiction down the supply chain.  If they were also bound by the U.K Modern Slavery Act, they would want to ensure such a mechanism could help eradicate slavery from their business and supply chain (enabling them to positively report on it in the Modern Slavery and Human Trafficking Statement).  Ideally they would want to do this not only because of the code of conduct or the MSA, but also because their business model relied heavily on supply chain workers, and as such, their positive corporate ethical stance compelled them to want to ensure workers in those supply chains could access remedy, even though they did not owe them a contractual duty of care.  

The challenge of creating such an OGM with reach down a supply chain would be to get suppliers to buy into it.  Success would depend on the leverage the lead contractor had with their suppliers, and those suppliers with theirs.  Slavery is found to normally occur further down a supply chain where it is unlikely that the owner of a factory using forced labour would agree to participate.  How to ensure an OGM has reach down a supply chain is a challenge we need to resolve through innovation.  A good ‘co-design’ process could address this challenge and come up with situation specific solutions.   

Lack of access. 

Modern slaves may not know they should not be slaves.  They are less likely to know where to go to get justice and would most likely not have the courage to access justice even if an OGM existed.  They are slaves, sometimes physically constrained and illegally hidden away down a supply chain.  Education and empowerment programmes aimed at raising awareness and building resilience could – possibly – start to overcome these challenges, and a hybrid form of ADR might overcome their pronounced vulnerability issues.  At the same time given this pronounced vulnerability and the hidden nature of slavery, the reality might be that no matter how well designed an OGM is to try and overcome these issues, it will mainly be a good ‘audit process’ that will uncover slavery, and a post audit remediation programme that incorporates remedy for victims (by actually talking to them to ascertain their needs) that will provide them with effective local remedy.

(6) Can post-audit remediation augment the role of an OGM for these victims? 

Audit has been widely criticized as not having sufficient impact on reducing levels of forced labour.  If audit could be made to be more people-centered by ensuring stakeholders were consulted during audits; if they were performed by highly skilled auditors trained to spot the signs of slavery; and, critically, if remediation plans were drawn up with actual input from victims such that also provided effective local remedy, the effect would be not only to restore faith in audit, but to enable remediation plans to augment OGMs as a credible form of effective local remedy for stakeholder grievances – some of which would relate to modern day slavery. 

Hopefully, things are moving in the right direction when it comes to audit.  The Association of Professional Social Compliance Auditors (see APSCA.org) is currently professionalizing the auditing industry and seems to have buy-in from all the key audit bodies.  SEDEX has just released its Guidance on Operational Practice and Indicators of Forced Labour, and many other helpful indicators exist (sorry not referencing all). To my mind the key part of the puzzle that will enable audit remediation plans to become an effective remedy mechanism, will be when lead contractors do not just rely on the supplier to draft the remediation plan, but ask them to ensure the views of stakeholders (especially rights holders with grievances) have been properly reflected, especially regarding the remedy they need. 

Conclusions

I didn’t provide many answers in my talk to the NEXUS Working Group (nor in this blog), instead I raised questions and proffered some suggestions.  But it has been good to share some of my thinking and to have critiqued.  I would love to know your views too on whether you feel OGMs can ever provide remedy for victims of modern slavery, and/or if you feel audit remediation plans have a role to play. 

By way of conclusion, what I currently think is that OGMs are a vehicle to enable effective local remedy for stakeholder grievances, but that there are real challenges relating their ability to provide remedy for victims of slavery.  These are the fact that slavery is a crime, the fact it seems hard to design an OGM with reach down a supply chain (which is where slavery tends to be), and the fact victims of slavery are so vulnerable.  Therefore, I propose the question “Can a good ‘co-design’ process overcome these challenges and lead to the innovation of such a mechanism?” In my view, innovation through ‘co-design’, where the needs of all stakeholders are genuinely met, seems the only chance.  Finally, to augment the role of an OGM I believe we need to strengthen the contribution that audit remediation plans can play as a mechanism to provide remedy for victims of slavery, and to see this as a fundamental part of the broader context of OGMs in this difficult and distressing area. 

END

Michele Law
4 June 2017

Fight against modern slavery strengthened through new changes to the Companies Act

Fight against modern slavery strengthened through new changes to the Companies Act

The Company Regulations 2016 are another good step forward to encourage uptake by business of ethical human rights compliance.  The trend towards asking businesses to do more on human rights that was started in the first instance by the UN Framework and Principles on Business and Human Rights, concretised into UK law by the Companies Regulations 2013 and the Modern Slavery Act 2015, is now being strengthened further by the Companies Regulations 2016.