EU Due Diligence Directive forces companies to adopt complaints mechanisms
The European Council’s adoption of the Corporate Sustainability Due Diligence Directive (CSDDD) marks a significant step in harmonising human rights and environmental due diligence across the EU. Companies must establish complaints procedures by 2027, supported by new guidance from the OHCHR on creating effective grievance mechanisms. This initiative ensures accountability and promotes sustainable business practices within the EU market.
28 June 2024
On 24 May 2024, the European Council adopted the Corporate Sustainability Due Diligence Directive (CSDDD). It obliges EU members states to ensure that large companies with significant activities in the EU conduct human rights and environmental due diligence in their own operations and across their chains of activities. After several years of negotiations the CSDDD is a milestone in harmonizing due diligence requirements across EU member states and will create a level playing field for companies active in the EU market.
In a phased approach based on company size and turnover, companies will have to conduct due diligence in accordance with the CSDDD from 2027. With entry into force, EU member states have two years to adopt a law transforming the CSDDD into national law and to take appropriate measures for implementation including setting up supervisory authorities.
As part of the due diligence requirements, companies need to establish and maintain a complaints procedure. The CSDDD determines that persons and organisations such as trade unions, workers’ representatives and civil society organisations shall be able to submit complaints directly to the companies in case of legitimate concerns regarding actual or potential human rights and environmental adverse impacts. Companies must now establish a procedure for dealing with those complaints and inform workers, trade unions and other workers’ representatives, where relevant, about such processes.
However, the question of how to design and implement a complaints procedure often leaves companies in a difficult position. It is good timing, that the Office of High Commissioner of Human Rights of the UN recently issued an Interpretative Guide (Advance Version) to one of the key pillars of the UN Guiding Principles of Business and Human Rights, i.e. Access to Remedy in Cases of Business-Related Human Rights Abuse.
This Guide offers practical and detailed advice on setting up effective non-state-based grievance mechanisms. The Guide includes recommendations on establishing operational-level grievance mechanisms for individuals and communities who may be adversely impacted by business operations. For example, it explains that the scale and complexity of the mechanism depends on the extent of the company’s likely impact and that it should not be cumbersome in its nature in order to be effective. Some or all functions may be outsourced or shared with other companies, industry associations, multi-stakeholder initiatives or other relevant actors. These must have sufficient access to company management and be endowed with the necessary support and resources to ensure swift resolution and remediation.
The Guide provides many other useful recommendations, for example what companies can do to protect people from risk of retaliation; how to design a user-friendly mechanism; how to ensure that the mechanism is gender-sensitive; or how reporting and information sharing can be organised to be both transparent and sufficiently confidential.
Engagement and dialogue are seen as central to resolving grievances. An operational-level grievance mechanism should not be about “judge and jury” regarding adverse human rights impacts or imposing solutions on affected stakeholders, but about jointly finding an optimal solution to resolving the problem. Dialogue-based processes including mediation are also important elements in the grievance mechanisms of multi-stakeholder initiatives such as ASI. By joining ASI, companies accept to be subjected to the ASI Complaints Mechanism which aims to resolve issues collaboratively and ensure fair outcomes for all parties involved.
To help Members and other interested stakeholders to develop or improve their complaints mechanisms, ASI has produced learning materials including a ’45 minutes on’ webinar, Grievance Mechanisms: a training for practitioners. This session was jointly developed with the Responsible Minerals Initiative, Copper Mark and the consulting firm BSR in late 2022.
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