Handling and Resolving Local-Level Concerns and Grievances

Shift worked with ICMM in 2018 and 2019 to update the guidance they provide to their members on how to put in place effective operational-level grievance mechanisms, in line with the effectiveness criteria of the UN Guiding Principles. Our role included co-facilitating workshops with ICMM members; developing case studies with the support of ICMM members and inputting into the new guidance.

ESG Toolkit for Fund Managers: Briefing Note on Human Rights

This resource, developed with support from Shift, explains the relationship between human rights and traditional environmental and social due diligence. It aims to provide fund managers with a practical introduction to human rights issues that may be relevant to their investments. It gives fund managers:

  • A clear understanding of what human rights risks and impacts are, why they are important and how they relate to traditional environmental and social (E&S) risks and impacts;
  • A practical approach to integrating human rights lens into existing E&S due diligence approaches, aligned with international standards.

Dispute or Dialogue? Community Perspectives on Company-Led Grievance Mechanisms

This book includes a foreword and overview chapter authored by members of the Shift team. The summary below is excerpted from the resource.

Summary

What is a company– community grievance mechanism?

We define a company–community grievance mechanism as a process or set of processes for receiving, evaluating and addressing grievances from affected communities, in a timely and consistent manner at the site or operational level. The mechanism may be wholly or partially run by the company. Grievances might be real or perceived: the latter may be a source of acute anxiety for communities and can be addressed through dialogue and provision of timely and accurate information.

Extractive industry companies and their investors increasingly see a strong business case for building good relations with local communities, and addressing conflict and potential conflict in a timely and effective manner. This involves engaging meaningfully with communities affected by project operations, so as to build trust and to respond appropriately to any local concerns, major or minor. If left unaddressed even minor complaints may escalate into disputes or even violent conflict. This is potentially devastating for local communities. From the company perspective, it can also result in damage to its reputation, a loss of operational time and money, and it can put future investment opportunities at risk.

Effective channels by which local communities can voice their concerns about a project — and get these concerns addressed — are particularly important. In general the only formal mechanisms by which citizens can challenge the activities of extractive companies tend to be those available under host country legislation. However, courts and tribunals in host countries, particularly in developing countries and emerging economies, can be inefficient, corrupt or reluctant to interfere with extractive industry activities (Schwarte and Wilson, 2009). This can result in increased conflict and resentment among host communities, which may be a key legacy challenge when one company acquires a project from another.

Leading oil and gas, mining and forestry companies are starting to establish their own formal mechanisms to address and resolve local citizens’ grievances. Grievance mechanisms provide a channel for concerns to be identified and addressed before they escalate. As part of an effective overall community engagement strategy, they can help to build trust with stakeholders, reduce operational risks and enhance management of project impacts and community relations.

Frequently companies establish grievance mechanisms in order to comply with the formal requirements of project finance and international certification initiatives, which address conflict resolution and human rights protection. Since 2006, for example, the International Finance Corporation (IFC) requires its clients — companies that receive project finance — to set up and administer procedures to address project-related grievances from affected communities. Other international financial institutions have similar requirements. The environmental management systems standard ISO 14001 of the International Organization for Standardization (ISO), and the Forest Stewardship Council (FSC) certification standard both require certified companies to establish company–community grievance mechanisms.

More recently, a major influence on the adoption and development of grievance mechanisms, and on public awareness, has been the work of Professor John Ruggie in his role as UN Special Representative on Business and Human Rights, and the UN Human Rights Council’s endorsement of the UN Guiding Principles on Business and Human Rights (UN/OHCHR, 2011) (see Chapter 2).

There is a growing body of literature on company– community grievance mechanisms, supported by online resources such as BASESwiki (transferred to the ACCESS platform in 2013).

In general, there is a need for more long-term analysis of the implementation, impact and effectiveness of grievance mechanisms, including analysis of the broader societal impacts beyond day-to-day resolution of grievances. Having identified in particular a lack of material on the community perspectives on company-led grievance mechanisms — their effectiveness and impact on sustainable development and livelihoods locally — IIED sought to address this by undertaking and commissioning the research in this book, with case studies based on a mix of desk-research, interviews and fieldwork.

Chapter 2 is a review of the current literature and experience of grievance mechanisms. Based on desk-research and interviews with company and industry experts, it explores definitions of the term ‘grievance mechanism’; some history behind the evolution of grievance mechanisms including alternative dispute resolution; key drivers, standards and guidance for their design and use; and consideration of future trends in grievance mechanism development. This is followed by a series of four chapters focusing on case studies in the oil and gas, mining, and forestry sectors.

Chapter 3 covers the grievance mechanism run by BP in Azerbaijan for the 1,768km Baku–Tbilisi– Ceyhan (BTC) pipeline, which passes through Azerbaijan, Georgia and Turkey. The BTC pipeline project has been the focus of considerable international scrutiny by civil society organisations and project lenders, due to its size and impact and international profile. The project has benefited from investing in civil society capacity building during the construction phase, which has enabled informed dialogue between the company and civil society over the years. The case study highlights the need to balance government and company responsibilities in resolving grievances. It also demonstrates how a major international project such as this can positively influence government practice.

Chapter 4 is a case study of the company Congolaise Industrielle des Bois (CIB), which manages around 1.4 million hectares of tropical forest concessions in the northern Republic of Congo. The company achieved its first FSC certificate in 2006 and full certification in 2010. FSC has been a key driver for CIB to establish a grievance mechanism for resolving land-related disputes and for providing fair compensation for loss or damage to property, livelihoods and resources. This case study demonstrates how grievance mechanisms can be based on existing community structures and underscores the need to respect traditional conflict resolution approaches.

Chapter 5 relates to the Sakhalin-2 oil and gas project in the Russian Far East. Like the BTC project, Sakhalin-2 has used project finance, and has come under considerable international scrutiny and criticism, but is also seen as a pioneer of community engagement in Russia. This case study analyses the experience of the operating company, Sakhalin Energy, in addressing grievances and building a dialogue with the indigenous peoples in the north of the island. This is then compared to a conflict that has developed with a (non-indigenous) dacha community located close to a liquefied natural gas plant in the south of the island. The case study provides an example of a well-functioning grievance mechanism, but highlights the need to understand the full range of complexities associated with building dialogue with communities, including outside the grievance resolution process.

Chapter 6 considers the effectiveness of three different grievance mechanisms and stakeholder engagement processes implemented by mining companies. The first is Anglo American’s approach to stakeholder engagement, its grievance mechanism and the computerised system employed to manage grievances. The second is TVIRD in the Philippines, which demonstrates the value of building on local and traditional modes of communication and dispute management to create culturally appropriate grievance mechanisms. The third case, Kaltim Prima Coal in Indonesia, illustrates the ‘governance gaps’ that exist in a number of developing countries that a company–community grievance mechanism can help to fill.

The book’s findings demonstrate the importance of having an open and responsive overall approach to stakeholder engagement within which a grievance mechanism can be employed effectively. The book offers examples of successful approaches for enhancing dialogue — from civil society capacity building to designing engagement around traditional decision-making processes, as well as system innovations such as electronic logging, which facilitate the monitoring and management of grievance resolution within the company. The book considers community conflict with an eye to understanding the mechanics and the challenges of how company– community engagement takes place in practice. It also offers local perspectives on the implementation of standards and processes that are frequently analysed primarily at the level of system or process. As such the book offers a fresh take on a growing body of literature on company–community grievance mechanisms.

How to Use the UN Guiding Principles on Business and Human Rights in Company Research and Advocacy: A Guide for Civil Society Organisations

The summary is excerpted from the resource.

Summary

The objective of this guide is to help civil society organisations (CSOs) use the Guiding Principles in their research, campaigns, engagement and advocacy towards companies and governments. By using the Guiding Principles in corporate research, campaigning, engagement and advocacy, CSOs can play an indispensable role as a countervailing power in confronting companies with their responsibility to respect internationally recognised human rights and ensuring they are held to account to meet their responsibility and improve their behaviour. Thereby, CSOs can contribute to making the Guiding Principles of real value for rights holders likely to be negatively affected by corporate activities.

Furthermore, by using the Guiding Principles in their research and advocacy and building up expertise, CSOs will be able to provide national and international authorities with useful insights in the strengths and weaknesses of the Guiding Principles, helping to improve the international business and human rights framework in due course.

Corporate Culture and Conflict Management in the Extractive Industries: A Study in Peru

This summary is excerpted from the resource.

Summary

This report aims to build knowledge about how corporate cultures in mining companies influence how well those companies manage conflict with local communities. It is the product of a joint research project undertaken by the Corporate Responsibility Initiative at Harvard Kennedy School and the Centre for Social Responsibility in Mining at the Sustainable Minerals Institute of The University of Queensland in Australia. The research project recognized that factors external to mining companies can have a significant influence on the success of conflict management efforts; however, it started from a working assumption that the culture within a company also plays a substantial role. The project sought to test this assumption by identifying some general lessons that might be of use to mining and other extractive companies.

The research was conducted in two phases. Phase One engaged with experts in the extractive industries at the global level to identify aspects of corporate culture that appear critical to the effective management of conflict with communities. This report focuses on the results of Phase Two of the research, which took those global-level findings and tested them within the more focused context of the mining industry in Peru. Peru was selected since it is both a major center of mining and a country in which the lack of socio-economic advancement for mine-affected communities has led to protest, destruction of property and suspended mine development. The project involved a combination of desk-based research and interviews involving five participating mine sites: Antamina, La Granja, Pierina, Tintaya and Yanacocha/Conga. Interviewees included individuals from senior management, technical departments (exploration/construction/operations), procurement, government relations/ communications, legal, human resources, security, social/community relations and social development.

From the interviews, a number of factors emerged that appeared to be leading determinants of the participating sites’ ability to manage conflict with communities effectively. These factors, or themes, generally corroborated findings from Phase One of the research. These included:

  • Company attitudes to community relationships and conflict management
  • Modes of engagement with communities
  • The internal influence of Community Relations staff
  • Corporate structures and hierarchy
  • Staff attitudes: hiring and training
  • The role of formal processes
  • Assessing social performance
  • The role of the Legal function

There was a strong recognition across all five sites of the importance of good community relationships and the effective management of conflict for success in mining in Peru. In some instances, this view had been informed by experiences of major conflict at the sites in question; in others, by the broader reality of frequent social conflict related to mining in Peru. This recognition was apparent across different functions and departments, and up to the most senior levels. However, there were real differences in how this recognition affected company practices.

Most sites had elevated the leadership level of the Community Relations function or were about to do so; evidence from the research underlined that this elevation in formal status is but one step. The fundamental shift in approaches — and progress in managing conflict — only really occurred when both senior management and technical staff were prepared to act on advice coming from Community Relations. This required an ability on the part of the Community Relations team to ‘translate’ the rationale for addressing community needs into terms that made sense to senior management and technical staff. It also required the Community Relations staff to build trust in their skills and judgment within the company, much as they had to do with communities. As such, it showed the task of stakeholder engagement to be as much inward-facing as outward-facing.

The various sites included in this report used a broad range of approaches to building relationships and trust with communities through engagement. Some approaches were focused on ‘educating’ communities on technical ‘facts,’ while others were built around two-way dialogue or shared, participatory processes. Based on interviewees’ own perceptions of what was proving successful, the optimal approaches appeared to be those that were least ‘owned’ by the company alone, and least ‘transactional’ in their objectives (that is, not timed around or predicated primarily on a desire by the company to extract an agreement from a community).

While the model of “dialogue tables” was challenged by some interviewees, it became apparent that they used the term to denote bilateral engagements established by the company to negotiate a solution to a problem with a community. In contrast, interviewees who reported success with dialogue tables viewed them as platforms co-owned with communities and other stakeholders, and facilitated (at least at key points) by a neutral third party trusted by all involved. See our related video looking at a specific community in Peru impacted by activities at a copper mine, and how they used dialogue tables to resolve conflict.

The research also highlighted the need for any mining company to have not only the right people and management processes in place, but to understand how the two interact. Without good processes to retain institutional knowledge, keep track of commitments to communities, and regularize successful methods for engagement, the success of a company in managing community relationships could become dependent on individual staff and change rapidly if those staff left. That said, the possibility for bureaucratic processes to exacerbate tensions and conflict with communities was also apparent. In a context where the time in which communities want responses on significant issues is frequently shorter than the time desired by any large company to consider the issues properly, the interviews highlighted a need for innovative procedural approaches that can narrow or offset that disconnect.

The interviews confirmed wider research evidence that companies in the industry do not generally measure and aggregate the actual costs they incur as a result of conflict with communities. While some ‘headline’ costs may be apparent, they are also often viewed as unlikely to occur. Meanwhile, more routine costs are overlooked, including management time, poor staff morale and retention, or harm to the company’s reputation that seeds future crises or affects the chances of gaining future contracts, permits and partnerships. This underappreciation of costs was seen to raise the risk of undervaluing the role, skills and contribution of Community Relations staff. Subsequent to this report, extensive research was conducted on the cost of conflict with communities in the extractives sector; see that report and its findings in our library.

There was limited evidence from this research of the extent to which corporate structures and hierarchy might have an effect on efforts to build a corporate culture at site level that enables effective conflict management. However, there appeared to be some degree of trade-off between a mine with a strongly hierarchical structure on the one hand and strong cross-functional collaboration to manage community relationships on the other. To learn more about the importance of cross-functional management, see our resources on embedding as part of implementing the Guiding Principles for companies.

When it came to the role of the Legal function, findings from the first phase of the project – that in-house counsel could be quick to take a defensive or confrontational approach when faced with escalating conflict from communities – were not corroborated by the evidence in Peru. In general, legal personnel themselves took the strong view that almost any outcome was better than a lawsuit, and tended to be actively supportive of strong community relations functions and dialogue-based approaches to dispute resolution. 

Corporate-Community Dialogue: Documentary Series

Corporate-Community Dialogue: An Introduction from ACCESS Facility on Vimeo.

About the Series

This documentary series looks at how companies and communities have resolved disputes over corporate activities on three specific projects in Nigeria, Peru and the Philippines. The series includes one overview film of all the stories, and one film per story. These films tell the story of what happened on the ground in the words of the people who experienced it – the local community, the company and the dialogue facilitators that were asked to help.

In all three films, we hear stories from companies and communities that have found themselves in varying degrees of conflict and looked for a way out through dialogue. In each instance, the parties in conflict used a neutral third-party mediator to help them craft a process through which they could address concerns and progressively resolve their core conflicts.

Each film is about 40 minutes and they are hosted by ACCESS Facility. The individual films share the following stories:

Company-Community Dialogue: An Introduction: provides an overview of all three stories and finds common themes. Click embedded video above or follow this link to view directly on Vimeo.

Making Monkey Business: Building Company/Community Dialogue in the Philippines shares the story of a dispute resolution process with communities that were impacted by the building of the Ambuklao and Binga hydroelectric power plants in the Benguet Province of the Philippines. The mediated dialogue was facilitated by the Compliance Advisor/Ombudsmanof the World Bank Group and the mediation was conducted by the Conflict Resolution Group in the Philippines. Click embedded video below or follow this link to view directly on Vimeo.

Putting Ourselves in their Shoes: The Dialogue Table of Tintaya tells of the rising resentments among indigenous community members about a copper mine in the Peruvian Andes initially owned by the government and then owned by BHP Billiton (and now by Glencore Xstrata). It relates the process by which non-governmental organizations such as Oxfam Australia, Oxfam America, CooperAccion and Corecami entered the picture, and the important roles they played in helping give birth to the process and supporting the communities’ ability to engage effectively. Click embedded video below or follow this link to view directly on Vimeo.

The Only Government We See: Building Company-Community Dialogue in Nigeria tells the story of the negotiation of General Memoranda of Understanding (GMOUs) between Chevron and communities in the Niger Delta around its facilities. The process began after violent conflict in the region in 2003 led to the withdrawal of the company and the destruction of property, including schools and hospitals the company had built for communities. The film relates the role played by the head of the New Nigeria Foundation, a local NGO that came in to mediate the dialogue and help build the foundations for increased trust between those involved and addresses how and why the communities decided to engage in the dialogue, what progress and challenges emerged along the way, and the outcomes that have been achieved. Click embedded video below or follow this link to view directly on Vimeo.

These films were produced by the Corporate Responsibility Initiative at the Harvard Kennedy School on behalf of the mandate of the former Special Representative of the UN Secretary-General for Business and Human Rights, Professor John Ruggie. The films were produced with the generous support of the Government of Norway, the Compliance Advisor/Ombudsman of the World Bank Group, the International Bar Association and the Government of Germany. The films are MATCH productions.

In November 2012 the series won “best communication or publication” award at the biennial Centre for Effective Dispute Resolutions awards ceremony held in London.

The Corporate Responsibility to Respect Human Rights: An Interpretive Guide

This guide is designed to support the effective implementation of the UN Guiding Principles on Business and Human Rights. It provides additional background, detail and assistance in understanding the Guiding Principles, and complements the commentary contained in the Guiding Principles themselves. It defines key concepts, elaborates on the foundational and operational principles underlying the corporate responsibility to respect, and includes a series of questions and answers for businesses.

Principles for Responsible Contracts: Integrating the Management of Human Rights Risks Into State-Investor Contract Negotiations

This resource is based on extensive consultation during Ruggie’s UN mandate with government and company legal representatives involved in such negotiations, particularly from the African region. The summary is excerpted from the resource. We also recommend training materials related to this topic issued by the UN.

Summary

Every business venture has the potential to have positive and negative impacts on people and human rights – those rights and freedoms that the international community has agreed that people need in order to live with dignity. In some cases, where the potential positive and negative human rights impacts of a venture are direct and significant, managing human rights risks will be an essential consideration to be included at the earliest stages of the life cycle of the venture. This is the case where the project presents either large-scale or significant social, economic or environmental risks or opportunities, or involves the depletion of renewable or non-renewable natural resources.

In such cases, irrespective of the sector involved, the negotiation process between a host State and a business investor offers a unique opportunity to identify, avoid and mitigate human rights risks. This will help optimize the full range of benefits to be drawn from the investment and help ensure the potential negative impacts on people are avoided or mitigated. Moreover, these principles will help ensure that States maintain adequate policy space in the investment contract, including for the protection of human rights, while avoiding claims relative to the contract in binding international arbitration.

The 10 principles that can help guide the integration of human rights risk management into contract negotiations are listed below:

  1. Project negotiations preparation and planning: The parties should be adequately prepared and have the capacity to address the human rights implications of projects during negotiations.
  2. Management of potential adverse human rights impacts: Responsibilities for the prevention and mitigation of human rights risks associated with the project and its activities should be clarified and agreed before the contract is finalized.
  3. Project operating standards: The laws, regulations and standards governing the execution of the project should facilitate the prevention, mitigation and remediation of any negative human rights impacts throughout the life cycle of the project.
  4. Stabilization clauses: Contractual stabilization clauses, if used, should be carefully drafted so that any protections for investors against future changes in law do not interfere with the State’s bona fide efforts to implement laws, regulations or policies in a non-discriminatory manner in order to meet its human rights obligations.
  5. “Additional goods or service provision”: Where the contract envisages that investors will provide additional services beyond the scope of the project, this should be carried out in a manner compatible with the State’s human rights obligations and the investor’s human rights responsibilities.
  6. Physical security for the project: Physical security for the project’s facilities, installations or personnel should be provided in a manner consistent with human rights principles and standards.
  7. Community engagement: The project should have an effective community engagement plan through its life cycle, starting at the earliest stages.
  8. Project monitoring and compliance: The State should be able to monitor the project’s compliance with relevant standards to protect human rights while providing necessary assurances for business investors against arbitrary interference in the project.
  9. Grievance mechanisms for non-contractual harms to third parties: Individuals and communities that are impacted by project activities, but not party to the contract, should have access to an effective non-judicial grievance mechanism.
  10. Transparency/Disclosure of contract terms: The contract’s terms should be disclosed, and the scope and duration of exceptions to such disclosure should be based on compelling justifications.

UN Guiding Principles on Business and Human Rights


Table of Contents

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I. THE STATE DUTY TO PROTECT HUMAN RIGHTS
  • Foundational principles
  • Operational principles
II. THE CORPORATE RESPONSIBILITY TO RESPECT
  • Foundational principles
  • Operational principles
III. ACCESS TO REMEDY
  • Foundational principles
  • Operational principles