Developing a corporate grievance mechanisms platform to address business and human rights issues in Japan - key opportunities and challenges for lawyers

Sakon Kuramoto
Kuramoto International Law Office, Tokyo
skuramoto@kuramoto-jurist.com

Daisuke Takahashi
Shinwa Law, Tokyo
takahashi@shinwa-law.jp

One of the most critical challenges that companies and lawyers face in addressing business and human rights issues is how to effectively design and implement corporate grievance mechanisms that ensure access to a remedy and the meaningful role lawyers can play in this process.

Japan’s Engagement and Remedy Platform

As discussed in our previous IBA article, ‘Japan: launching an ESG grievance mechanisms platform and the role of lawyers,’^[1] the Japan Center for Engagement and Remedy on Business and Human Rights (JaCER) launched the Engagement and Remedy Platform in October 2022. This initiative serves as a collective platform for corporate grievance mechanisms that aims to promote action by and support Japan-affiliated multinational corporations in addressing human rights issues across their global operations and supply chains. As part of the platform, the JaCER has established a common grievance contact point^[2] on its website, where complaints can be raised related to human rights concerns. The JaCER encourages member companies to address any grievances in line with the UN Guiding Principles on Business and Human Rights (UNGPs). This is achieved through the issuance of initial assessment reports, monitoring progress, offering additional support when needed and publishing a grievance list on its website.^[3]

In May 2023, when our previous IBA article was published, around 20 companies were participating in the JaCER. In just two years, this number has rapidly grown to over 75 companies. As detailed in the JaCER’s grievance list, it has received a wide range of human rights-related complaints both domestically and internationally. In the fiscal year 2024 alone, the JaCER received a total of 86 grievance reports (59 domestic and 27 international), covering a broad range of issues, including harassment, discrimination, labour issues, environmental concerns and conflict-related matters.

This article aims to share the key lessons learned from the first few years of operation of the JaCER’s Engagement and Remedy Platform, with a focus on developing effective corporate grievance mechanisms.

How to increase the accessibility of grievance mechanisms

Accessibility is one of the key criteria for the establishment of effective grievance mechanisms under the UNGPs, specifically Principle 31. If a grievance mechanism is not easily accessible to stakeholders, it is unlikely to be utilised and, as such, access to a remedy will be unattainable.

To enhance accessibility, companies need to take proactive steps to raise awareness about the available grievance mechanisms. The JaCER’s member companies have undertaken a variety of awareness-raising initiatives, not only within their own corporate groups, but also among their suppliers and other stakeholders. For example, some companies distribute flyers containing QR codes that provide direct access to the company’s grievance mechanism website.

Engagement with external stakeholders is also critical. Addressing human rights abuses and environmental harm often requires the involvement of civil society actors, such as non-governmental organisations (NGOs), labour unions and human rights or environmental groups that support victims. Companies can improve grievance mechanism accessibility by engaging in regular dialogue with these organisations and clearly explaining how their grievance mechanisms function. The JaCER supports this effort by organising opportunities for its member companies to engage in proactive dialogue with both domestic and international stakeholders.

Additionally, the JaCER has participated in international forums, including the UN Forum on Business and Human Rights in Geneva and Bangkok, to enhance the understanding of its Engagement and Remedy Platform among global stakeholders.

Language barriers can also hinder access. To address this, companies should consider providing multilingual grievance channels. The JaCER has established a system to support reporting in multiple languages, helping to lower access barriers for stakeholders around the world.

Finally, companies may benefit from participating in shared grievance mechanism platforms, such as the JaCER’s, as this can enhance the visibility of their grievance systems and strengthen trust among stakeholders.

How to ensure rights-compatible remedies

‘Rights compatibility’ is another key criterion for the effectiveness of grievance mechanisms, as emphasised in Principle 31 of the UNGPs. If a grievance mechanism fails to provide remedies consistent with internationally recognised human rights, it risks being ineffective and undermining trust.

The JaCER has incorporated this principle into its initial review reports for member companies, including specific recommendations for addressing grievances in a rights-compatible manner. In several cases, companies have successfully implemented remedial measures based on these recommendations.

For example, in a case where a foreign resident was denied a certain service due to their residence status, the company responded swiftly by revising its contract terms with foreign residents, effectively resolving the issue. In another case, a foreign employee reported discriminatory remarks made by a superior based on nationality. The company conducted an internal investigation, during which the party responsible partially acknowledged the incident and expressed regret. The victim accepted the apology and the company implemented measures to prevent recurrence.

In some situations, while full remedial action may not be immediately possible, companies have still demonstrated responsible engagement. For instance, when indigenous communities and NGOs raised concerns that the financing of offshore gas development projects violated indigenous rights, the member company, supported by the JaCER, held direct, face-to-face discussions with the stakeholders involved. In another case involving allegations of forced labour in overseas supplier factories, the company undertook supply chain investigations and initiated audits and improvement plans, with the involvement of both the company’s direct and indirect suppliers.

However, there are also instances where a swift and effective remedy is difficult to achieve. This is often due to fundamental differences in how the complainant and the company perceive the facts and corporate responsibility. In such cases, consulting with independent external experts can be essential to ensure appropriate responses are given as part of responsible business conduct. Following the issuance of an initial review report, the JaCER requests member companies to provide progress updates and, where necessary, facilitates additional support through establishing advisory and mediation panels. When closing a case, the JaCER assesses whether an appropriate remedial measure has been achieved.

Furthermore, in cases such as the one concerning forced labour allegations at an overseas supplier factory mentioned above, problems often arise from structural issues related to the systemic exploitation of migrant workers within certain countries and regions. In such situations, there are often limitations to the leverage that a single company can exert. In these cases, it is crucial for companies to collaborate with other businesses and relevant stakeholders. The JaCER supports these collaborative efforts among its member companies.

Opportunities and challenges for lawyers

There is significant potential for lawyers, both in-house and external counsel, to contribute meaningfully to the operation of corporate grievance mechanisms. Many lawyers possess expertise in fact finding and dispute resolution through their legal practice, skills that are highly relevant in regard to addressing grievances effectively.

In fact, lawyers have played an active role in the operation of the JaCER’s platform. The authors of this article are both practicing lawyers and serve as Representative Directors of the JaCER. Akira Kawamura, former president of the International Bar Association (IBA), sits on the JaCER’s Advisory Board. Many other lawyers contribute to the platform in various capacities, including as staff, advisors and mediators. Within the JaCER’s member companies, grievance teams are often jointly managed by sustainability departments and legal or compliance departments, with the active involvement of in-house lawyers. Lawyers’ involvement in grievance mechanisms offers a valuable opportunity to advance corporate sustainability and strengthen governance frameworks.

However, grievance mechanisms in areas such as human rights and the environment differ in important ways from traditional corporate misconduct processes. The objective is not solely to investigate legal violations or ensure compliance, but to align corporate behaviour with international standards, such as the UNGPs, even in instances where no legal breaches have occurred. Companies should consider what is expected of them from the perspective of international norms in order to preserve their reputations and maintain trusted relationships with stakeholders.

This approach requires companies to engage in constructive dialogue and seek collaborative solutions with affected stakeholders. To do this effectively, lawyers must work alongside professionals in sustainability and other relevant fields. In regard to the JaCER’s platform, for example, legal and sustainability experts collaborate closely to ensure grievance mechanisms are both fair and effective.

A way forward

In June 2024, the UN Working Group on Business and Human Rights submitted its report to the Human Rights Council following its visit to Japan. In its report,^[4] the Working Group recognises the JaCER’s Engagement and Remedy Platform as ‘a notable example’ of positive practices to establish grievance mechanisms that are open to all stakeholders, ‘accumulating know-how and offering a non-judicial platform for its members to achieve redress based on the Guiding Principles.’

While we are grateful for this positive recognition, we remain committed to tackling the ongoing challenges related to corporate grievance mechanisms that are discussed in this article. In addition, we aim to promote the proactive role of lawyers in advancing access to remedies in the field of business and human rights, in collaboration with legal professionals worldwide.