Japan: launching an ESG grievance mechanisms platform and the role of lawyers
Thursday 11 May 2023
Sakon Kuramoto
Orrick, Herrington & Sutcliffe, Tokyo
skuramoto@orrick.com
Daisuke Takahashi
Shinwa Law, Tokyo
takahashi@shinwa-law.jp
Establishment of the Japan Centre for Engagement and Remedy on Business and Human Rights – background and purpose
Principle 31 of the United Nations Guiding Principles (UNGPs) on business and human rights (BHR) provides eight criteria for effective corporate operational-level grievance mechanisms:
- legitimacy;
- accessibility;
- predictability;
- equity;
- transparency;
- rights compatibility;
- continuous source of learning; and
- based on engagement and dialogue.
How can we increase the effectiveness of grievance mechanisms for addressing ESG issues including human rights abuses? How can lawyers contribute to it?
In 2019, the HR Lawyers Network Japan[1] and the Global Compact Network Japan published the Engagement and Remedy Guidelines,[2] a guide for Japanese businesses to operate corporate ESG grievance mechanisms. Since then, an Engagement and Remedy Forum has been held annually to explore how to increase the effectiveness of grievance mechanisms. As one of its outcomes, in July 2022, the Japan Centre for Engagement and Remedy on Business and Human Rights (JaCER)[3] was established with the support of the Japan Electronics and Information Technology Industries Association (JEITA),[4] one of the biggest industrial organisations in Japan. JaCER began the operation of its engagement and remedy platform in October 2022.
As of April 2023, more than twenty Japanese major companies from various sectors participate in JaCER to improve their grievance mechanisms for addressing human rights abuses through their operation and supply chains. Among them are Furukawa Electric, Itochu, KOA, Mitsubishi Electric, Morinaga＆Co, Morinaga Milk Industry, Omron, Panasonic Group, Sharp, Sumitomo Metal Mining, Toshiba, Yamaha, Kirin, Yokohama Rubber, Brother Industries, Sakai Chemical Industry and Bic Camera.
Many Japanese companies are generally keen on improving their grievance mechanisms due to the challenges they face arising from an increasing gap in terms of the progress of the BHR and ESG movements between Western and Asian countries. Mandatory human rights due diligence (HRDD) legislation and human rights-based trade regulations introduced in North America and Europe also have extraterritorial impacts on Japanese companies, since Japanese business maintains a close relationship with these jurisdictions. ESG investors have also been asking whether their investee Japanese companies operate effective grievance mechanism addressing ESG issues. On the other hand, most Japanese companies have a significant business presence and supply chains in Asia, where there still exist serious concerns about human rights abuses. To address the above challenges, in September 2022, the Japanese government published the Guidelines on Respecting Human Rights in Responsible Supply Chains[5] and in April 2023 announced that it was going to incorporate HRDD into public procurement.[6]
Functions of JaCER in increasing the effectiveness of grievance mechanisms
It should be noted that JaCER itself does not operate grievance mechanisms. It is each member company’s responsibility to operate its own grievance mechanism in accordance with the UNGPs. JaCER supports the member companies in increasing the effectiveness of mechanisms through its engagement and remedy platform in various ways, including:
- increasing accessibility: JaCER has established a common grievance contact point on its website where it receives any claims/reports on any ESG-related issues, including human rights abuses, which have occurred in the member companies’ operations and supply chains from various stakeholders. JaCER will contact the concerned member companies and will recommend they address the reported grievances in line with the UNGPs;
- increasing legitimacy: JaCER aims to act in a professional capacity to support and promote the grievance mechanisms of its member companies in accordance with the UNGPs. JaCER also receives advice on the general operation of the platform from its stakeholders panel, comprised of various stakeholders, and from its advisory board, comprised of independent international experts; and
- increasing transparency: JaCER publishes grievance lists that describe any claims/reports, and the progress of grievances on its website.
In addition, JaCER aims to serve as a source of continuous learning by providing regular training where member companies can learn about each grievance practice.
Key roles of lawyers in improving access to remedies
Further, lawyers play various roles in JaCER. The authors of this article are both lawyers and serve as co-representative directors of JaCER to ensure that its operation is in line with international norms, including the UNGPs. Akira Kawamura, a former IBA President, serves as a member of JaCER’s advisory board.
Lawyers can also serve as independent advisors and mediators to increase the legitimacy of grievance mechanisms and facilitate dialogues between companies and stakeholders. Through JaCER’s engagement and remedy platform, companies may appoint an advisory and mediation panel. This panel, consisting of independent experts, can provide advice to the company and serve as an intermediary among the stakeholders to resolve grievance cases.
In collaboration with the BHR Lawyers Network Japan, JaCER published the Advisory and Mediation Panel Candidate Members List.[7] Most of the candidate members are lawyers who have expertise and experience in advising and intermediating in areas related to law, human rights, labour, environment and development, dispute resolution, supply chain management and other sustainability practices.
A way forward
There are various challenges ahead for further increasing the effectiveness of grievance mechanisms through JaCER. We believe JaCER urgently needs to expand its international network to include lawyers with BHR expertise from various jurisdictions, as grievance cases may be related to jurisdictions beyond our borders. We are also interested in learning how lawyers are contributing to increasing the effectiveness of grievance mechanisms in other jurisdictions.
In the upcoming new era, we look forward to further discussions and collaborations with lawyers from various jurisdictions on access to remedy through the IBA.
[1] An information-sharing network established through the collective action of lawyers, scholars, businesspersons, and other legal specialists active in diverse areas ranging from business law practices to human rights in Japan. See www.bhrlawyers.org/en-home. The authors of this article are serving as steering committee officers.