Establishing an Effective Grievance Mechanism: Challenges & Solutions


Today’s consumers and investors are socially and environmentally conscious in their purchasing decisions. Companies utilise the potential of responsible business conduct to risk not only customers and investment opportunities but also achieve employee satisfaction and productivity. To build trust with stakeholders including workers, consumers, and investors, businesses must work towards mitigating ethical risks.

An all-encompassing whistleblowing and complaints mechanism, accessible to all, is crucial to building this trust.

Businesses benefit greatly from grievance mechanisms. As an easily accessible means to raise concerns or complaints, the mechanism acts as a cost-effective remedy to potential business risks. It can help to enhance risk management systems and business integrity as well as human rights and environmental standards.

However, several factors may pose a challenge:

  • Lack of awareness: A clear understanding among employees, management and other stakeholders of the benefits of a formalized reporting mechanism as well as the process and steps involved, it cannot be implemented effectively.
  • Limited resources: Establishing a grievance mechanism and supporting those using it requires investment in resources, time, technology, and training additional to companies core business operations.
  • Trust and Transparency: Another challenge is ensuring the grievance mechanism is trusted, transparent and functioning in a reliable turn-around time. Workers and stakeholders must be confident that their concerns will be taken seriously and addressed in a timely manner.
  • Cultural Context: A diverse target group, cultural and language barriers may hinder accessibility to grievance reporting. It may be necessary to provide translation services or to modify the mechanism to accommodate cultural contexts. This factor may be especially significant for the investigation and remediation of grievances.
  • Complexity of Investigation: Grievance mechanisms can be complex and difficult to navigate. This can discourage companies to invest in internal resources to achieve a satisfactory resolution when an investigation is required.

Grievance mechanisms across complex international supply chains must account for logistical and socio-economic barriers, such as literacy levels and access to technology. This is especially challenging for India due to its diverse population and large unorganised labour sector.

The mechanism may be used by an aggrieved party, such as an employee that has experienced sexual harassment at the workplace, or a local community that has been impacted by the operations of a manufacturing facility. Alternatively, a third-party entity may use the mechanism to report issues they have learned about, such as corruption in an organisation or labour risks violation in the supply chain. Accordingly, many types of stakeholders may have valuable information to report about risks related to a company’s operations. An open channel of communication is, hence, necessary and cost-efficient mean to foster business integrity and supply chain resilience.

Whistleblowers or aggrieved parties must be assured that they can remain anonymous throughout the process and that retaliation will not occur against them. Hence the mechanism must be carefully planned to maintain confidentiality. Only then the early warning system works in both ways: pattern will be identified over time and employees will benefit from an improved working environment.

Investment in skilling and expertise on the topic will help to enhance the planning and coordination required to overcome these hurdles. Providing training to all workers and suppliers is a first step to raise the knowledge and awareness around grievance mechanisms.

Companies are increasingly turning to digital platforms or external agencies to facilitate this process and thus they can also look at being a part of an external grievance mechanism platform instead of creating their own. These platforms are developed by experts on the topic and operated by qualified professionals


The Indo-German Chamber of Commerce in collaboration with Alliance for Integrity is piloting an Inter-Company Grievance Mechanism connecting larger companies and their suppliers to one unified complaints and whistleblowing mechanism.

Our pilot platform, handled by legal, human rights and business integrity experts, will enhance participating companies' risk management efforts. It identifies and assesses potential human rights and environmental issues and recommends remediation action after legally qualifying the captured grievances.

If you are interested in this topic and would like to participate, please register here or contact us at sustainmarkets(at)indo-german.com.