South Korea Re-enters the Race for Asia’s First Mandatory Human Rights Due Diligence Law

On June 13, Representative Jung Tae-ho re-introduced the “Legislative Bill for the Act on the Protection of Human Rights and the Environment for Sustainable Business Management,” also known as the Corporate Human Rights and Environmental Due Diligence Act.

If passed, this Act would be Asia’s first mandatory human rights due diligence law. It would require subject companies – including US and other multinationals doing business in South Korea – to proactively identify and address potential negative human rights and environmental impacts in their business and supply chains. The bill is discussed in detail in this post, including how it differs from an earlier version of the bill.

The bill was originally introduced to the Korean National Assembly in September 2023 during its last term (read our post on the original bill here). That bill expired at the term’s end. The 2025 version of the bill has been revised and was reintroduced after undergoing review by the Ministry of Government Legislation. 

Thailand also has expressed its intent to introduce a Mandatory Human Rights Due Diligence (MHRDD) law, but draft legislation is not expected until the end of 2025 or later. Starting with France in 2017, several European countries have adopted MHRDD laws. Most recently, the EU-wide Corporate Sustainability Due Diligence Directive (CSDDD) was adopted. The CSDDD takes effect in 2028, although it is in the process of being “simplified” as part of the Omnibus process, so the current requirements will change (see this Ropes & Gray post, among others).

Subject companies

The re-introduced bill maintains the thresholds for subject companies that were in the original bill. A company would be subject to the Act if it:

• Is a Korean company with its head office in South Korea; or
• Is a foreign company that has established a business place in South Korea pursuant to Article 614 of the Commercial Act. 

and has:

• 500 or more full-time employees (including temporary agency workers); or
• Revenue of at least KRW 200 billion in the previous financial year (approximately US$146 million as of the date of this post).

As proposed in the bill, the calculation method for determining the number of employees and revenue would be determined by presidential decree.

General prohibition

All subject companies would be prohibited from engaging in domestic or foreign business activities that violate the human rights of another person or cause environmental harm. The re-introduced bill also would require subject companies to endeavor to take measures to remedy negative human rights and environmental impacts due to their business activities.

Management systems and policies 

Board committee: The board of directors of a subject company would have to establish a committee within the board to oversee human rights- and environmental-related deliberations. The committee also would be responsible for approving plans for and the results of human rights and environmental due diligence. 

Responsible manager: Subject companies would need to designate a person as the responsible manager for compliance with the Act.  

Annual plan: The CEO or managing director of the subject company would need to establish an annual plan for the implementation of human rights and environmental due diligence. The plan would need to address matters concerning the operation of due diligence, and would also need to be approved by the board of directors, as noted above. Under the proposed Act, additional requirements for the plan could be prescribed by presidential decree.

Grievance mechanism: Subject companies would need to have a grievance reporting mechanism for accepting reports on negative human rights and environmental impacts covered by the Act. The grievance mechanism would need to be accessible to all stakeholders. 

The grievance mechanism would be required to allow stakeholders to submit grievances anonymously. The subject company also would have the responsibility to keep the identity of the reporting person confidential, unless disclosure is essential for the prevention, elimination or mitigation of the negative impact and the reporting stakeholder gives their consent. Companies would be prohibited from retaliating against a reporting person for a complaint made in good faith.

If a company receives a substantiated report, it would need to take steps to mitigate the negative impact, as described below. As proposed, additional grievance mechanism requirements could be prescribed by presidential decree.

Identifying and mitigating negative impacts

Identification: A subject company would need to at least annually assess the negative impacts on human rights and the environment arising from its business activities and the activities of its supply chain, taking into account the business sector and regions in which the activities take place. The term “negative impacts” replaces “human rights and environmental risks” in the re-introduced bill, but the meaning behind the term remains largely unchanged.

Covered negative impacts would include actual or potential adverse impacts on the following rights:

• Human dignity, worth, liberty and rights as guaranteed by the Constitution and laws of South Korea, or as recognized by international human rights treaties or customary law.
• Labor rights guaranteed by the Constitution and laws of South Korea, or by International Labour Organization conventions ratified by South Korea.
• Environmental protection and health and safety rights guaranteed by the Constitution and laws of South Korea, or by international environmental conventions ratified by South Korea.

The re-introduced bill is narrower than the original bill in that it removes the general catch-all of other instances where adverse impacts on human rights or the environment are serious or likely to occur, such as a climate crisis.

In addition to the annual assessment, a company would be required to promptly assess negative impacts if:

• There is a concern that the business activities are directly or indirectly involved in acts against humanity (e.g., war crimes and genocide).
• There is a concern that the business activities directly or indirectly involve child labor.
• The business activities are in a conflict or high-risk area.

Mitigation: Subject companies would be required to establish and implement measures to address and/or mitigate identified negative impacts. To the extent the subject company cannot address all negative impacts at once, it would be permitted to prioritize the identified impacts based on their severity and probability. 

The duty to mitigate the negative impact would depend on where in the value chain it occurred:

• If the negative impact occurs in the company’s own or a controlled company’s business activities, it would need to (1) suspend or modify its applicable business activities to prevent or eliminate any adverse effects; (2) prevent the recurrence of the adverse effect; and (3) implement measures to remedy any damage. If the negative impact continues despite the establishment and implementation of preventative measures, the company would be required to cease the business activities producing the negative impact.
• If the negative impact occurs at a supplier, the company would need to:
  • Notify the supplier of the negative impact.

If the negative impact is at a direct supplier, only the direct supplier would need to be notified. If the negative impact is at an indirect supplier, the company would need to notify all suppliers in the chain up to and including the indirect supplier. 

• Provide appropriate support for the direct supplier to prevent and remedy any negative impacts.

This could include financial, educational or technical support. The subject company would need to use its leverage to encourage the supplier to implement measures to address and mitigate the negative impact. However, the re-introduced bill specifically notes that the company could not unfairly pass on expenses related to due diligence to direct or indirect suppliers. 

A subject company could temporarily suspend its relationship with the supplier if the negative impact continues despite the establishment and implementation of preventive measures, although it would not be required to suspend the relationship. If the negative impact continues and is serious, the company could terminate its relationship with the supplier, except that termination would not be permitted if the termination would result in more serious damage than the original negative impact.

Periodic evaluation of mitigation measures: Subject companies would be required to periodically evaluate the measures implemented to address and/or mitigate negative impacts to ensure their effectiveness.

Reporting requirements

Subject companies would need to publish a report describing identified negative impacts, the process used to identify the impacts, the resulting mitigation measures and the company’s evaluation of those measures.

The report also would need to be submitted to the government Human Rights and Environmental Corporate Committee (the Committee is further discussed below) if: 

• An interested party raises an appeal to the Committee regarding the adequacy of the company’s human rights and environmental due diligence or the factual findings in its report; 
• The company or one of its controlled entities is conducting business activities in a conflict or high-risk area; or
• In other equivalent circumstances, where the Committee decides to directly investigate based on the gravity of the matter.

Third-party engagement and right to information 

Subject companies would be required to engage with and take into account the views of interested parties throughout the due diligence process. The re-introduced bill would require companies to cooperate with stakeholders in a timely manner to ensure the effectiveness of the company’s due diligence.

As proposed, the Act would give interested parties the right to request information on a company’s due diligence under the Act. A subject company generally would have an obligation to provide requested information. It could decline to disclose information in limited circumstances when the requested information is considered a trade secret or if it includes personal information. However, a company has an obligation to disclose even a trade secret or personal information if disclosure of the requested information is necessary to protect life, health or property. If a company declines to provide information requested by an interested party, the interested party would be able to make an appeal to the Committee. 

The re-introduced bill expands on the prior bill, indicating that when a company receives a request for information, it would need to disclose the applicable information within ten days from the date of receipt of the request (a set number of days was not set in the original bill). However, depending on the amount and complexity of the information requested and subject to presidential decree, a company could receive additional time.

Further standards and guidance

Under the Act, the South Korean government would be required to establish standards for the disclosure of required information. It also would be required to prepare and disseminate due diligence guidance. 

Enforcement 

The Act would establish a Human Rights and Environmental Corporate Committee, under the control of the Minister of Strategy and Finance, to monitor companies’ compliance with the Act. The Committee would designate conflict and high-risk areas, support companies’ human rights and environmental due diligence and investigate complaints under the Act.

If the Committee finds that a company violated its obligations under the Act, the Committee also would be authorized to issue a corrective order to the company. The Committee also could seek to prohibit the company from participating in a bid for public procurement via a corrective order. 

In addition, the Act would impose both criminal and civil penalties for violations. For example, the Minister of Strategy and Finance could impose administrative fines of up to KRW 10 million (approximately US$7,300 as of the date of this post) for the following:

• Failing to report an annual plan to the Board of Directors;
• Failing to identify a negative impact;
• Failing to implement a mitigation measure against a negative impact;
• Failing to disclose the company’s report to the Human Rights and Environmental Corporate Committee;  
• Making a false claim in the company’s report; or
• Failing to listen to interested persons’ opinions. 

In the case of a severe violation of the Act (i.e., a failure to fulfill a corrective order), a criminal penalty – including imprisonment up to five years or a fine of up to KRW 50 million – could be imposed.

Subject companies also would be required to compensate interested parties for damages caused by their violation of the Act, including by third parties acting on the company’s behalf. If the complainant is able to prove the possibility that their damage is related to the business activities of the company or the activities of a company in the supply chain, the burden of proof would be on the company to prove that it either (1) did not violate the Act or (2) compliance with the Act would not have prevented the damage.

Next steps

The bill is in its very initial stages. As a next step, it will need to undergo committee review and deliberation and, like the original bill, the current bill may not progress. Furthermore, if the current bill does progress, it is likely to undergo significant modification as it moves through the legislative process. Many provisions of the bill are similar to contentious aspects of the EU CSDDD that various constituencies are seeking to roll back through the Omnibus process. A difference from 2023 that may impact the bill’s trajectory is that, in addition to having been the largest party in the National Assembly since 2016, Representative Jung’s Democratic Party of Korea also is now the ruling party following the 2025 presidential election.

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