The business and human rights (BHR) movement is essentially a movement to regulate transnational corporations (TNCs) in relation to human rights abuses in developing countries that are linked to the business activities of TNCs based in developed countries. Understandably, developed regions like Europe are leading the BHR movement. However, for the movement to be effective, it must be global. In this context, the developments in the BHR movements outside of Europe are as crucial as those within Europe. Indeed, the success of the BHR movement in Europe can and should be gauged by the changes it prompts beyond European borders. Below, I will present three regulatory episodes that feature the current state of BHR in Korea and draw implications for the BHR movement in Europe.

Human Rights Due Diligence (HRDD) by Public Enterprises

Many might be surprised to learn that all public enterprises in Korea conduct HRDD, in line with the UNGPs. Indeed, there are at least 2,000 public enterprises in Korea, each practicing HRDD. They publicly post their human rights commitments and the systems and procedures (including grievance mechanisms) they have in place to fulfil these commitments. These enterprises are required to regularly conduct human rights impact assessments, develop and implement action plans, and submit annual HRDD reports to the government. These achievements are unprecedented and unique globally.

The HRDD policy for public enterprises began in 2018, when the Human Rights Commission of Korea recommended that all public enterprises conduct HRDD and that their regulatory bodies consider the HRDD activities when evaluating overall management performance(the Commission’s recommendation in Korean). These recommendations were later accepted, making HRDD effectively mandatory for all public enterprises in Korea. The recommendation aimed not only to ensure that public enterprises fulfil their own human rights responsibilities but also to foster corporate culture of respect for human rights as mandated in the UNGPs, thereby laying the groundwork for expanding mandatory HRDD policies to private companies as a next step.

However, the actual impact of the HRDD policy for public enterprises has been underwhelming. There are few success stories showing that HRDD in public enterprises has prevented or remedied human rights abuses in supply chains domestically, much less internationally. Stakeholders, including labor unions, have rarely shown interest in HRDD in public companies. The impact of the HRDD on private companies has also been negligible. Even when human rights issues have arisen in a public enterprise (e.g., when dams collapsed at Laos in 2018, Korea Western Power was one of the major investors), the existing HRDD procedure played little role in resolving them. In summary, HRDD in public enterprises appears to be largely a formality, not distinct from unimpressive corporate social responsibility (CSR) activities.

This demonstrates that simply mandating HRDD is not enough. Based on the Korean experience, it seems necessary to firmly strengthen accountability mechanisms (e.g., transparency, sanctions etc) and to overcome the indifference of major stakeholders like labor unions and human rights victims. (author’s recent article on related issue)

Enactment of the “Serious Accidents Punishment Act”

A critical issue concerning human rights violations by companies in Korea is infamous industrial accidents. In response, the Serious Accidents Punishment Act was enacted in 2021. According to this law, when a company outsources, the CEO and managing director must take preventive measures to ensure that subcontracted workers are not injured, and if a serious accident occurs, they may face imprisonment and fines. This law is notable because it imposes a duty on prime contractors to prevent workplace injuries in their subcontractors, namely in their supply chains.

The call to regulate prime contractors to protect subcontracted workers from industrial accidents is traceable back to year 2003, and it was again awakened by the death of a subcontracted worker in 2018. This incident triggered the legislative process for the law, which was supported by over 100,000 people who signed a legislative petition, and the victim’s family, unions, and activists who staged a hunger strike in freezing weather. The law’s passage was also aided by the then pro-union government.

In the legislative discussion, however, the UNGPs or HRDD were not mentioned, and workplace accidents in overseas supply chains were never a focus of the law. In this sense, the law’s enactment represents not a victory for the global BHR movement, but rather a disregard for it. The activists and labor unions pushing for the law favored government-imposed criminal penalties over company-led HRDD. Frankly, the mainstream labor movement in Korea appears to have no confidence in HRDD, at least so far. 

Proposition of a South Korean Due Diligence Act

There is significant interest in due diligence law in South Korea. The French Vigilance Act, the German Supply Chain Due Diligence Act, the Norwegian Transparency Act, and the EU Due Diligence Directive (draft) were promptly translated and discussed in South Korea. Consequently, on September 1, 2023, 15 lawmakers proposed a due diligence act, titled the Act on Human Rights and Environmental Protection for Sustainable Business (Korean version of the Bill). The bill requires companies to establish and operate a human rights and environmental due diligence system, and would impose administrative, criminal, and civil sanctions on companies that violate the law.

The bill was drafted in cooperation with leading NGOs on BHR in Korea, incorporating appealing provisions from several European due diligence laws. However, it was not the product of a social consensus and appeared rather radical. When the bill was circulated, the Ministry of Strategy and Finance, the Ministry of Trade, Industry and Energy, the Ministry of SMEs and Startups, the Federation of Korean Industries, the Korea Chamber of Commerce and Industry, and the Korea Federation of SMEs and Startups all expressed their opposition, arguing that the law would place an undue burden on businesses, with some suggesting that the government should help companies with corporate HRDD rather than drive it forcefully.

With the closure of the previous National Assembly sessions, the bill was automatically scrapped. It’s unclear if the Due Diligence Bill will be revisited in the newly-formed National Assembly. Most activists believe that the passage of a due diligence law in Korea will depend on the passage of the EU’s Due Diligence Directive. Even then, it is unlikely that the Assembly will pass a bill similar to the previous one.

It is true that there has been significant progress in South Korea since the rise of the global BHR movement, but this does not mean that Korean companies are fulfilling their human rights responsibilities in a meaningful way or that the future is bright in terms of BHR. What is needed now is to maintain the progress made so far and overcome the limitations, by mandating HRDD to private companies and by encouraging stakeholders, including labor unions, to actively participate in the HRDD process of each company.

The crucial role of Europe in legislating and implementing a due diligence law that will have an impact in South Korea cannot be overstated. Most activists who pushed for the Due Diligence Bill admit that the enactment of due diligence law in South Korea will definitely be influenced by the adoption of the EU Due Diligence Directive, and that the contents of the Directive will also significantly shape those of Korean version. If stakeholders in Europe demonstrate good practices in taking advantage of the HRDD system, then their South Korean counterparts may become more receptive to HRDD. 

In fact, the European influence on the Korean BHR movement has always been evident. For example, the exemplary practices of Norwegian pension funds have been the most powerful benchmark in criticizing or persuading the Korean National Pension System. The work of European NCPs has inspired the BHR movement and has become a reference point in the NCP reform discussion in Korea. This sort of impact will not lessen any time soon. When it comes to the future of the BHR in Korea, what happens in Europe will undoubtedly matter.