The Republic of Korea has reintroduced a landmark bill requiring large enterprises to conduct mandatory human rights and environmental due diligence. Designed to enhance corporate responsibility and bring national regulations in line with international norms, the proposed Act on the Protection of Human Rights and the Environment for Sustainable Business Management compels major corporations to identify, prevent, and mitigate risks related to human rights violations and environmental harm across all aspects of their operations and supply chains.

I. Legal basis

• Act on the Protection of Human Rights and the Environment for Sustainable Business Management
• UN Guiding Principles on Business and Human Rights (UNGPs)
• OECD Guidelines for Multinational Enterprises

II. Contents of the Act on the Protection of Human Rights and the Environment for Sustainable Business Management

The Act on the Protection of Human Rights and the Environment for Sustainable Business Management requires large enterprises in Korea to conduct mandatory Human Rights and Environmental Due Diligence (mHREDD).

Specifically, enterprises are required to:

• Assess and identify potential risks that may negatively impact human rights and the environment throughout the entire value chain (from internal operations to suppliers).
• Prevent, mitigate, and remedy adverse impacts related to human rights violations or environmental pollution.
• Publicly report the results of due diligence and the corrective measures on a regular basis.
• Establish grievance and remediation mechanisms for parties affected by the company’s operations.

The scope of application includes:

• Enterprises with more than 500 employees or annual revenue exceeding KRW 200 billion (approximately USD 150 million).
• Multinational corporations engaged in business activities or supply chains connected to Korea.

Violations of the regulations may lead to financial sanctions and criminal liability for the management or legal entity.

III. Objectives of the Environmental Bill

The bill aims to enhance corporate social responsibility and transparency in business operations, with the following specific objectives:

1. To prevent forced labor and human rights violations within global supply chains.
2. To promote sustainable development by ensuring that economic growth does not come at the expense of environmental degradation.
3. To align with international standards, particularly the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises, thereby enhancing the global competitiveness of Korean companies.
4. To strengthen consumer and international partner confidence, especially in the United States and the European Union, where regulations on forced labor and product origin are becoming increasingly stringent.
5. To promote transparent and responsible corporate governance, thereby minimizing legal and reputational risks for enterprises.

IV. What Korea’s due diligence bill means for companies and supply chains

The reintroduction of Korea’s due diligence bill carries significant implications for both domestic and foreign companies operating within the country or connected through global supply chains.

Under this framework:

• Companies will be required to integrate human rights and environmental risk assessments into all stages of production, sourcing, and distribution.
  
• Foreign corporations doing business in Korea must ensure their Korean subsidiaries and suppliers comply with these standards to avoid penalties or trade restrictions.
  
• Firms that fail to conduct proper due diligence may face financial sanctions, criminal charges, and potential exclusion from government contracts.
  
• The legislation also provides incentives for companies demonstrating proactive compliance, including preferential treatment in public procurement and sustainability certification programs.
  

In the long term, this bill is expected to elevate Korea’s position as a regional leader in ethical business governance, fostering a more transparent, sustainable, and socially responsible corporate ecosystem.

V. Conclusion

The Act on the Protection of Human Rights and the Environment for Sustainable Business Management marks a significant milestone in South Korea’s efforts to promote responsible corporate governance and sustainable development. For the first time, South Korea has introduced a mandatory requirement for large enterprises to conduct human rights and environmental due diligence, demonstrating a strong commitment to aligning with international standards and preventing ethical risks within global supply chains.

The bill not only helps enhance transparency, fairness, and sustainability in business operations, but also contributes to elevating South Korea’s international standing as a pioneering country in the Asia–Pacific region in ethical business practices and respect for human rights.

In the long term, the bill is expected to lay the foundation for a sustainable corporate development model that balances economic, social, and environmental interests. It will also serve as a driving force for other countries in the region to adopt similar governance standards—paving the way toward a greener, more transparent, and more humane society.

VI. About NYLA – Korean Legal Office

■ NYLA – Your Trusted Legal Partner in Korea

At NYLA, we understand that the success of foreign businesses in Korea requires not only a solid business strategy but also reliable legal support. With a team of experienced Korean attorneys and legal professionals, NYLA provides tailored legal services for companies, investors, and individuals operating or planning to establish a presence in Korea.

We support our clients throughout the entire business journey with comprehensive services, including:

• Legal consultation on company establishment, taxation, and immigration;
• Advice on commercial real estate, franchising, and product distribution;
• Support in human resources, marketing, and business strategy.

In addition to legal advisory, NYLA also represents clients in civil litigation cases related to business, labor, marriage, family, and inheritance to ensure their rights and interests are fully protected.

■ Contact NYLA

If you’re a foreign business or individual looking for a reliable legal partner in Korea, NYLA is here to help. We are committed to delivering effective, practical, and personalized legal solutions for every client.

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Don’t let legal matters hold you back. Let NYLA be your trusted guide in the Korean market.

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