Additional Proposal of the ‘Act on Protection of Human Rights and the Environment for Corporate Sustainable Management’

Following the introduction of the ‘Act on the Protection of Human Rights and the Environment for Corporate Sustainable Management’ by Democratic Party lawmaker Jeong Tae-ho last June, a new bill with the same title was recently co-sponsored by 15 lawmakers, including Democratic Party lawmaker Park Ji-won, on November 4.

1.	Overview: Comparison of Two Legislative Proposals

Scope of Application: The thresholds were raised from 500 to 1,000 regular employees, and from KRW 200 billion to KRW 500 billion in revenue in the preceding fiscal year. The provision in the first proposal that imposed due diligence obligations on companies operating in high-risk areas or where there are concerns about involvement in internationally recognized crimes against humanity or child labor, regardless of the number of regular employees or amount of revenue has been removed.
Definition of Stakeholders: The scope of stakeholders has been reduced, as the definition of stakeholders now only includes individuals or groups whose rights or legal status are or may be affected, while organizations advocating for their rights are excluded.
Definition of Supply Chain: The scope of the supply chain has been reduced to direct or indirect economic relationships in which the company can substantially control, dominate, or exercise significant leverage.
Role of ‘the People’: While the scope of stakeholders has been reduced, ‘the people’ (general citizens) have been newly added as parties who can use grievance mechanisms, request disclosure of information related to corporate human rights and environmental due diligence, and provide input that companies must consider during the due diligence process.
Obligations of Management: The standard for management’s joint and several liability with the company for damages has been eased from “intent or gross negligence” to “intent or negligence.”
Enforcement Body: The name of the overseeing committee with authority to issue corrective orders has been changed from the ‘Human Rights and Environmental Corporate Committee’ to the ‘Human Rights and Environment Dispute Resolution Committee,’ which reports to the Prime Minister instead of the Minister of Economy and Finance.
Damages: The presumption of causation for corporate liability has been removed. Furthermore, companies can be exempt from damages if it is proven that there was no intent or negligence.
Penalties: Criminal penalties and joint penal provisions for failure to comply with corrective orders have been removed. The ceiling for administrative fines has been reduced to KRW 10 million.
Enforcement Date: The enforcement date has been delayed to two years after promulgation, instead of one year.

2.	Side-by-Side Comparison of Major Changes in the Proposed Bills

Provision		Side-by-Side Comparison of Major Changes in the Proposed Bills
Provision		Proposed on June 13, 2025	Proposed on November 4, 2025
Purpose		Article 1	Article 1
Purpose		To prevent human rights and environmental damages by companies	To systematically prevent and mitigate human rights and environmental risks that may arise from corporate activities and supply chains
Definitions	Human Rights/ Environmental Risk	Article 2, Subparagraph 4	Article 2, Subparagraph 4
	Human Rights/ Environmental Risk	Adverse impacts resulting from infringements and violations of obligations related to human dignity, value, freedoms, rights, and labor rights recognized in the Constitution, laws, international human rights treaties, customary international law, International Labor Organization conventions, international environmental agreements, etc.	Adverse impacts on human rights (including fundamental rights under the Constitution) and the environment that have occurred or may occur due to corporate activities or activities within the supply chain
	Supply Chain	Article 2, Subparagraph 8	Article 2, Subparagraph 3
	Supply Chain	Relationships formed directly or indirectly in the entire system and process of corporate activities (including relationships formed in the process of selling/providing direct/indirect suppliers and financial products)	Direct or indirect economic relationships in which companies can substantially control, dominate, or exercise significant leverage, as prescribed by Presidential Decree
	Controlled Company	Article 2, Subparagraph 3	-
	Controlled Company	A subsidiary company under the Act on External Audit of Stock Companies and a company controlled by the same person under the Fair Trade Act	No separate definition; *Controlled companies are included in the definition of the supply chain
	Stakeholder	Article 2, Subparagraph 9	Article 2, Subparagraph 5
	Stakeholder	Individuals, groups, or labor unions that are or may be adversely affected, and organizations advocating for their rights	Individuals or groups that are or may be affected by human rights/environmental risks
	Human Rights/ Environmental Due Diligence	Article 2, Subparagraph 5	Article 2, Subparagraph 6
	Human Rights/ Environmental Due Diligence	A process in which companies prevent and mitigate adverse impacts that have occurred or may occur in connection with their own activities or those of its controlled companies or companies in the supply chain, while communicating and cooperating with stakeholders	A systematic procedure for companies to identify, prevent, and mitigate human rights/environmental risks arising from corporate activities or activities within the supply chain, in cooperation with the people and stakeholders
	Management, Etc.	Article 2, Subparagraph 11	Article 2, Subparagraph 7
	Management, Etc.	The representative director (or a person equivalent thereto) and the head of a public institution/local public enterprise	A person with the authority and responsibility to represent/oversee the business and the head of a public institution/local public enterprise
Scope of Application		Article 5	Article 6
Scope of Application		Companies other than small and medium enterprises under the Small and Medium Enterprise Act, with 500 or more regular employees or revenue of KRW 200 billion or more in the preceding fiscal year	Companies other than small and medium enterprises under the Small and Medium Enterprise Act, with 1,000 or more regular employees or revenue of KRW 500 billion or more in the preceding fiscal year
Establishment of Due Diligence Implementation System and Policies		Article 6	Article 7
		Establishment of a due diligence implementation plan and designation of a responsible person.	Establishment of a human rights/environmental due diligence policy and regular inspection/improvement
Responsibilities and Roles of Management, etc.		Article 8	Article 8
Responsibilities and Roles of Management, etc.		Supervisory responsibility for the implementation, reporting, and disclosure of human rights/environmental due diligence. Liability for damages (joint and several liability with the company) if supervisory duties are neglected due to intent or gross negligence	Operation/supervision of the overall human rights/environmental due diligence Liability for damages (joint and several liability with the company) if supervisory duties are neglected due to intent or negligence
Establishment and Operation of Committee within the Board of Directors		Article 6, 7	Article 9
		Establishment of a committee within the board of directors to deliberate and resolve on matters concerning the implementation plan and results of due diligence, measures against adverse impacts, etc.	Establishment and operation of a dedicated committee for human rights/environmental due diligence within the board of directors (may be omitted for companies with total assets of less than KRW 2 trillion)
Establishment and Operation of Grievance Mechanism		Article 9	Article 10
Establishment and Operation of Grievance Mechanism		Reporting by stakeholders	Reporting/consultation by the people or stakeholders
Risk Identification and Assessment		Article 10, Article 9, Subparagraph 3	Article 11
Risk Identification and Assessment		Deemed to have identified an adverse impact if there is a reasonable ground for a grievance report In cases of concern about direct or indirect involvement in internationally recognized crimes against humanity and child labor, or corporate activities in conflict/high-risk areas, the adverse impact must be identified without delay (Applies to all companies, including small and medium enterprises)*	If the possibility of risk is confirmed in a matter reported by the people or stakeholders, the relevant risk shall be promptly investigated and assessed *No provision for high-risk identification obligation applicable to all companies
Establishment, Implementation, Evaluation, and Feedback of Measures		Article 11	Article 12
		If the company identifies adverse impacts from its own activities or those of its controlled companies, it shall establish and implement measures; If the company identifies adverse impacts from the activities of companies in its supply chain, it shall establish and implement measures	If risk is identified, the company shall prioritize, establish, and implement measures considering the severity and likelihood of the risk, and take proportional/reasonable measures within the scope of its actual influence Regular evaluation of the effectiveness of measures and improvement of measures based on evaluation results
Termination of Corporate Activities and Business Relationships		Article 12	-
		If adverse impacts continue despite the establishment and implementation of measures, the company must cease corporate activities, and may temporarily suspend business relationships with companies in the supply chain	*No provision related to the termination of corporate activities and business relationships
Preparation of Due Diligence Report		Article 14	Article 14
Preparation of Due Diligence Report		Preparation of a report including the evaluation of measures and supplementary measures	Preparation of a due diligence report including the establishment, implementation, evaluation, and improvement of measures
Disclosure Obligation		Article 14	Article 15
Disclosure Obligation		Disclosure of due diligence report	Disclosure of human rights/environmental due diligence policy, list of management, etc., due diligence report, improvement measures, dispute resolution results, etc. (However, non-disclosure is possible in cases prescribed by Presidential Decree, such as due to trade secrets/personal information)
Information Disclosure and Right to Claim		Article 16	Article 16
Information Disclosure and Right to Claim		Stakeholders may request disclosure of information related to due diligence	The people and stakeholders may request disclosure of information related to due diligence
Stakeholder Engagement		Article 15	Article 17
Stakeholder Engagement		Ongoing communication/consultation with stakeholders throughout the entire due diligence process, using language they can easily understand	Proactive communication with the people and stakeholders throughout the entire due diligence process, with consideration of their opinions
Dispute Resolution Committee		Article 18~34	Article 19~30
Dispute Resolution Committee		Under the Minister of Economy and Finance Investigation and deliberation of objections to due diligence and refusal to disclose related information, and issuance of corrective orders Designation of conflict/high-risk areas	Under the Prime Minister Investigation related to due diligence, mediation of disputes, recommendations, corrective orders
Liability for Damages		Article 39	Article 31
Liability for Damages		Presumption of Causation: a causal relationship between the company’s violation of the law and the occurrence of damage is presumed Exemption: If the company proves that there was no violation of the law, or that the damage could not have been prevented even if the law was complied with	Liability arises if the company causes damage to another person by violating the provisions of this Act (no presumption of causation) Exemption: If the company proves that there was no intent or negligence
Penalties		Article 41~42	Article 34
Penalties		Failure to comply with a corrective order within the deadline: imprisonment for not more than 5 years or a fine not exceeding KRW 50 million (Joint penal provisions exist)	A member of the Dispute Resolution Committee who leaks confidential information obtained while performing duties or uses it for purposes other than for his/her duties: imprisonment for not more than 1 year or a fine not exceeding KRW 10 million
Administrative Fines		Article 43	Article 35
Administrative Fines		Administrative fine not exceeding KRW 10 million - Management who fails to report the due diligence implementation plan to the board of directors - A company that fails to identify adverse impacts or establish measures - A company that fails to disclose, fails to submit, or includes false information in the due diligence report - A company that fails to consult with stakeholders Failure to identify adverse impacts without delay in cases of concern about direct or indirect involvement in internationally recognized crimes against humanity, child labor, or corporate activities in conflict/high-risk areas: administrative fine not exceeding KRW 50 million	Administrative fine not exceeding KRW 10 million - Management who fails to report the due diligence report to the board of directors - A company that fails to identify/assess adverse impacts or establish measures - A company that includes false information in the due diligence report - A company that refuses to disclose requested information without justifiable grounds - A company that fails to comply with a corrective order

[Korean Version]

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