A Historic Reintroduction: Asia's First Mandatory Due Diligence Law
Representative Jung Tae-ho reintroduced the Corporate Human Rights and Environmental Due Diligence Act (CHREDDA) to South Korea's National Assembly on June 13, 2025. The bill was originally introduced in September 2023 during the previous Assembly term but expired when that term ended without a vote. Now revised and reintroduced after review by the Ministry of Government Legislation, it is being championed alongside major civil society and labor organizations including the Korean Confederation of Trade Unions and the Federation of Korean Trade Unions. If enacted, the law would be Asia's first mandatory human rights due diligence requirement — a milestone that would position South Korea alongside European pioneers like France and Germany, which have already implemented similar frameworks. The reintroduction is especially significant as it represents the first major legislative initiative on human rights and the environment under South Korea's newly inaugurated government, which has emphasized democracy and human rights restoration following recent political upheaval. South Korea's new president, Lee Jae-myung, a former labor and human rights lawyer, has raised expectations that responsible business conduct will be a national priority. The bill covers the core elements aligned with the United Nations Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises, including mandatory impact assessments, grievance mechanisms, stakeholder engagement, transparent disclosure, and board-level governance. Companies are prohibited from knowingly causing human rights abuses or environmental damage, whether domestically or abroad.
The bill applies to large Korean companies and foreign multinationals operating in South Korea, with specific size thresholds triggering mandatory compliance obligations.
The reintroduced bill retains the same eligibility thresholds from the 2023 draft. A company is subject to the Act if it is a Korean firm with its head office in South Korea, or a foreign company that has established a business place in South Korea under Article 614 of the Commercial Act. The law applies to companies with more than 500 employees or annual revenue exceeding KRW 200 billion, approximately USD 144–146 million. Subject companies must establish a board-level committee to oversee human rights and environmental deliberations and approve annual due diligence plans. They must also designate a responsible manager for compliance. The CEO or managing director is required to prepare an annual due diligence plan, which must be approved by the board of directors. These governance requirements embed human rights and environmental risk management into the highest levels of corporate strategy. On supply chain obligations, the bill defines the supply chain broadly — from raw material procurement to end-user consumption — covering both direct and indirect business relationships. If a negative impact is identified at an indirect supplier, the company must notify all suppliers in the chain up to and including that supplier. Companies must use their leverage to help suppliers address issues but cannot unfairly pass due diligence costs down the chain. Temporary suspension or termination of supplier relationships is permitted if serious negative impacts persist, though termination is not allowed if it would cause more serious harm than the original issue. Companies that violate the Act face civil liability for damages, including where harm is caused by third parties acting on their behalf. The burden of proof shifts to the company to demonstrate either that it did not violate the Act or that compliance would not have prevented the damage. Non-compliance can also trigger administrative corrective orders, fines, and in serious cases, criminal penalties including imprisonment of up to five years.
South Korea's move aligns it with a wave of mandatory due diligence legislation sweeping Europe, and signals a broader shift of these compliance expectations into major Asian trading economies.
Starting with France in 2017, European countries have progressively adopted mandatory human rights due diligence laws. Germany's Supply Chain Due Diligence Act (LkSG) followed, and the EU's Corporate Sustainability Due Diligence Directive (CSDDD) was subsequently adopted with a target effective date of 2028, though it is currently being simplified through the Omnibus process. South Korea's CHREDDA is directly modeled on the frameworks established by the UNGPs and OECD Guidelines, making it conceptually consistent with these European laws. In Asia, Japan has voluntary corporate guidelines aligned with the UNGPs but no mandatory law. Thailand is drafting its own mandatory human rights due diligence legislation, though it was not expected until late 2025 or later. Indonesia is pursuing a business and human rights roadmap tied to its OECD accession. South Korea's bill, if passed, would set a regional precedent and likely pressure suppliers in countries like Vietnam and India to raise their own human rights and environmental standards in order to remain eligible partners for Korean companies subject to the law. As a major export-driven economy, South Korea also faces mounting pressure from forced labor import bans in both the United States and the European Union. These laws restrict goods linked to forced labor, making it strategically critical for South Korean companies to ensure their supply chains meet international standards and can withstand scrutiny in key export markets.
For multinationals operating in or sourcing from South Korea, the time to prepare is before the law passes, not after.
South Korea's CHREDDA elevates human rights and environmental risk from a voluntary ESG consideration to a core legal and financial obligation. Businesses operating in Korea — or supplying Korean companies — will need to build or strengthen systems for supply chain mapping, impact assessment, grievance handling, supplier engagement, and board-level reporting. Boards, operations teams, HR, and legal departments will all need to align on governance, transparency, and meaningful stakeholder engagement. The bill is still in early stages and will undergo committee review and deliberation. Like the original 2023 bill, it may not progress or may be significantly modified as it moves through the National Assembly. However, given the current political environment and growing global momentum, companies should not wait. Experts recommend that businesses assess whether they fall within the scope of the law based on employee count and revenue thresholds, audit their existing human rights and environmental policies, map their supply chains to identify high-risk relationships, and develop an internal governance strategy that can satisfy board approval requirements. For global companies already working toward compliance with the EU's CSDDD or Germany's LkSG, much of the underlying framework required by CHREDDA will be familiar. The core logic is the same: define your scope, collect evidence across your supply chain, assess risk, remediate issues, and document everything in a way that is defensible to regulators. South Korea cannot afford to miss this opportunity to lead in Asia on responsible business conduct, and companies operating there should treat preparation as a competitive advantage, not just a compliance burden.
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