Tuesday, June 18, 2024

Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 7: Sang Soo Lee--"BHR Regulations in South Korea: Achievements and Limitations"

 

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I am posting and providing brief reflections on the essays that make up the excellent new online symposium organized by the marvelous Caroline Omari Lichuma and Lucas Roorda and appearing on the blog site of the Business and Human Rights Law Journal. Entitled Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe. The essays (and the symposium) means to expand the conversation about human rights from out of its hub in the UN apparatus in Geneva and begin exploring in more depth the sometimes extraordinary developments occurring outside the highest reaches of elite curation in the Global North.

The sixth of the essays is Sang Soo Lee--"BHR Regulations in South Korea: Achievements and Limitations."

Sang Soo LEE is Professor in Sogang University School of Law, Seoul, Korea, delivering lectures of ‘BHR & Law’ in addition to legal ethics and sociology of law. He was Director of Sogang Institute for Legal Studies (2017-2019) and President of Korean Society for Sociology of Law (2017-2019). He graduated from Seoul National University and received a PhD degree thereof. He was a visiting professor in National Law School of India University, Bangalore, India (2003-2004), Institut de Recherche Juridique de la Sorbonne, Paris, France (2015-2016), and Indiana University School of Law, Bloomington, Indiana, US (2022-2023). He published more than 20 articles on BHR, which include ones on UNGP, OECD Guidelines for MNE, supply chain issues, corporate HRs legal accountability, case studies etc, as well as several government research projects. He translated Just Business (John Ruggie, 2013) into Korean. In 2022, he published an extensive monograph on BHR, Business and Human Rights: New Approach to Change the World. In 2023, he supervised the translation of Nadia Bernaz’s book, Business and Human Right (2017), into Korean. He closely collaborates with the Korean government and NGOs on BHR issues. He plays various advisory roles in Korea Human Rights Commission, Ministry of Justice and Supreme Court Sentencing Committee, mostly as a BHR specialist.

Sang Soo Lee's contribution follows below and may be accessed as originally posted here. Sang Soo Lee makes the following three major points which are worthy of some reflection:

1. Mandatory human rights due diligence schemes can sometimes serve more a "feel good" purpose than have any real effect as applied. Sang Soo Lee notes that under the S. Korean mandatory scheme "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." ("BHR Regulations in South Korea: Achievements and Limitations"). The issue here, though may be as much a problem of data as it might be one of substantive or operational challenge. Under a prevent-mitigate-remedy principle it may be difficult to adequately develop data and data impact measures for prevention successes. Indeed there is always a danger that impact for prevention success might be too speculative (and itself subject to virtue signalling abuse--eg, something like if Company X had not avoided this potential adverse impact, all employees would have been potentially subject to substantial adverse impacts with long terms effects"). Equally important might be the reported indifference of key stakeholders who "have rarely shown interest in HRDD in public companies. ("BHR Regulations in South Korea: Achievements and Limitations"). These challenges are augmented by what might be critical ellipses in coverage--primarily private companies (though it is not clear whether there are nudging policies in place). But perhaps most telling is what might be the effective irrelevance of HRDD in resolving high profile human rights issues. For Sang Soo Lee, "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." ("BHR Regulations in South Korea: Achievements and Limitations").

2. On the other hand, human rights related national measures appear to have more profound effect, irrespective of their formal connection to the international business and human rights project. This is apparaent, for example, in the context of labor rights. Sang Soo Lee notes that while the UNGP framework was substantially absent from formal aspects of regulation, its regulatory effects were more noticeable in  the Serious Accidents Punishment Act enacted in 2021 which effectively created a limited form of supply chain due diligence respecting some labor rights. But this effectiveness as a functional matter comes at a price: "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." ("BHR Regulations in South Korea: Achievements and Limitations").

3. That contradiction between (1) internal functional approaches to functionally differentiated adverse human rights effects that are furthered without acknowledging its international normative foundations with some effect and (2) externalized and transnational formal approaches to adverse human rights impacts that follow the forms and structures of HRDD with less effect--appear to set the tone for some in the Asian periphery. The willingness of the State to follow the regulatory thrust  of important trading partners, especially the EU, appears to increase the more likely it is that such efforts will permit formal but not functional alignment. The consequence  follows--States in the middle levels of the global supply chains, will tend to develop all of the "right" mandatory regulations but foreign entities subject to their own mandatory measures will tend to drive effectiveness.  These will tend to produce quite different levels of effectiveness depending on the extent to which a specific industrial sector is tied to global supply chains. Otherwise, national interest will drive human rights focus and effectiveness. 

4. And that contradiction describes a particular form of conundrum for States at the peripheries of supply chains. It also suggests what may be a useful compromise for those states seeking to balance strong national interests respecting human rights in contextually relevant ways and the need for these States to ensure that relevant industrial sectors remain closely embedded with global supply chains managed from outside the State.  National human rights regulatory efforts will be undertaken within the structures of national constitutional and policy objectives without reference to international norms (though likely in compliance therewith). Transnational supply chain compliance will be undertaken in stricter formal conformity to international standards and the regulatory practices of important trading partners (in the case of South Korea the EU). Effective compliance will be driven by home states. "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." ("BHR Regulations in South Korea: Achievements and Limitations"). The idea of the UNGP, then, drives State directed compliance in two distinctly different directions. 

Links to all Essays in the BHR Blog Symposium here:

Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 1--"Setting the Stage"

 Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 2: Bonny Ling--"Taiwan: Business and Human Rights on the Margins of the UN System"

Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 3: Keren Adams--"A Race to the Top? Progress and pitfalls of Australia’s Modern Slavery Act"

 Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 4: Jernej Letnar Černič--"Business and Human Rights in the Western Balkans"

Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 5: Barnali Choudhury--"BHR Developments in Canada: Targeting Low Hanging Fruit"

 Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 6: Larry Catá Backer--"The Chinese Path for Business and Human Rights"[白 轲 "工商企业与人权的中国道路"]

Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 7: Sang Soo Lee--"BHR Regulations in South Korea: Achievements and Limitations"

Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 8: Rimdolmsom Jonathan Kabré--"Business And Human Rights In Africa in The Era of The African Continental Free Trade Area (AfCFTA)"

Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 9: Cristiane Lucena Carneiro and Nathalie Albieri Laureano --"Regulatory Initiatives on Business and Human Rights in Brazil – From the Domestic to the International and Back? "

Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 10: Lisa J, Laplante, "The United States 2024 National Action Plan on Responsible Business Conduct"
Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 11: Erika George and Enrique Samuel Martinez, "The Uyghur Forced Labor Prevention Act: An Assessment Of Enforcement Efforts"

Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 12: Pradeep Narayanan, Dheeraj, and Jhumki Dutta, "Business Responsibility Reporting in India – Can it go Beyond the Global North Gaze?"

Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 13: Kazuko Ito,"Challenges for Japan’s Regulatory Approaches for Business and Human Right

 

 

BHR Regulations in South Korea: Achievements and Limitations

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.

Author

  • Sang Soo Lee

    Sang Soo LEE is Professor in Sogang University School of Law, Seoul, Korea, delivering lectures of ‘BHR & Law’ in addition to legal ethics and sociology of law. He was Director of Sogang Institute for Legal Studies (2017-2019) and President of Korean Society for Sociology of Law (2017-2019). He graduated from Seoul National University and received a PhD degree thereof. He was a visiting professor in National Law School of India University, Bangalore, India (2003-2004), Institut de Recherche Juridique de la Sorbonne, Paris, France (2015-2016), and Indiana University School of Law, Bloomington, Indiana, US (2022-2023). He published more than 20 articles on BHR, which include ones on UNGP, OECD Guidelines for MNE, supply chain issues, corporate HRs legal accountability, case studies etc, as well as several government research projects. He translated Just Business (John Ruggie, 2013) into Korean. In 2022, he published an extensive monograph on BHR, Business and Human Rights: New Approach to Change the World. In 2023, he supervised the translation of Nadia Bernaz’s book, Business and Human Right (2017), into Korean. He closely collaborates with the Korean government and NGOs on BHR issues. He plays various advisory roles in Korea Human Rights Commission, Ministry of Justice and Supreme Court Sentencing Committee, mostly as a BHR specialist.

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