JIPYONG LLC

On November 1, 2023, Jipyong LLC and BSR successfully co-hosted a seminar titled “Emerging Trends in Corporate Sustainability: Asia's Response to Human Rights Due Diligence.”

BSR is a sustainable business network and consultancy focused on creating a world in which all people can thrive on a healthy planet. With offices in Asia, Europe, and North America, BSR provides its 300+ member companies with insight, advice, and collaborative initiatives to help them see a changing world more clearly, create long-term value, and scale impact. Its members include Meta, Google, Microsoft, Nike, Inc., and BNP Paribas.


Keynote Presentation

This seminar was facilitated by Hyun Chan JUNG, Advisor at Jipyong LLC, and started with an opening remark of Sung Taek LIM, Managing Partner at Jipyong LLC and Aron CRAMER, President & CEO at BSR. Pichamon YEOPHANTONG, Member of the UN Working Group on Business and Human Rights, gave a keynote presentation regarding ”UN Working Group on Business and Human Rights Priorities and Expectations to Companies in Asia” and Hiroki MATSUI, Director, Ministry of Foreign Affairs of Japan, presented “Japanese Government Initiatives on UN Guiding Principles on Business and Human Rights.”

Pichamon YEOPHANTONG, Member of the UN Working Group on Business and Human Rights, elaborated on the recent trend of legislation to mandate human rights due diligence, especially in Germany. In this context, it was emphasized that the bottom line is to substantially implement and complement the goals and plans for promoting human rights. Accordingly, Pinchamon YEOPHANTONG emphasized the necessity of establishing mandatory and voluntary human rights policies that are firmly rooted in the UN Guiding Principles on Business and Human Rights (UNGPs) beyond merely ticking off boxes on issues with respect to human rights. In the pursuit of the goals and plans, Pichamon YEOPHANTONG stressed that access to remedy, one of the three core pillars of the UNGPs framework, must be bolstered, and methodological discussions must be reinvigorated, predicting that companies can play a significant role in this transformative process.
 

Hiroki MATSUI, Director at the Ministry of Foreign Affairs of Japan introduced the National Action Plan (NAP) at the Japanese government level to promote human rights and emphasized that soliciting inputs from various stakeholders during the plan’s development is a way to enhance its effectiveness. Hiroki MATSUI introduced that the goal of NAP is to improve international competitiveness and sustainability and that it focuses on the effective operation of the human rights due diligence system. Additionally, Hiroki MATSUI stated that Japan is currently in the process of promoting mandatory human rights due diligence for all businesses by establishing the guidelines for respecting human rights in responsible supply chains based on the UNGPs. Although a significant number of Japanese companies have demonstrated success in establishing human rights policies, a survey of companies revealed that there are discernible differences between large corporations and small and medium-sized companies, indicating a lack of understanding regarding the human rights due diligence process. Accordingly, the keynote presentation concluded by sharing the analysis on the importance of specifying the concept of human rights due diligence and promoting it at the government and corporate levels.

■ Session 1: Evolving Landscape of Human Rights Due Diligence

In the first session, Rosa KUSBIANTORO, Director at BSR, delivered a presentation on “Mandatory Human Rights and Environmental Due Diligence (MHREDD) Developments — Global Legislative Landscape and Trends,” focusing on “Emerging trends in Corporate Sustainability and Implications for Asian Companies” and Chang Wook MIN, Partner at Jipyong LLC, presented “The Impact of the EU’s Due Diligence Legislations on Business in Asia — Focusing on Group-Level Due Diligence and Responsible Sourcing.”

Rosa KUSBIANTRO, Director at BSR, explained that since the adoption of the UNGPs, legislation to harden human rights due diligence has increased, and while voluntary participation by companies was the main trend before, the perspective is now changing to translate the human rights due diligence requirements into hard law. Additionally, Rosa KUSBIANTRO said that the latest trends in human rights-related legislation could be categorized as mandatory disclosure of human rights performance by companies, mandatory due diligence to prevent actual and potential human rights risks, sanctions and penalties against forced labor, and the establishment of protective measures in the public procurement process (Canada’s Procurement Code of Conduct). In that regard, the European Union is responding in advance when it comes to establishing legislation. Starting with Europe, it is predicted that Canada, the United States, the United Kingdom, Latin America, and Asia will follow suit.

Chang Wook MIN, Partner at Jipyong LLC, presented that “an ultimate parent company of a group” has been added to the companies subject to the amendments to the Corporate Sustainability Due Diligence Directive (CSDDD) adopted by the EU Parliament in June this year. For non-European companies, the group’s global net turnover exceeds 150M euros, of which 40M euros are generated within the EU, and the group’s ultimate parent company is included if the group employs more than 500 people on a consolidated basis. Chang Wook MIN said, “If the ultimate parent company of the group falls under the scope of the CSDDD, the ultimate parent company will be obligated to conduct due diligence on all subsidiaries within the group, so the scope of group-level due diligence may be partially expanded or overlapped.” “In Article 4a of the EU Parliament amendment, which mandates parent companies to support their subsidiaries’ due diligence duties. In the future, sizeable Asian company groups conducting business in Europe should integrate their due diligence policies among affiliates within the group and establish comprehensive due diligence methodologies. Furthermore, Chang Wook MIN underscored that the EU Deforestation Regulation (EUDR) and the EU Batteries Regulation have stipulated separate due diligence obligations, including responsible sourcing. Chang Wook MIN stated, “Asian furniture companies, food companies, tire companies that export products made using wood, palm oil and rubber to Europe, as well as manufacturing companies that place batteries in Europe, should be careful because they might be obliged to conduct due diligence on their product supply chains and disclose the results in accordance with the EU deforestation regulation or the EU battery regulation.


■ Session 2: Supply Chain Human Rights Due Diligence – Case Studies of Current Company Practices

In the second session, Yoko NORO, Procurement Department at Kirin Holdings Company, Limited, Hogene SHIN, ESG Manager at SK GAS, and Daphne HAMEETEMAN, General Manager Sustainability at Wilmar International Limited, delivered presentations on “Supply Chain Human Rights Due Diligence – Case Studies of Current Company Practices.” Afterwards, Asako NAGAI, Managing Director at BSR moderated the panel discussion and the Q&A session, and three experts from each company answered the questions from the seminar participants.

Yoko NORO, Procurement Department at Kirin Holdings Company, Limited, said, “As human rights risks increase due to the impact of globalization and product diversification, Kirin Holdings has formed an internal organization and position to be in charge of these risks and is expanding supply chain human rights due diligence.

Hogene SHIN, ESG Manager at SK GAS, introduced the results and methodology of the human rights due diligence conducted this year and said, “When determining the scope of the due diligence, SK GAS conducted self-assessment questionnaire (SAQ), focus group interviews (FGI) and on-site due diligence of stakeholders, including key business partners based on prioritization.” Based on the identified salient issues, SK GAS established three strategies and shared an action plan to prevent not only any negative impact arising from the relationship between SK Gas and business partners but also situations where business partners might cause negative human rights impacts on their executives and employees. Hogene SHIN emphasized the necessity to establish and consider three elements to bolster the human rights due diligence system: leadership, grievance mechanism, and meaningful communication with stakeholders.

Daphne HAMEETEMAN, General Manager Sustainability at Wilmar International Limited, said “Today’s human rights due diligence system is conducted in accordance with the OECD guidelines for multinational enterprises, but it is not the right answer compatible with all companies. Customized procedures need to be prepared based on industry, size, and organizational structure, even including key elements (stakeholder communication).” “The scope of human rights due diligence should be expanded to encompass the entire supply chain based on mutual cooperation with business partners, and pre-emptive measures of prevention (anti-discrimination policies) and reactive system (whistleblowing, grievance mechanisms) should be implemented on a par.” Daphne HAMEETEMAN added. Furthermore, the presentation concluded by highlighting the need to tailor checklists and questionnaire designed to identify and address salient issues relevant to each company and industry, as most companies use a generic self-assessment questionnaire (SAQ) when conducting human rights due diligence.

Subsequent to the presentations by three participating company representatives, an active Q&A session was conducted. This session was centered on methodologies for conducting supply chain due diligence on a large scale and key departments responsible for advancing human rights due diligence. Due to a myriad of challenges associated with conducting on-site due diligence of all business partners, participating companies commonly reported that they prioritize tasks to tackle and high-risk business partners through comprehensive risk assessments. More to the point, they also stated that each company designates a specific organizational unit in charge of implementing human rights due diligence, such as the procurement and production departments, as illustrated by Kirin Holdings, and a specific working group, as exemplified by Wilmar, including the human resources department.
 

 

Jipyong Compliance Practice Group specializes in assisting human rights and environmental due diligence (HREDD) in accordance with global standards, notably the UN Guiding Principles (UNGPs) and the OECD Guidelines. Earlier this year, we published the "Interpretive Guide on Business and Human Rights" and have extensive experience and expertise accumulated via cooperation with leading global organizations such as the World Benchmarking Alliance (WBA), the Responsible Business Alliance (RBA), and Business for Social Responsibility (BSR). We have successfully provided expert consulting services of human rights impact assessments and due diligence for various companies spanning industries, including manufacturing, information technology, construction, pharmaceuticals, energy, chemicals, real estate, food, and entertainment. Furthermore, we have provided in-depth and accurate advice on supply chain due diligence laws and requirements across nations and regions, inter alia, Germany and the European Union.

Key members
^■     Sung Taek LIM Managing Partner
^■     Chang Wook MIN Partner
^■     Hyun Chan JUNG Advisor