Ministry of Industry and KOTRA to Inform on How to Respond to 'EU Supply Chain Due Diligence Guidelines'

'Webinar on EU Supply Chain Due Diligence Directive'
Supporting SME ESG Response Ahead of Enforcement on 25th

The Ministry of Trade, Industry and Energy and KOTRA announced on the 18th that they held a 'Webinar on Responding to the European Union (EU) Supply Chain Due Diligence Directive' for small and medium-sized enterprises (SMEs) and mid-sized companies.

This webinar was organized to share preparations and propose response measures for domestic companies subject to the EU Supply Chain Due Diligence Directive (CSDDD). The webinar covered the topics ▲Current issues and response measures regarding the EU Supply Chain Due Diligence Directive (Embassy of Belgium to the EU) ▲Analysis of key contents of the Due Diligence Directive (KOTRA Brussels Trade Center) ▲Importance of due diligence and establishing a due diligence system (Jipyong Law Firm ESG Center).

Cover of the 'EU Supply Chain Due Diligence Guidelines Q&A Book' published by KOTRA earlier this month. [Photo by KOTRA]

The Supply Chain Due Diligence Directive is a new system requiring companies to take responsibility for human rights and environmental issues throughout their supply chains. It is scheduled to take effect on the 25th, and within the next two years, EU member states must transpose the directive into their national laws. Korean companies providing products and services to the EU both inside and outside the EU region will also be affected by this directive. It is expected to be fully applied from 2027, requiring companies exporting products to the EU or within the supply chain to establish due diligence systems, identify potential human rights violations or environmental damage risks, and take preventive and corrective actions.

The Supply Chain Due Diligence Directive is closely linked with other EU laws such as the 'Corporate Sustainability Reporting Directive (CSRD)' and the 'EU Deforestation Regulation (EUDR)'. These laws aim to help companies manage ESG-related risks within their supply chains and practice sustainable management by disclosing sustainability reports. Together with the due diligence directive, thorough preparation by our companies is necessary.

KOTRA provides practical services such as online and offline briefings and export voucher services, in addition to information research, to support responses to global trade issues including the Supply Chain Due Diligence Directive. In particular, since June this year, KOTRA has launched the 'KOTRA ESG Global Legal Bridge' service to support legal advice related to ESG, and from July, in collaboration with specialized institutions, it plans to support SMEs and mid-sized companies in responding to the EU Supply Chain Due Diligence Directive through consulting in 2024, helping our companies improve ESG responses and resolve export obstacles.

Meanwhile, KOTRA published the 'EU Supply Chain Due Diligence Directive Q&A Book' earlier this month. The booklet provides explanations about the due diligence directive system as well as answers focusing on practical inquiries from companies. It is available for free download in PDF format from the KOTRA Trade Resource Center.

Shim Jin-su, Director of New Trade Strategy Support at the Ministry of Trade, Industry and Energy, said in his opening remarks, "If our companies proactively respond and prepare for the EU Supply Chain Due Diligence Directive, it will rather be an opportunity to strengthen competitiveness and gain an advantage in the global market." He added, "We will continue to communicate closely with the industry to minimize the burden on related companies, expand support, and continue consultations with the EU Commission and member states."

Lee Ji-hyung, Head of the Economic and Trade Cooperation Headquarters at KOTRA, stated, "KOTRA is actively cooperating with the government and related organizations so that our companies can proactively respond to the rapidly changing global trade environment." He added, "We will actively support companies to prepare stably ahead of the enforcement of the EU Supply Chain Due Diligence Directive."