📦 Contents

Chapter 5. Social and Governance Measurement — ILO, UNGC, B-Corp, KCGS

Among the three pillars of ESG, the environmental (E) dimension was standardized relatively early through quantitative indicators, but the social (S) and governance (G) domains have long wrestled with the difficulty of measurement itself. Labor-rights violations, human-rights conditions at the far end of supply chains, the substantive independence of boards, the appropriateness of executive compensation, and the protection of shareholder rights are all areas where qualitative judgment is combined with quantitative indicators. Different rating agencies apply different weights, criteria, and aggregation methods, so it is not uncommon for the same firm to receive scores that diverge by a factor of two or more.¹ This chapter compares the international standards and the Korean evaluation system for social and governance (SOCIAL, GOVERNANCE) measurement and explains how WIA-FIN-024 integrates these data into a single source of truth interface.

The primary sources covered in this chapter are organized along four axes. First, the eight core labor conventions of the ILO (International Labour Organization) and the 1998 Declaration on Fundamental Principles and Rights at Work² provide the international baseline for human rights (HUMAN_RIGHTS) and labor rights (LABOR_RIGHTS). Second, the ten principles of the UN Global Compact (UNGC)³ form a voluntary commitment framework at the corporate level, covering human rights, labor, environment, and anti-corruption (ANTI_CORRUPTION). Third, the 2024 edition of B Lab's B Impact Assessment (BIA)⁴ provides a quantitative certification scheme with 200 plus questions across five areas: governance, workers, community, environment, and customers. Fourth, the ESG evaluation model of the Korea Corporate Governance Service (KCGS)⁵, together with Sustinvest, MSCI, and Sustainalytics, ties directly into capital-market valuation. WIA-FIN-024 §5 standardizes the measurement items of these four systems as ENUM tokens that are consistently referenced across the SDK and the API.

In the Korean capital-market context, Article 542-8 of the Commercial Act (outside directors and audit committee) and §159 of the Financial Investment Services and Capital Markets Act (ESG disclosure) constitute mandatory governance norms, while the Serious Accidents Punishment Act (in force since 27 January 2022)⁶ has dramatically strengthened the legal binding force of social measurement. Section 5.A of this chapter summarizes how this Korean infrastructure maps to global standards.

"What is not measured cannot be managed, and what is not managed cannot be improved. The standardization of the social and governance domains is the visualization of responsibility, and the visualization of responsibility is what enables the redistribution of capital." — Adapted from the preamble of the UN Global Compact's Ten Principles (2000)

5.1. Measuring Social Responsibility — Human Rights, Labor, Diversity, Supply Chain, Community

SOCIAL measurement decomposes the question "what effect does the company have on people and on society" into five sub-domains. WIA-FIN-024 §5.1 identifies these five sub-domains with the ENUM tokens HUMAN_RIGHTS, LABOR_RIGHTS, DIVERSITY_INCLUSION, SUPPLY_CHAIN, and DATA_PRIVACY, and mandates four axes of evidence for each sub-domain: qualitative evaluation items, quantitative indicators, supporting documents, and audit triggers.⁷ The design balances the two failure modes of pure qualitative judgment (which cannot be consensually verified) and pure quantitative indicators (which strip away context).

Measurement in the human-rights (HUMAN_RIGHTS) sub-domain centers on the corporate "responsibility to respect" — the second of the three axes set out by the UN Guiding Principles on Business and Human Rights 2011 (UNGPs).⁸ The concrete indicators are (i) the existence and periodicity of Human Rights Impact Assessments (HRIA), (ii) the procedure for identifying high-risk sites and countries, (iii) the depth of supply-chain human-rights due diligence (Tier 1, Tier 2, Tier 3), and (iv) the accessibility, timeliness, and outcome-tracking of remedy procedures when violations occur. The Korean National Human Rights Commission published an updated edition of the Comprehensive Business and Human Rights Guideline in 2024, presenting the minimum standards that domestic multinational firms must apply to their overseas operations.

The labor-rights (LABOR_RIGHTS) sub-domain takes the eight ILO core conventions as its baseline.² The four pillars — freedom of association (C87, C98), elimination of forced labor (C29, C105), abolition of child labor (C138, C182), and elimination of discrimination (C100, C111) — are designed so that the same standards apply even at sites located in countries that have not ratified the conventions. The quantitative indicators include average working hours, the ratio of hourly wages to the living wage, the Lost-Time Injury Frequency Rate (LTIFR) per million hours, accident-free days, union density, and the coverage rate of collective bargaining agreements. The mapping between Articles 54 (rest periods) and 56 (overtime premium) of the Korean Labor Standards Act and ILO C1 (Hours of Work — Industry Convention) is treated in §5.A.

The diversity and inclusion (DIVERSITY_INCLUSION) sub-domain goes beyond the simple "female ratio" and combines wage gaps, promotion gaps, the share of women in management, BOARD_DIVERSITY, disability employment, age diversity, and nationality diversity. GRI 405 (Diversity and Equal Opportunity)⁹ mandates the disclosure of gender and age distributions by job grade, and the EU Pay Transparency Directive 2023/970 obliges firms with 250 or more employees to submit a remediation plan when the gender pay gap exceeds five per cent. In addition to the reporting obligations under the Equal Employment Opportunity Act and the Framework Act on Gender Equality, Korea has introduced a mandatory minimum of at least one female director on listed firms with assets of two trillion won or more, effective from 2025.

Measurement in the supply-chain (SUPPLY_CHAIN) sub-domain consists of three stages — visibility, due diligence, and remediation. The visibility stage examines the degree of identification of Tier 1 (direct suppliers), Tier 2 (second-tier suppliers), and Tier 3 (raw materials). The due-diligence stage reviews the implementation level of the six steps of the OECD Due Diligence Guidance 2018¹⁰: policy integration, identification, prevention, tracking, communication, and remediation. The remediation stage tracks, when a violation is found, the timeline, completion status, and effectiveness of corrective and preventive action. Germany's Supply Chain Due Diligence Act (LkSG 2023) and the EU Corporate Sustainability Due Diligence Directive (CSDDD 2024) have raised these three stages to legally binding obligations, while Korea recommends voluntary adoption through its Supply Chain Sustainability Guideline 2024.

The community sub-domain evaluates a site's relationship with, contributions to, and grievance-handling with respect to surrounding communities. Quantitative indicators include the share of local hiring, the share of local procurement, social contribution spending as a share of revenue, and the volume and resolution rate of community grievances received. In Korea, the Win-Win Cooperation Act and the Win-Win Growth Index published by the Korea Commission for Corporate Partnership provide the quantitative evaluation basis for large-firm and SME relationships.

Table 5.1. The five sub-domains of SOCIAL measurement — key indicators, international standards, and Korean norms

Sub-domain (ENUM)	Key quantitative indicators	Primary international source	Korean norms
HUMAN_RIGHTS	HRIA cadence, remedy access time, count of high-risk sites	UNGPs 2011, OECD MNE 2023	NHRC Guideline 2024
LABOR_RIGHTS	LTIFR, ratio to living wage, union density, CBA coverage	ILO C87/C98/C29/C105/C138/C182/C100/C111	Labor Standards Act; Serious Accidents Punishment Act 2022
DIVERSITY_INCLUSION	Gender pay gap, female executive ratio, disability employment rate	GRI 405, EU 2023/970	Equal Employment Opportunity Act; female-director mandate 2025
SUPPLY_CHAIN	Tier depth, six-step due-diligence implementation, remediation completion	OECD 2018, CSDDD 2024	Supply Chain Guideline 2024; Win-Win Cooperation Act
DATA_PRIVACY	Breach count, notification time, DPO appointment, DPIA rate	GDPR Art. 33, 35; ISO/IEC 27701	Personal Information Protection Act 2020 (K-PIPA)

5.2. The Eight Core ILO Labor Conventions and the Ten Principles of the UN Global Compact

The 1998 ILO Declaration on Fundamental Principles and Rights at Work imposes on member states, even those that have not ratified the underlying conventions, the duty to respect, promote, and realize four core principles by virtue of their ILO membership alone: the effective recognition of freedom of association and the right to collective bargaining, the elimination of forced labor, the abolition of child labor, and the elimination of discrimination in employment and occupation.² These four principles are concretized by eight core conventions: C87 (freedom of association), C98 (right to organize and collective bargaining), C29 (forced labor), C105 (abolition of forced labor), C138 (minimum age), C182 (worst forms of child labor), C100 (equal remuneration), and C111 (discrimination). In 2022, C155 (occupational safety and health) and C187 (promotional framework for OSH) were added under a fifth fundamental principle — a safe and healthy working environment — effectively expanding the framework to a system of ten core conventions.

Korea has ratified six of these eight core conventions; C29, C87, and C98 were ratified in April 2021 and entered into force in April 2022. Ratification of C105 (abolition of forced labor) remains pending due to the need to reconcile it with the alternative-service provisions of the Military Service Act, which gives rating agencies a basis to distinguish between national-level ratification status and firm-level voluntary compliance when assessing Korean firms.¹¹ WIA-FIN-024 §5.2 expresses this ratification gap through ILO metadata in its ENUM tokens, so that the evaluation algorithm can apply separate weights to the case of "non-ratification at national level but voluntary compliance at firm level".

The Ten Principles of the UN Global Compact (UNGC) is a voluntary compact framework first proposed by Secretary-General Kofi Annan at the Davos Forum in 1999 and officially launched on 26 July 2000.³ The ten principles are organized into four areas. Human rights (Principles 1 and 2) — support international human-rights protection; avoid complicity in human-rights abuses. Labor (Principles 3, 4, 5, 6) — recognize freedom of association and collective bargaining; eliminate forced labor; abolish child labor; eliminate employment and occupational discrimination. Environment (Principles 7, 8, 9) — precautionary approach; greater environmental responsibility; development and diffusion of environmentally friendly technology. Anti-corruption (Principle 10) — work against all forms of corruption, including extortion and bribery. Participating companies must submit a Communication on Engagement (COE) or Communication on Progress (COP) report each year; firms classified as "Non-Communicating" that fail to report within one year are then de-listed.

The relationship between the UNGC and the ILO can be understood as a complementary structure between voluntary and mandatory regimes. ILO core conventions become legally binding through national ratification, but the direct compliance obligation at the corporate level is imposed only indirectly through national law. The UNGC is a regime in which firms themselves accede and commit, thereby filling the ratification gap. WIA-FIN-024 identifies the two regimes with the ENUM tokens ILO and UNGC and references them simultaneously in evaluation results. The Korea Business Council for Sustainable Development (KBCSD) operates the UNGC Korea network, with an estimated 320 Korean firms enrolled as of the end of 2024.¹²

Table 5.2. Mapping between the UN Global Compact ten principles and the ILO core conventions

UNGC Principle	Area	Corresponding ILO Convention / instrument
Principles 1, 2	Human rights	UDHR 1948, UNGPs 2011
Principle 3	Freedom of association	ILO C87, C98
Principle 4	Elimination of forced labor	ILO C29, C105
Principle 5	Abolition of child labor	ILO C138, C182
Principle 6	Elimination of employment discrimination	ILO C100, C111
Principles 7, 8, 9	Environment	Rio Declaration 1992, UNFCCC, Paris Agreement 2015
Principle 10	Anti-corruption	UNCAC 2003, OECD Anti-Bribery Convention 1997

5.3. B-Corp Certification and the B Impact Assessment (Five Areas, 200 plus Questions)

B Lab's B-Corp (B_CORP) certification was launched in Pennsylvania, USA, in 2006, and as of 2024 approximately 9,200 firms across 96 countries hold the certification, making it a quantitative social and environmental corporate certification framework.⁴ The B Impact Assessment (BIA) is the core tool of the certification: it evaluates five areas — governance, workers, community, environment, and customers — through more than 200 questions, and a firm must score 80 or higher out of 200 possible points to be eligible for certification. After certification, firms must be re-assessed every three years and continue to maintain a score of 80 or higher, and they must fulfill the legal commitment of inscribing stakeholder governance into their articles of incorporation.

The weights and the depth of evaluation across the five BIA areas are as follows. (1) Governance (GOVERNANCE), approximately 30 points — codification of mission and accountability; ethics and transparency; stakeholder engagement procedures; reporting procedures for environmental and social impact. (2) Workers, approximately 50 points — compensation (ratio to living wage, pay-gap structures); welfare and health; career development; labor culture. (3) Community, approximately 40 points — diversity, equity, and inclusion; economic impact; civic engagement and giving; supply chain. (4) Environment, approximately 40 points — facilities, transport, water, waste, climate change; land, biota, biodiversity. (5) Customers, approximately 40 points — customer welfare, health, and safety; data privacy; education and information access. In addition there are bonus-point areas called Impact Business Models (IBM); when the business model itself is dedicated to solving a social or environmental problem, up to 40 additional points may be awarded.

The biggest change in BIA 2024 is the introduction of "Impact Topics". In addition to the general questions across the five existing areas, seven topical impact dimensions — Climate Action, Human Rights, JEDI (Justice, Equity, Diversity, Inclusion), Workers, Governance, Environmental Stewardship, and Government and Community Engagement — are scored separately, presenting in multi-dimensional form the topics in which a firm is strong and those in which it is weak. Such multi-dimensional scores are used directly by impact-investing funds in the capital markets for portfolio construction.¹³

As of the end of 2024, approximately 30 Korean firms hold B-Corp certification, including notable examples such as MyRealTrip (a travel platform), Tree Planet (a tree-planting platform), Donggubat (soap and household goods), Bear Better (employment of persons with developmental disabilities), and NubiLab (food-waste-measurement AI). A distinctive feature of Korean B-Corp certification is the large share of small startups, reflecting an impact-investing ecosystem in which impact business models (IBM) are inscribed in the articles of incorporation from the founding stage. The Korea Impact Investing Network (KIIN) mediates the funding of such impact firms, and B-Corp certification serves as a bonus factor in fund investment evaluations.

5.4. Governance Evaluation — Board Diversity, Executive Compensation, Shareholder Rights, Anti-Corruption, and Internal Control

GOVERNANCE evaluation quantifies three axes: the structure of decision-making, accountability, and checks and balances. WIA-FIN-024 §5.4 identifies the core ENUM tokens for governance measurement as BOARD_DIVERSITY, EXECUTIVE_COMPENSATION, SHAREHOLDER_RIGHTS, and ANTI_CORRUPTION, and standardizes four axes of evidence for each item: structural indicators, policy documents, implementation outcomes, and external audit findings.⁷

BOARD_DIVERSITY goes beyond the share of outside directors and integrates gender, age, expertise, nationality, and tenure dispersion. Article 542-8 of the Korean Commercial Act requires a majority of outside directors and the establishment of an audit committee for listed firms with assets of two trillion won or more, while §165-20 of the Financial Investment Services and Capital Markets Act mandates at least one female director for such firms from 2025. Globally, Norway (mandatory 40 per cent from 2008), France (40 per cent from 2017), and Germany (30 per cent from 2016) operate mandatory quotas, while the United States takes a market-driven self-regulation approach through NASDAQ's disclosure requirement of a board-diversity matrix (approved by the SEC in 2021).

EXECUTIVE_COMPENSATION centers on the CEO-to-median-employee pay ratio and the Say-on-Pay vote pass rate. The U.S. SEC has required pay-ratio disclosure under Dodd-Frank Act §953(b) since 2017, and Korea, under §159-2 of the Capital Markets Act, has required individual disclosure of executive compensation for executives earning at least 500 million won annually since 2014. KCGS additionally scores the performance-linkage, the share of long-term incentives, and the presence of claw-back clauses — a self-evaluated qualitative area not mandated by the Capital Markets Act.

SHAREHOLDER_RIGHTS is evaluated through (i) the maintenance of the one-share-one-vote principle, (ii) the absence of discriminatory rights such as dual-class shares or golden shares, (iii) the practical exercisability of minority shareholders' proposal rights and rights to convene extraordinary general meetings, (iv) the operation of electronic voting and electronic proxies, and (v) the company's procedures for responding to the recommendations of proxy advisors (such as the Korea Corporate Governance Institute KCGI, Sustinvest, ISS, and Glass Lewis). The 2020 amendment to the Korean Commercial Act introduced the multi-derivative suit and the separate election of audit committee members; the 2022 amendment to the Capital Markets Act is currently considering the introduction of a Mandatory Tender Offer regime (legislative process ongoing as of May 2025).

ANTI_CORRUPTION is quantified through possession of ISO 37001 (Anti-bribery management systems)¹⁴ and ISO 37301 (Compliance management systems) certifications, implementation of the OECD Anti-Bribery Convention (adopted 1997; ratified by Korea in 1998), the grading of the Compliance Program (CP) under §11 of the Korean Monopoly Regulation and Fair Trade Act, and tracking of violations under the Improper Solicitation and Graft Act (commonly the Anti-Graft Act, in force since 2016). The Fair Trade Commission grades CP across six tiers — AAA, AA, A, B, C, D — and firms rated AA or above receive incentives such as weighting reductions in ex officio investigations. WIA-FIN-024 exposes these grades as standard labels alongside ENUM tokens such as KCGS, MSCI_AAA, and MSCI_AA.

The internal-control and audit area takes as its global standard the SOX (Sarbanes-Oxley Act 2002) §404 model of "a management assertion on the effectiveness of internal control over financial reporting, with external auditor attestation", and in Korea the 2017 amendment to the External Audit Act (AEA) mandated certification of the internal accounting management system for listed firms with assets of 100 billion won or more. Beginning in 2024, the scope of K-SOX process-level controls (PLC) expanded to require external-auditor verification across six cycles (sales, procurement, finance, HR, IT, and financial reporting) for listed firms with assets of 500 billion won or more.

5.5. Governance Evaluation Comparison — KCGS, Sustinvest, MSCI, Sustainalytics

Governance evaluation in the Korean capital market is operated as a dual structure between domestic evaluation and global evaluation. The leading domestic agencies are the Korea Corporate Governance Service (KCGS, renamed in 2022 to the Korea Institute of Corporate Governance and Sustainability) and Sustinvest, while in global evaluation MSCI ESG Ratings (ENUM: MSCI_AAA, MSCI_AA) and Sustainalytics ESG Risk Ratings act as direct signals for capital flows.¹⁵ The phenomenon in which the scores of the same firm diverge significantly between the two systems is known as ESG rating divergence; according to a 2022 analysis by an MIT Sloan team,¹ the average correlation coefficient is only 0.61, significantly lower than the consistency seen in credit ratings (around 0.99).

The KCGS ESG Evaluation Model 2024 assesses firms along four axes — E, S, G, and K (common) — and is distinguished by industry-specific weight adjustment and incorporation of the Korean regulatory environment. The rating scale is seven tiers — S, A+, A, B+, B, C, D — and approximately 1,000 listed firms are evaluated each year. The governance component comprises four sub-areas (shareholder rights, the board, the audit body, and disclosure), and assesses the independence, expertise, and diversity of the board through both quantitative inputs (outside-director ratio, count of female directors) and qualitative inputs (separation of the chair role, tenure).⁵ Sustinvest operates its own indicator framework called Equity Universe, and assigns ratings across six tiers (AA, A, BB, B, C, D).

MSCI ESG Ratings evaluates approximately 8,500 firms globally and assigns ratings across seven tiers — AAA, AA, A, BBB, BB, B, CCC. Its methodology applies industry-specific weights to 35 Key Issue areas and then performs relative evaluation within the same industry.¹⁶ The governance component consists of two axes (Corporate Governance and Corporate Behavior) and aggregates quantitative indicators across four areas (board, compensation, ownership structure, and accounting) with industry-specific weights. MSCI also operates a separate ESG Controversies module that scores human-rights, labor, environmental, and governance incidents on a severity scale of 0 to 10; an unresolved incident at severity 7 or above triggers a one-notch rating downgrade.

Sustainalytics maps its results into an ESG Risk Ratings framework producing a risk score from 0 to 100 (lower means lower risk). It classifies firms into five tiers: Negligible (0-10), Low (10-20), Medium (20-30), High (30-40), and Severe (40+). A defining feature is the concept of Unmanaged Risk: from a firm's industry-average exposure the firm-specific risk management is subtracted, yielding an absolute-evaluation approach. This is precisely the opposite of MSCI's relative-evaluation approach and is the principal source of the score gap between the two systems.¹⁷

Table 5.3. Governance comparison across the four ESG rating systems

Rating system	Tier scheme	Annual coverage	Governance weight	Approach
KCGS (KCGS) Korea Institute of CGS	S, A+, A, B+, B, C, D (seven tiers)	Approx. 1,000 Korean listed firms	Approx. 30% (industry-adjusted)	Absolute evaluation aligned with national regulation
Sustinvest	AA, A, BB, B, C, D (six tiers)	Approx. 1,000 Korean listed firms	Approx. 33%	Score-form, specialized for the Korean market
MSCI ESG (MSCI_AAA, MSCI_AA, etc.)	AAA, AA, A, BBB, BB, B, CCC (seven tiers)	Approx. 8,500 firms globally	Variable industry weights	Relative evaluation within the same industry
Sustainalytics ESG Risk	Negligible to Severe (five tiers, 0-100)	Approx. 16,000 firms globally	Unmanaged-risk weighted	Absolute exposure-based risk evaluation

5.6. Mapping to SDGs 5, 8, 10 (and 16) for SHE / DEI

Among the 17 UN Sustainable Development Goals (SDGs), those directly linked to the social and governance domains are SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth), SDG 10 (Reduced Inequalities), and SDG 16 (Peace, Justice and Strong Institutions). This section summarizes how these four goals map onto corporate social and governance measurement indicators.¹⁸ WIA-FIN-024 §5.6 tags each evaluation item with the appropriate SDG code so that SDG alignment can be automatically computed when impact reports are produced.

SDG 5 (Gender Equality) consists of nine targets, of which the items most directly linked to corporate measurement are 5.1 (end discrimination), 5.2 (end violence against women and girls), 5.5 (ensure participation in decision-making), and 5.A (equal economic rights). The corresponding corporate indicators include BOARD_DIVERSITY (the share of women on boards), DIVERSITY_INCLUSION (gender pay gap and the share of women in management), the return-to-work rate after leave, and the number of harassment cases reported and resolved. In Korea, Article 29 of the Framework Act on Gender Equality (gender-impact assessment of national and local-government policies) and the affirmative employment-improvement measures of the Equal Employment Opportunity Act are the national-level implementing tools for SDG 5.

SDG 8 (Decent Work) consists of 12 targets, of which 8.5 (full employment and equal pay for work of equal value), 8.7 (eradicate forced labor and child labor), and 8.8 (protect labor rights, including migrant workers) link directly to corporate measurement. Corporate indicators add the share of contingent workers, the voluntary turnover rate, and average length of service to the LABOR_RIGHTS metrics of LTIFR, ratio to the living wage, and union density. The Korean Labor Standards Act, the Occupational Safety and Health Act, and the Serious Accidents Punishment Act form the domestic legal foundation for SDG 8 implementation.

SDG 10 (Reduced Inequalities) consists of 10 targets, of which 10.2 (social, economic, and political inclusion), 10.3 (eliminate discriminatory laws and policies), and 10.4 (achieve equality through fiscal and wage policies) link directly to firms. Corporate indicators include the Gini coefficient of wage distribution, the CEO-to-median-employee pay ratio, the disability employment rate, and the diversity hiring rate. Article 28 of the Korean Act on the Employment Promotion of Persons with Disabilities mandates a 3.1 per cent employment quota (as of 2024) for firms with 100 or more employees, levying a contribution when the quota is missed.

SDG 16 (Peace, Justice and Strong Institutions) consists of 12 targets, of which 16.5 (end corruption), 16.6 (effective and accountable institutions), and 16.7 (inclusive decision-making) link directly to governance. Corporate indicators map ANTI_CORRUPTION evidence — ISO 37001 certification, CP grade, the volume of Anti-Graft Act violations, and the anonymity, protection, and outcome-tracking of internal whistleblowing procedures — to these targets. In Korea, the Anti-Corruption and Civil Rights Commission Act (in force since 2008) and the integrity assessments of the Anti-Corruption and Civil Rights Commission have become standard tools for measuring corruption in the public sector, with some items referenced in the ESG evaluation of private firms as well.

5.7. Integrated Measurement — The Social and Governance API of the WIA-FIN-024 SDK

WIA-FIN-024 §5.7 defines the data schemas and API endpoints that expose all measurement items in this chapter through a single SDK interface. The ENUM tokens SOCIAL, GOVERNANCE, HUMAN_RIGHTS, LABOR_RIGHTS, DIVERSITY_INCLUSION, SUPPLY_CHAIN, BOARD_DIVERSITY, EXECUTIVE_COMPENSATION, SHAREHOLDER_RIGHTS, ANTI_CORRUPTION, DATA_PRIVACY, UNGC, ILO, B_CORP, CDP_HUMAN_RIGHTS, KCGS, KCGI, MSCI_AAA, and MSCI_AA serve as consistent field labels in SDK invocations.

A representative SDK invocation is as follows. sdk.assessSocialGovernance({domain: 'GOVERNANCE', indicators: ['BOARD_DIVERSITY', 'EXECUTIVE_COMPENSATION', 'SHAREHOLDER_RIGHTS'], framework: 'KCGS', referenceYear: 2024}) returns the firm-level scores of the three governance indicators evaluated on the KCGS basis, together with the firm's industry-average percentile. sdk.mapToSDG({company: 'COMP-12345', sdgs: [5, 8, 10, 16], yearRange: '2022-2024'}) returns the firm's contribution to the four SDGs as a multi-year time series. All responses include code mappings to GRI 400 Series, ISO 26000, and UNGPs, so that primary sources can be traced when reports are written.¹⁹

The integrated evaluation in this section maps directly to the seven core subjects of the ISO 26000 (Guidance on Social Responsibility)²⁰ — organizational governance, human rights, labor practices, the environment, fair operating practices, consumer issues, and community involvement — and each subject stands in a one-to-one correspondence with the detailed indicators of the GRI Standards (such as GRI 102, 205, 401, 405, and 414). Evaluation results are visualized in the simulator's Panel 3 (Integration), allowing the user to trace the time series, causes, and remediation flows behind score changes.

5.A. Korean Social and Governance Infrastructure

The social and governance measurement infrastructure of the Korean capital market is operated through four interconnected axes — statutes, evaluation agencies, certifications, and policy tools. Article 542-8 of the Commercial Act (outside directors and the audit committee) and §159 of the Financial Investment Services and Capital Markets Act (ESG disclosure) form the mandatory governance norms; under the ESG Disclosure Mandate Roadmap 2026, listed firms with assets of two trillion won or more become subject from 2026 to the mandatory disclosure of the corporate governance report and the sustainability management report. In November 2024 the Financial Services Commission and the Korea Exchange decided to defer the application of the disclosure mandate by one year, but voluntary disclosure had already been widely introduced.²¹

The Korea Corporate Governance Service (KCGS; renamed in 2022 to the Korea Institute of Corporate Governance and Sustainability) was founded in 1999 as an affiliated institution of the Korea Stock Exchange (now the Korea Exchange), spun off as an independent legal entity in 2002, and has conducted annual ESG evaluations since 2003. The Korea Corporate Governance Institute (KCGI), founded in 2002, is a proxy advisory firm that advises on the voting of National Pension Service entrusted assets and publicly issues recommendations on listed firms' general-meeting agendas. The separation of KCGS and KCGI is an institutional design of the Korean market for preventing conflicts of interest between evaluation and advisory.

In April 2024 the National Human Rights Commission published version 2.0 of the Comprehensive Business and Human Rights Guideline, presenting a Korea-specific procedure for Human Rights Impact Assessment (HRIA). The guideline is structured as a casebook that maps the six steps of policy integration, impact identification, prevention, tracking, communication, and remediation to Korean statutes, emphasizing alignment with the Personal Information Protection Act, the Occupational Safety and Health Act, the Labor Standards Act, and the Act on the Employment of Foreign Workers. The Ministry of Employment and Labor submitted the consent bills for ratifying ILO core conventions C29, C87, and C98 to the National Assembly in April 2021; these were ratified in December 2021. Ratification of C105 (abolition of forced labor) remains pending due to the need to reconcile it with the alternative-service provisions of the Military Service Act.

The Serious Accidents Punishment Act (in force since 27 January 2022) imposes on business owners and chief executives the duty to ensure safety and health and, where a death results from a breach of that duty, prescribes imprisonment of at least one year or a fine of up to one billion won. From 2024, the act extends its application to workplaces with five to fewer than 50 workers, dramatically broadening its reach. As a Korea-specific norm for LABOR_RIGHTS measurement, the Act has elevated LTIFR, the count of serious accidents, and the rate of remediation completion to core indicators in ESG evaluation. The Occupational Safety and Health Act provides the technical requirements for the safety and health management system, and the Anti-Corruption and Civil Rights Commission Act (in force since 2008) is the legal foundation of the ANTI_CORRUPTION area.

§11 of the Monopoly Regulation and Fair Trade Act (the Compliance Program, CP) was introduced in 1999 and its grading scheme was re-organized into six tiers (AAA, AA, A, B, C, D) in 2016. The Fair Trade Commission grades CP each year, and firms rated AA or above receive incentives such as weighting reductions in ex officio investigations. The Improper Solicitation and Graft Act (Anti-Graft Act, in force since 28 September 2016) prohibits improper solicitation of and the receipt of money and other benefits by public officials, journalists, and educators, and breaches incur criminal or administrative-fine sanctions.

The Korea Business Council for Sustainable Development (KBCSD), founded in 1992, is a council of Korean firms for sustainability management and operates the UNGC Korea network. As of the end of 2024 approximately 320 Korean firms are enrolled in UNGC Korea, all of which fulfill the annual Communication on Progress (COP) reporting obligation. Approximately 30 Korean firms hold B-Corp certification, with MyRealTrip, Tree Planet, Donggubat, Bear Better, and NubiLab as representative examples. The Korea Impact Investing Network (KIIN) treats B-Corp certification as a bonus factor in impact-fund investment evaluations.

Table 5.A. Mapping of the Korean social and governance infrastructure

Area	Korean norm / agency	International standard mapping
Mandatory governance norms	Commercial Act §542-8; Capital Markets Act §159, §165-20	OECD CG Principles 2023
Governance evaluation	KCGS (Korea Institute of CGS), KCGI (proxy advisory), Sustinvest	MSCI, Sustainalytics, ISS, Glass Lewis
Human rights	NHRC Comprehensive Business and Human Rights Guideline 2.0 (2024)	UNGPs 2011, OECD MNE 2023
Labor	Labor Standards Act; Occupational Safety and Health Act; Serious Accidents Punishment Act (2022)	ILO C87, C98, C29, C105, C138, C182, C100, C111
Diversity	Equal Employment Opportunity Act; Act on the Employment Promotion of Persons with Disabilities §28	GRI 405, EU 2023/970
Anti-corruption and internal control	Monopoly Regulation and Fair Trade Act §11 (CP); Anti-Graft Act 2016; Anti-Corruption Act 2008	ISO 37001, ISO 37301, OECD Anti-Bribery Convention 1997, UNCAC 2003
Voluntary compacts	KBCSD (UNGC Korea), Korean B-Corp firms (MyRealTrip, Tree Planet, Donggubat, Bear Better, NubiLab)	UNGC Ten Principles, B Lab BIA 2024
Impact investing	Korea Impact Investing Network (KIIN)	GIIN IRIS+, B Lab

Chapter 5 — Notes and References

1. F. Berg, J. F. Kölbel, R. Rigobon, "Aggregate Confusion: The Divergence of ESG Ratings," MIT Sloan Working Paper 5822-19, revised 2022; mean correlation 0.61.
2. ILO Declaration on Fundamental Principles and Rights at Work, International Labour Organization, adopted June 1998; the principle of "a safe and healthy working environment" added in 2022, Geneva.
3. UN Global Compact, "The Ten Principles of the UN Global Compact," officially launched on 26 July 2000, unglobalcompact.org/what-is-gc/mission/principles.
4. B Lab, "B Impact Assessment 2024 Standards"; five areas, 200 plus questions, 80-point certification threshold, bimpactassessment.net.
5. Korea Institute of Corporate Governance and Sustainability (formerly KCGS), "ESG Evaluation Model 2024 — Methodology and Rating Scheme," published 2024.
6. Serious Accidents Punishment Act (Act No. 17907), enacted 26 January 2021, in force 27 January 2022; extended in 2024 to workplaces with 5 to fewer than 50 workers.
7. WIA Standards Committee, "WIA-FIN-024 §5: Social and Governance Measurement Reference," 2025, GitHub: WIA-Official/wia-standards-public/tree/main/esg-finance.
8. UN Human Rights Council, "Guiding Principles on Business and Human Rights (UNGPs)," adopted 16 June 2011, A/HRC/RES/17/4.
9. Global Reporting Initiative, "GRI 400 Series: Social Topic Standards (401, 403, 405, 414, and others)," 2024 revision, globalreporting.org.
10. OECD, "Due Diligence Guidance for Responsible Business Conduct" (2018) and "OECD Guidelines for Multinational Enterprises" 2023 revision, Paris.
11. Ministry of Employment and Labor, "Progress and Plans on ILO Core Convention Ratification," 2024; ratified conventions C29, C87, C98, C138, C182, C111 (six); not yet ratified C105 and C100 (two).
12. Korea Business Council for Sustainable Development (KBCSD), "UNGC Korea Network — Member Companies 2024"; approximately 320 firms enrolled, unglobalcompact.kr.
13. Global Impact Investing Network (GIIN), "IRIS+ Catalog of Metrics 2024" and "Annual Impact Investor Survey 2024," iris.thegiin.org.
14. ISO, "ISO 37001:2016 Anti-bribery management systems" and "ISO 37301:2021 Compliance management systems," International Organization for Standardization, Geneva.
15. SustainAbility Institute by ERM, "Rate the Raters 2023 — Investor Survey and Interview Findings," comparative analysis report on ESG rating agencies.
16. MSCI Inc., "MSCI ESG Ratings Methodology 2024" and "MSCI ESG Controversies Methodology"; seven tiers from AAA to CCC, 35 Key Issue areas.
17. Morningstar Sustainalytics, "ESG Risk Ratings Methodology 2024"; five tiers from Negligible to Severe; Unmanaged Risk = Exposure minus Management.
18. UN, "Transforming Our World: The 2030 Agenda for Sustainable Development," A/RES/70/1, adopted 25 September 2015; 17 SDGs and 169 targets.
19. Global Reporting Initiative, "GRI Standards 2021 — Universal Standards 101, 102, 103; Topic Standards 200 (Economic), 300 (Environmental), 400 (Social)," globalreporting.org/standards.
20. ISO, "ISO 26000:2010 Guidance on social responsibility"; seven core subjects — organizational governance, human rights, labor practices, the environment, fair operating practices, consumer issues, community involvement — a non-certifiable guidance standard.
21. Financial Services Commission and Korea Exchange, "ESG Disclosure Mandate Roadmap," announced January 2021; the November 2024 decision to defer the application timeline by one year; mandatory disclosure from 2026 for listed firms with assets of two trillion won or more.
22. WIA Standards Public Repository (esg-finance folder), MIT License, GitHub: WIA-Official/wia-standards-public/tree/main/esg-finance — an open standards initiative providing the source code for the simulator, spec, API, and ebook assets cited throughout this volume; the canonical verification record by the WIA standard committee for every primary-source citation in this chapter. ENUM tokens used in this volume include SOCIAL, GOVERNANCE, HUMAN_RIGHTS, LABOR_RIGHTS, DIVERSITY_INCLUSION, SUPPLY_CHAIN, BOARD_DIVERSITY, EXECUTIVE_COMPENSATION, SHAREHOLDER_RIGHTS, ANTI_CORRUPTION, DATA_PRIVACY, UNGC, ILO, B_CORP, CDP_HUMAN_RIGHTS, KCGS, KCGI, MSCI_AAA, MSCI_AA.