A responsible supply chain is how a business identifies, prevents and remedies adverse impacts on human rights, labour and the environment, not only in its own operations but also among its suppliers. For Vietnamese exporters, this is an increasingly common condition in contracts with customers in Europe, the United States and Japan.
Key takeaways
- The EU adopted the Corporate Sustainability Due Diligence Directive (CSDDD) in 2024; its application timeline is being adjusted through the Omnibus simplification package.
- Germany has applied its Supply Chain Due Diligence Act (LkSG) since 2023.
- The common foundation: the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Due Diligence Guidance.
Why are these requirements reaching Vietnamese suppliers?
Due diligence regulations place obligations on large companies in respect of their chains of activities. To comply, they require suppliers to sign a code of conduct, accept assessments and provide data. Suppliers that fail to meet these requirements may see their orders reduced or be replaced.
Due diligence is not a one-off inspection, but an ongoing risk management process.
The six-step due diligence process (OECD)
- Embed responsible business conduct into policies and management systems.
- Identify and assess actual and potential adverse impacts.
- Cease, prevent and mitigate those impacts.
- Track implementation and results.
- Communicate how impacts are addressed.
- Provide for or cooperate in remediation when appropriate.
The labour risks to prioritise
- Forced labour and child labour.
- Overtime beyond legal limits, wages and social insurance.
- Occupational safety and health.
- Discrimination, freedom of association and collective bargaining.
Practical tools
A supplier code of conduct, assessments under common industry programmes (such as SMETA and amfori BSCI), a grievance mechanism for workers and time-bound corrective action plans. Report under GRI 414 (Supplier Social Assessment) and GRI 308 (Supplier Environmental Assessment).
Frequently asked questions
Does the CSDDD apply directly to Vietnamese businesses?
The CSDDD applies directly to companies that meet the size thresholds for operating in the EU; Vietnamese businesses are mainly affected indirectly as partners in those companies' chains of activities.
Is a factory audit enough to demonstrate due diligence?
No. An audit is just one tool; due diligence requires policies, risk assessment, a grievance mechanism, remediation and continuous monitoring.
Where should small suppliers start?
Start with a self-assessment of compliance with labour law, standardise records on working hours, wages and contracts, and set up a simple grievance channel for workers.
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