CORPORATE SUSTAINABILITY DUE DILIGENCE IN VIETNAM 2024

EU Corporate Sustainability Due Diligence Directive (CSDDD) in Vietnam

EU Corporate Sustainability Due Diligence Directive (CSDDD) in Vietnam

CORPORATE SUSTAINABILITY DUE DILIGENCE​

Lawyer, Master of Law Tran Ngoc Thich

Head of Legal Department Talentnet

Head of Law Office Thich and Associates

Arbitrator of VTA Center

The European Union’s Corporate Sustainability Due Diligence Directive (CSDDD) marks a significant step towards ensuring sustainable and responsible business practices across global supply chains. As Vietnam continues to integrate deeper into the global economy, understanding and complying with this directive is crucial for Vietnamese enterprises.

WHO MUST COMPLY

  1. Companies established under the law of a Member State and meeting one of the three conditions set out in Article 2.1 of the Directive.
  2. Companies established under the law of a third country and meeting one of the three conditions set out in Article 2.2 of the Directive.

ACTIONS TO BE TAKEN

  1. Integrate due diligence into its risk management policies and systems in accordance with Article 7.
  2. Identify and assess actual or potential adverse impacts in accordance with Article 8 and, where necessary, prioritize actual and potential adverse impacts in accordance with Article 9.
  3. Prevent and minimize potential adverse impacts, and stop actual adverse impacts and reduce their magnitude in accordance with Articles 10 and 11.
  4. Provide remedies for actual adverse impacts pursuant to Article 12.
  5. Conduct meaningful engagement with stakeholders in accordance with Article 13.
  6. Establish and maintain a notification mechanism and complaints procedure in accordance with Article 14.
  7. Monitor the effectiveness of their policies and appraisal measures in accordance with Article 15.
  8. Disclosure of information on appraisal according to Article 16.

III. LABOR ISSUES THAT NEED TO BE COMPLIED WITH

  1. Convention concerning Freedom of Association and Protection of the Right to Organise, 1948 (No. 87) .
  2. Right to Organise and Collective Bargaining Convention, 1949 (No. 98).
  3. Forced Labour Convention, 1930 (No. 29) and its Protocol of 2014.
  4. Abolition of Forced Labour Convention, 1957 (No. 105).
  5. Minimum Age Convention, 1973 (No. 138).
  6. Worst Forms of Child Labour Convention, 1999 (No. 182).
  7. Equal Remuneration Convention, 1951 (No. 100).
  8. Discrimination (Employment and Occupation) Convention, 1958 (No. 111).

COMPLIANCE ABILITY OF VIETNAMESE ENTERPRISES

  1. Large enterprise.
  2. Small and medium enterprises.

– Many businesses have improved labor standards, complying with the revised Labor Code.

– Some industries (textiles, footwear) have applied international standards (SA8000, BSCI, etc.).

– Experience participating in global supply chains.

– Some large businesses have the capacity to conduct environmental and human rights reporting.

– Small and medium enterprises lack resources to implement supply chain assessment.

– Insufficient awareness of EU requirements.

CHALLENGES

  1. Vietnam has not yet joined the Convention on Freedom of Association and Protection of the Right to Organise, 1948 (No. 87).
  2. The ability of Vietnamese enterprises to perceive and apply European regulations is still limited, especially small and medium enterprises.
  3. The supply chain is very diverse, complex, and dispersed across many geographical areas, making it difficult to assess, evaluate, and control, leading to a high risk of violations.
  4. High compliance costs.
  5. Difficulty in demonstrating compliance.
  6. Still violating specific labor regulations such as overtime (specific to the industry).
  7. Very high fines, damages.
  8. Excluded from the supply chain.

RECOMMENDATIONS

  1. Vietnam promptly ratified the Convention on Freedom of Association and Protection of the Right to Organise, 1948 (No. 87).
  2. Build a mechanism to support businesses in training and finance.
  3. Strengthen cooperation and support between the state, international organizations and businesses.
  4. Develop tools to guide supply chain appraisal according to international standards (such as assessment criteria, appraisal process, technical support tools, etc.).
  5. Continue to research and review to amend and supplement labor laws to better comply with ILO and EU standards and recommendations.

If you need more consulting, please Contact Us at TNHH NT International Law Firm (ntpartnerlawfirm.com)

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“The article’s content refers to the regulations that were applicable at the time of its creation and is intended solely for reference purposes. To obtain accurate information, it is advisable to seek the guidance of a consulting lawyer.”

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