More and more FDI manufacturers in Vietnam are receiving questionnaires, supplier codes of conduct and audit requests on human rights, labour conditions and environmental impacts in their supply chains from European partners and customers. The question arises: is this a mandatory legal obligation under Vietnamese law? The short answer: Vietnamese law currently has no equivalent of the EU CSDDD and imposes no general mandatory supply chain due diligence obligation on enterprises. The compliance pressure FDI companies feel comes mainly indirectly — from EU law, transmitted through parent companies, business partners and contractual arrangements.
1. Vietnam has no mandatory supply chain due diligence obligation
This must be stated clearly to avoid misunderstanding: no provision of Vietnamese law requires enterprises in general (including FDI enterprises) to carry out human rights and environmental due diligence across their entire supply chains on the model of the EU Corporate Sustainability Due Diligence Directive.
Current Vietnamese legislation only imposes direct obligations on a company’s own operations; it does not extend them into a continuous duty to scrutinise suppliers:
- Law on Environmental Protection 72/2020/QH14 (Articles 91, 92, 139) sets out the environmental responsibilities of organisations and individuals, extended producer responsibility and greenhouse gas emission reduction duties — but these attach to the enterprise’s own activities, not to its supply chain;
- Decree 06/2022/ND-CP and Decree 119/2025/ND-CP regulate greenhouse gas emission reduction and ozone layer protection — their scope covers emitting facilities, not entire supply chains;
- Labour Code 45/2019/QH14 imposes employer obligations toward the employer’s own employees — it does not extend to monitoring working conditions at suppliers.
In other words, the angle of this article differs from internal supplier selection and vetting: it concerns a human rights and environmental due diligence duty — continuous, systematic and tied to legal liability — which Vietnamese law has not established as a general obligation.
2. The EU CSDDD: the latest version after the Omnibus I package
The real-world pressure on FDI enterprises in Vietnam originates from Directive (EU) 2024/1760 on corporate sustainability due diligence (CSDDD) — effective from 25 July 2024. However, this instrument has already undergone a major amendment:
- Directive (EU) 2026/470 (Omnibus I), published in the EU Official Journal on 26 February 2026 and effective from 18 March 2026, substantially amended the CSDDD;
- New application thresholds after the amendment: companies with at least 5,000 employees and turnover of at least EUR 1.5 billion;
- Narrowed due diligence scope: focused on tier-1 (direct suppliers) only, instead of the entire value chain as originally designed;
- Compliance timeline: starting from July 2029;
- Directive (EU) 2025/794 (“Stop-the-clock”) postponed CSDDD application by one year.
Crucially, the CSDDD is an EU instrument that does not apply directly to companies located in Vietnam. But parent groups and large customers falling within its scope must conduct due diligence on their own supply chains — and they pass this duty down to suppliers, including FDI enterprises in Vietnam, through contracts and commercial tools.
3. Indirect pressure: contracts, codes of conduct and audits
In practice, FDI enterprises in Vietnam commonly face the following demands from European partners:
- Contractual clauses requiring suppliers to commit to human rights, labour and environmental standards, with termination and damages for breach;
- Supplier codes of conduct issued by the parent company or customer, requiring signature and periodic compliance;
- Periodic audits at factories, including worker interviews and reviews of environmental and occupational safety records;
- Self-assessment questionnaires on human rights and environmental risks in operations and downstream supply chains.
Once incorporated into a valid contract, these requirements become binding contractual obligations — breach can mean losing the contract, losing access to the EU market, or even damages claims. So even though Vietnamese law imposes no such duty, FDI companies exporting to the EU must in practice build equivalent compliance capacity.
4. A note on Germany LkSG: still only a political proposal
Regarding Germany’s Supply Chain Due Diligence Act (LkSG), caution is needed: any repeal or amendment of the LkSG in 2026 remains at the level of political proposals; no replacement instrument has been adopted. Companies should not cite the LkSG as “repealed” but should monitor further legislative developments before adjusting compliance policies.
Similarly, the CSDDD timeline may still be adjusted by further EU omnibus packages. Companies should follow official EU updates rather than treating the current milestones as absolutely fixed.
5. Practical recommendations for FDI enterprises in Vietnam
- Review contracts with EU customers and partners: identify human rights and environmental commitments, reporting duties and sanctions for breach;
- Build a tier-1 supplier assessment process: internal policies, assessment criteria and remediation plans when risks are found;
- Keep records: audit reports, supplier commitments and remediation reports — key evidence in inspections or disputes;
- Distinguish clearly between direct legal duties under Vietnamese law (environment, labour — for the company’s own operations) and contractual commitments under EU standards, to allocate compliance resources sensibly;
- Track the CSDDD timeline: the 2029 milestones and possible adjustments by new EU omnibus packages.
Conclusion
FDI enterprises in Vietnam are not subject to any mandatory supply chain due diligence obligation under Vietnamese law — this point must be stated plainly to avoid misapplication. In commercial reality with the EU market, however, CSDDD-equivalent requirements are arriving through partners’ contracts, codes of conduct and audits. The prudent company prepares early: understanding the true nature of the duty (contractual, not Vietnamese statute), building systems from tier-1 onward, and closely following EU Omnibus developments.
Contact us
If your company is receiving supply chain due diligence requests from EU partners and needs a review of contractual obligations and a suitable compliance framework, please contact FLAT Law Firm for detailed assistance.
Note: This article is for general information only and does not constitute legal advice. Laws are frequently amended; each specific case must be assessed on its own file and the applicable regulations. This article was prepared with AI assistance and reviewed by the FLAW AI Legal Council; publication is pending owner approval, and does not replace the advice of a human lawyer.
