This group of responsibilities relates to measures that suppliers may be required to implement within the due diligence process upon request by EU/German partners subject to the regulations. These include: (i) the responsibility to directly implement measures to prevent, mitigate, and address risks of violations, and (ii) the responsibility to cooperate with EU/German partners (i.e. the companies subject to the regulations).

At the same time, in order to protect and support suppliers in this process, both the SCDDA and the CSDDD also recognize certain rights and benefits for suppliers when fulfilling these responsibilities.

1. Responsibility to cooperate in the due diligence process

When EU/German partners subject to the SCDDA/CSDDD carry out due diligence obligations related to suppliers’ activities, suppliers are required to cooperate to facilitate the proper implementation of such obligations.

In practice, the Directive/Law does not provide detailed provisions on this cooperation obligation of suppliers. However, based on the nature of due diligence activities imposed on companies subject to the regulations, the corresponding cooperation responsibilities of suppliers/business partners can be identified as summarized in Table below.

Table: Summary of suppliers’ cooperation responsibilities in the supply chain due diligence process

No.	Due diligence obligations of companies subject to the regulations	Supplier cooperation responsibilities
		Under the German SCDDA*	Under the EU CSDDD Directive**
1	Risk analysis, assessment, and classification	Provide relevant information within the scope of their business activities (excluding trade secrets) upon request of the company, including: -      Information on the supply chain in which the supplier participates (raw materials, services, semi-finished products used; upstream suppliers; production facilities; production models; workforce, etc.) -      Information on human rights and environmental standards, and the measures/practices implemented to ensure compliance, if any -      Information on risks, violations, and adverse impacts (type, nature, timing, consequences), as well as any risk/impact assessment methods applied, if any
2	Prevention, mitigation, and cessation of risks, violations, and adverse impacts	Where the company’s measures relate to the supplier’s operations, the supplier must cooperate in implementing such measures, for example: -       Providing necessary information for implementation -      Assigning staff to support the company and allowing the use of facilities for implementation
3	Remediation of risks, violations, and adverse impacts
4	Establishment of grievance mechanisms	Carry out activities as required by the company, including: -      Providing information on stakeholders who may access the grievance mechanism -      Disseminating information about the grievance mechanism to relevant stakeholders	Not defined

* Under the German SCDDA, these responsibilities apply only to direct suppliers. Indirect suppliers are subject to such cooperation obligations only where: (i) there are substantiated indications of risks or violations related to human rights or environmental standards in their operations; and (ii) the company subject to the regulation decides to carry out due diligence measures with respect to those indirect suppliers.
** Under the EU CSDDD Directive, these responsibilities apply equally to both direct and indirect business partners/suppliers.

Source: Compiled by the TTWTO-VCCI Research Group

2. Responsibilities for implementing preventive and remedial measures

Suppliers are only required to perform these responsibilities where their business activities are identified by EU/German partners as involving risks or adverse impacts related to human rights or the environment, and where they are requested to implement relevant measures.

Specifically, upon request, Vietnamese suppliers must either independently or jointly with EU/German companies implement appropriate measures to prevent, mitigate, address and/or remedy identified human rights and environmental risks and adverse impacts within their business operations.

The specific content of these responsibilities depends on the due diligence obligations imposed on EU/German companies under the Directive/Law, as summarized in Table below.

Table: Responsibilities of suppliers in implementing due diligence measures

No.	Due diligence obligations of companies subject to the regulations	Supplier responsibilities
		Direct suppliers	Indirect suppliers
I	The German SCDDA
1	Implementation of preventive measures	Participate in the implementation of the following preventive measures upon request of the company: -      Sign contractual compliance commitments and implement them; -      Participate in training on human rights and environmental standards and codes of conduct; -      Sign and cooperate in implementing monitoring/control mechanisms required by the company	May be required to implement certain preventive measures where the company identifies a high risk of violations.
2	Implementation of remedial measures	Participate in remedial measures to terminate violations upon request of the company: -      Make best efforts to cease violations as soon as possible; -      Where immediate cessation is not possible, implement a remediation plan established by the company. Note: -      The supplier may be temporarily suspended from the business relationship during remediation; -      The supplier may have the relationship terminated in case of serious violations where remediation measures are ineffective
II	The EU CSDDD Directive
1	Prevention, mitigation, addressing and cessation of adverse impacts	Participate in the implementation of measures upon request of the company: -      Cooperate in implementing the company’s action plans; -      Sign contractual commitments to comply with the company’s human rights/environmental code of conduct; -      Participate in capacity-building activities (training, upgrading management systems, receiving technical/financial support, etc.) Note: The supplier may be refused contract renewal or expansion if adverse impacts cannot be prevented or ceased
2	Implementation of remedial measures	-      Cooperate with the company in implementing remediation measures (where the adverse impact is not solely attributable to the supplier or only partially attributable); -      Independently implement remediation measures (where the adverse impact is entirely attributable to the supplier)

Source: Compiled by the TTWTO-VCCI Research Group

3. Rights of Vietnamese suppliers in implementing due diligence measures

In the course of implementing due diligence measures, suppliers are not only subject to obligations but are also entitled to certain rights. The EU CSDDD Directive emphasizes support measures for small and medium-sized enterprises (SMEs), while the German SCDDA focuses more on suppliers’ rights regarding information and compliance-related activities requested by German companies.

(i) Right to receive support under the EU CSDDD Directive

The Directive requires companies subject to the regulation to provide support to SME business partners. Accordingly, Vietnamese suppliers (most of whom are presumed to be SMEs) participating in the supply chains of such companies may benefit from these support measures.

Specifically, the Directive provides for two groups of support measures: (i) mandatory support measures and (ii) encouraged support measures. Both fall within the scope of prevention, mitigation, and cessation of adverse impacts.

Mandatory support measures

Articles 10–11 of the Directive require companies subject to the regulation to implement preventive and mitigation measures in the business operations of SMEs, including measures to support such entities. 

In terms of form, these support measures may be implemented through the following activities:

- Providing or enabling SME partners to access capacity-building activities, training, and upgrades of management systems;

- Providing financial support to SME partners (such as direct funding, low-interest loans, commitments to continue sourcing, or support in accessing finance) where compliance with the Code of Conduct (CoC) or the implementation of preventive action plans would jeopardize the viability of the partner.

Regarding the manner and extent of support, the Directive does not impose specific requirements but instead requires that such support be targeted and proportionate, taking into account the resources, level of understanding, and specific constraints of each SME partner.

Accordingly, depending on the specific circumstances in fulfilling due diligence responsibilities, Vietnamese SME partners may request companies subject to the Directive to provide appropriate support measures, notably financial support to comply with complex and costly human rights and environmental standards.

Encouraged support measures

In addition to the mandatory support measures mentioned above, the Directive also encourages companies subject to the regulation to implement certain support measures for SME suppliers where appropriate, including:

- Consulting SME partners on the company’s expectations and objectives in preventing or mitigating adverse impacts;

- Providing or facilitating access to capacity-building activities, guidance, and administrative or financial support (e.g., loans or financial assistance).

However, to ensure a balance of interests, the Directive specifies that the implementation of these encouraged measures should take into account the resources, level of understanding, and specific constraints of each SME partner.

(ii) Information and confidentiality rights of suppliers under the German SCDDA

While the German SCDDA does not provide for specific support measures for SME suppliers, it focuses on several important rights aimed at protecting the legitimate interests of suppliers in their relationship with companies subject to the regulation in the implementation of the Law. 

Right to refuse abusive requests from companies subject to the regulation

Under the SCDDA, companies subject to the regulation are not permitted to transfer their due diligence obligations to suppliers. Therefore, although suppliers are required to cooperate in the implementation of due diligence obligations, they have the right to refuse requests where the requested activities are, in substance, the due diligence obligations of the company itself. 

Specifically, Vietnamese suppliers participating in supply chains of companies subject to the German SCDDA may refuse requests to:

- Independently conduct risk assessments and analyses of their own business activities;

- Independently determine which preventive or remedial measures should be implemented upon identifying risks;

- Independently establish risk management systems, grievance mechanisms, or carry out record-keeping and reporting obligations to the competent German authority on supply chain due diligence (BAFA) regarding due diligence activities related to them.

Right to refuse to provide certain information

Under the SCDDA, companies subject to the regulation have the right to request suppliers to cooperate in due diligence activities; however, such requests are limited to necessary cooperation directly related to the implementation of due diligence obligations.

Accordingly, Vietnamese suppliers may refuse to provide:

- Information where the company cannot demonstrate how the requested information is relevant to the assessment and analysis of identified risks or violations;

- Information constituting trade secrets, in the absence of confidentiality agreements or where non-confidential summaries are not accepted.

Right to request information

To ensure transparency and prevent abuse, the German SCDDA allows suppliers to request that companies subject to the regulation:

- Share resources, information, and tools used to identify risks and violations (to better understand how such risks are identified in relation to the supplier);

- Clarify the specific risks or violations identified as relating to the supplier;

- Clarify practical cooperation arrangements and the support measures that may be provided to the supplier.

Source: Compiled by the TTWTO-VCCI Research Group

• Scope of Vietnamese suppliers potentially affected from the supply chain due diligence requirements of European markets
• Responsibility to comply with human rights and environmental standards of Vietnamese suppliers in the supply chain due diligence process
• Supply chain due diligence and textile and footwear supply chains in EU
• Actors in textile, garment and footwear supply chains potentially affected by due diligence requirements