Updates on ESG Trends: Navigating Industrial Investment in Vietnam

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Introduction

Environmental, social, and governance (ESG) considerations are rapidly reshaping how industrial investment decisions are made across Asia. For German companies active in or sourcing from Vietnam, maintaining ESG alignment as a strategic priority remains important, despite recent initiatives in Germany and the EU to scale back ESG-related regulatory obligations for businesses. In all likelihood, the scope of the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD) will be narrowed to apply to fewer companies. At the same time, reforms are underway in Germany’s Supply Chain Act (LkSG) to remove certain reporting obligations and associated sanctions. However, streamlining heightened regulatory complexity does in no way signify a general departure from the European and global trend towards greater ESG awareness and responsibility. In fact, sustainable German solutions, including environmental technologies, remain in high demand.

Vietnam’s industrial landscape is evolving in parallel, driven by governmental and private sector commitment, such as the soon-to-be-amended Decree 35/2022 and the corresponding Circular 05/2025 governing the country’s emerging Eco-Industrial Parks. Today’s best-in-class industrial parks integrate sustainability with infrastructure readiness, offering more than just land and utilities. This article explores what German investors should prioritize in Vietnam’s shifting ESG landscape, how regulatory requirements influence location choice, and how leading developers are adapting to offer future-ready solutions. We also highlight a live case study featuring WHA Vietnam, demonstrating how regulatory alignment and site readiness can work hand in hand.

Why Sustainability and Site-Readiness Matter for German Investors

1. ESG compliance isn’t optional. German industrial companies — especially those supplying OEMs or exporting to the EU — face significant expectations and regulations around carbon emissions, resource efficiency, and responsible supply-chain practices. Choosing an industrial park that already embeds sustainable infrastructure reduces the risk of later retrofit costs, regulatory non-compliance, or reputational exposure.
2. Operational cost-effectiveness and resilience. Utilities (water, wastewater, power), energy efficiency, waste-treatment, and connectivity all affect the cost and reliability of operations. A park with advanced infrastructure mitigates operational risk (e.g., power cuts, wastewater licensing) and secures long-term efficiency.
3. Forward-looking supply-chain strategy. Vietnam is transitioning from "low-cost nodal point" to "smart manufacturing hub." Investing in an industrial park that can support high-value production, digital infrastructure, and sustainable utilities aligns with German firms’ ambitions in automation, Industry 4.0, and higher-value segments.

Key Criteria: What to Check When Selecting an Industrial Park in Vietnam

German investors should examine:

• Land & built-factory readiness
• Utilities & infrastructure
• Sustainability/green features
• Connectivity & logistics
• Developer track record and service ecosystem
• Regulatory/incentive alignment
• ESG reporting and transparency

Case Study: WHA Vietnam – Sustainable Industrial Parks in Action

WHA Vietnam's is spearheading sustainable industrial development with two key projects: the 2,100 ha WHA Industrial Zones 1.2 Nghe An and the newly launched WHA Smart Technology Industrial Zones Thanh Hoa, part of the Northern Technology Industrial Corridor. Both sites showcase:

• Renewable-ready infrastructure and real-time digital monitoring.
• Advanced wastewater treatment and eco-conscious planning.
• Flexible space solutions to suit fast-scaling investors.

Backed by over US$1.2 billion in investment, WHA’s zones set benchmarks for smart, green industrial ecosystems in Vietnam’s north.

Embedding Vietnam’s 2025 Sustainability Trends

Vietnam’s current developments in industrial sustainability align increasingly with Germany’s regulatory and technology profile.

Key trends include:

• A national goal of 30% renewable energy capacity by 2030, opening collaboration for German firms in solar, wind, and hydrogen.
• A strong push for green finance and smart infrastructure development.
• Adoption of Industry 4.0 and digital transformation to improve energy/resource efficiency.
• Growing demand for circular economy models and ESG-compliant supply chains.
• Vietnamese firms are adjusting to meet international standards, particularly under Germany’s Supply Chain Due Diligence Act (LkSG).

Additional considerations:

Although still in force, the LkSG is undergoing reform: as of late 2025, the German government has proposed removing reporting obligations and limiting sanctions only to serious human rights violations. The BAFA (Federal Office for Economic Affairs and Export Control) has already suspended reviews of previous reports and cases not linked to core violations.

Importantly, while the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) is still under negotiation, recent proposals suggest limiting its scope to companies with over 5,000 employees and more than €1.5 billion in revenue. It is expected to follow a risk-based approach, focus on direct suppliers, and avoid mandatory civil liability or climate transition plans. Germany is set to incorporate the directive into national law by July 2027, gradually aligning the LkSG with the CSDDD framework.

Implications for German Firms and Strategic Takeaways

• First-mover in emerging regions: Select regions in Vietnam offer competitive costs and improved infrastructure suitable for long-term industrial investment.
• Sustainability is a value differentiator: Green-certified parks make ESG audits and supply-chain compliance easier.
• Seek out parks that match Germany’s regulatory standards: transparency from partners, strong environmental monitoring, and connections with local organisations can make these options both low-risk and highly effective.
• Adapt to current and evolving legislation: While the CSDDD is pending, the LkSG remains in effect and must be followed by German firms sourcing from Vietnam.

Conclusion

German businesses investing in Vietnam must factor in sustainability, infrastructure quality, and the industrial-park ecosystem as key decision variables. WHA Vietnam demonstrates how these factors can converge in one location, offering a credible platform for responsible industrial growth. With Vietnam's 2025 trends driving toward renewables, digital transformation, and ESG alignment, industrial parks like WHA’s are shaping the future of German-Vietnamese cooperation — not just in manufacturing, but in building a sustainable industrial economy.

As German businesses navigate Vietnam's evolving sustainability landscape, the Delegation of German Industry and Commerce in Vietnam (AHK Vietnam) serves as a facilitator and connector, helping companies engage with the right partners, institutions, and frameworks.

In November 2025, AHK Vietnam supported a German energy efficiency delegation to Cambodia and Vietnam, promoting dialogue and collaboration on industrial sustainability. Events like the energy conference in Phnom Penh and Ho Chi Minh City, along with site visits, exemplify our efforts to bring together German technology providers and Vietnamese stakeholders.

These activities reflect our ongoing commitment to enabling practical cooperation and laying the groundwork for responsible industrial growth in Southeast Asia.