How Brand Influence Transformed a Construction Giant’s ESG and HRDD Practices in Vietnam

The construction sector in Vietnam has traditionally experienced lower exposure to international labour standards, lagging in the adoption of best practices. This is also true for projects involving the construction of production facilities for international brands. However, a shift is underway, driven by the increasing number of large-scale projects across various sectors, including the construction of factories, as part of international brands’ broader sustainability strategies.

One company leading this transformation is a prominent main contractor in Vietnam, recognised as one of the country's top five. This firm was contracted by Brand A, which collaborates with The Centre. With a workforce of over 1,800 employees and management of more than 400 projects nationwide, this corporation possesses substantial international experience, particularly in developing countries, boasting an impressive revenue exceeding VND 6 billion. As a key contractor in the region, it wields significant influence over its supply chains and, to some extent, can shape labour practices throughout the construction sector.

A child rights risk assessment by The Centre conducted with Brand A’s main contractor in 2023 has led to the contractor enhancing its due diligence processes, positively impacting over 90 of its subcontractors. As a result, approximately 2,000 workers have benefitted from improved recruitment practices based on The Centre’s recommendations from the assessment. Under the brand's influence, Vietnam’s construction supply chain has witnessed significant improvements in worker well-being and recruitment practices.

The impact one year later

A year later, when The Centre conducted a human rights impact assessment on the same main contractor for another international brand, Brand B, the contractor’s environmental, social, and governance (ESG) policies had effectively cascaded from its headquarters to high-level and mid-level on-site management. Key initiatives included onboarding two dedicated ESG experts and mandating that existing site management staff assume ESG responsibilities, where the introduction of ESG Key Performance Indicators (KPIs) accounted for a minimum of 10% of site management's overall KPIs.

Brand A’s assessment has positively influenced workers and had a profound impact. Significant improvements have been observed in areas such as the prevention of forced labour and the mechanisms for reporting concerns in the main contractor’s supply chain. However, some challenges remain. In a male-dominated industry such as construction, maternity policies and protection processes are often challenging. We found that the main contractor has improved in providing maternity protection policies, but more support and capacity training are needed to improve the effectiveness of the implementation on the ground.

The capacity and mindset of those responsible for ESG as Brand A’s contractors have also transformed. Brand A has encouraged its contractors to comply with international labour standards and local regulations by consistently applying pressure and providing support. The brand also recognises contractors who demonstrate exemplary practices, motivating their supply chains to adopt sustainable approaches. This position has established the main contractor as a pioneer within the construction sector, fully acknowledging the challenges and embracing improvements in their human rights due diligence practices.

The interventions and leverage from international brands play a key role in shaping the strategies and practices of local contractors. By enhancing ESG standards and supporting their supply chain partners to embed these in their core business practices, global brands can drive significant, long-term change in their global supply chains.