Sustainable toy production in Southeast Asia

By Daniele Caroli

The Sustainable Toy Value Chains programme aims to promote sustainable production in toy factories in Indonesia and Vietnam over a period of two to three years. It is funded by develoPPP. The first project originated from a cooperation agreement between the International Sustainable Chemistry Collaborative Centre (ISC3) and the Ethical Supply Chain Program (ESCP).
A cooperation agreement between the ISC3 and the ESCP was signed in December 2025, aiming to promote more sustainable production across the global toy industry. 

• The International Sustainable Chemistry Collaborative Centre (ISC3) excels with its innovation, policy and education programmes on sustainable chemistry. It currently works with a network of over 40 international partners and engages more than 2,000 stakeholders annually. The initiative offers concrete tools to reduce chemical risks, replace hazardous substances, improve chemicals management and ultimately create safer workplaces.
• The Ethical Supply Chain Program (ESCP) focuses on strengthening safe, ethical and transparent working environments throughout complex supply chains; its initiatives have reached over 1,200 toy sector suppliers across Asia and Latin America.

Objectives of the cooperation

Through the agreement, ISC3 and ESCP will collaborate to support suppliers, especially in the Global South, in adopting more sustainable production practices and substituting harmful chemicals with safer alternatives. They will engage private sector actors – from major toy brands to small manufacturers – to increase their commitment to sustainability and responsible chemicals management. Furthermore, resources will be mobilized in order to scale joint activities and broaden their impact across the global toy industry.

Start des ersten Projekts

Launch of the first project

The "Sustainable Manufacturing in Southeast Asia" webinar, organised by ISC3 and ESCP, introduced the first joint industry initiative to focus on Vietnam and Indonesia. Participating companies will be assisted in managing chemical, environmental and labour risks in their supply chain while strengthening supplier capability. They will also be offered support to meet Environmental, Social and Corporate Governance (ESG), due diligence and buyer expectations. Furthermore they will gain improved supplier performance, transparency and resilience, while benefitting from collective action with peers to drive system-level impact in toy manufacturing.
Carmel Giblin, ESCP President & CEO, stated in the webinar on January 20, 2026: “We are looking for 4-5 companies to participate, but the project will be useful to any company in the world, the whole toy industry”.

Engagement with the toy sector

Expressing enthusiasm about the project, Romina Laumann, ISC3 Director Strategic Alliances, recalled that 90% of global production is dependent on chemical products: “We know chemical materials cause pollution and our mission is to promote sustainable chemistry. We support more than 300 start-ups. In 2025 we started to engage also with the toy sector where there is potential for improvement and reduction of plastics”.

Toy supply chains are global and complex, with production concentrated in Southeast Asia. Factories face challenges related to chemical use, worker health and safety and environmental impacts. Over 60% of toy factory workers are women, requiring gender-sensitive occupational health and safety measures. On the other hand, brands need credible, scalable approaches to support suppliers and reduce ESG and supply chain risks.

The initiative, aiming at supporting toy factories in Vietnam, Indonesia and other South East Asia countries within a structured 2-3 years project with impact Key Performance Indicators, was submitted to the develoPPP programme and received very positive feedback.

Additional brands are invited to join the project

develoPPP is a funding programme of the German Federal Ministry for Economic Cooperation and Development (BMZ). It addresses companies wishing to invest sustainably in a developing or emerging country and to expand their local operations. Currently, the programme is available in over 60 countries. In order to qualify for support under the programme, there have to be long-term business interests in the country and sustainable development benefits for the local people.

A company wishing to participate must be registered in the EU, EFTA or a developing or emerging country and be privately owned and profit-oriented. Other requirements: annual turnover of at least € 800,000, minimum 8 employees, minimum of two audited annual financial statements.

Sustainable Toy Value Chains, the develoPPP project launched together with ESCP and ISC3, already involves a private partner, the German company SchleichTo the "Sustainable Manufacturing in Southeast Asia" webinar, courtesy of the Ethical Supply Chain Program (ESCP).. It aims at training qualified labour force, improving working conditions, supporting a green transition and reducing costs. Public funding through develoPPP amounts to approximately € 450,000.

Additional brands are invited to join the initiative with a 2-3 years engagement and the opportunity to participate in shaping and implementing the project by bringing in expertise and contributing financially. Following the approval by BMZ, the project concept, plan and budget will be developed for finalization within the end of April so that the cooperation agreement might be signed by mid-May.

Arlett Laroy, Project Manager Indonesia and Vietnam at develoPPP, explained that project partners may contribute to the project either cash or in the form of services (in-kind contributions, i.e. non-cash inputs provided by the private sector partner that directly supports the implementation of the project). The cooperation agreement provides that GIZ and the company plan the project together and define concrete work packages. These are divided among each other and implemented jointly at own expense. With this type of contract, no money flows between the project partners.